The deadline for the latest quarterly Business Activity Statement (BAS) is fast approaching. Whilst the ability lodge directly with the ATO either via an online accounting system, ATO business portal or mygov makes the process more efficient, there is still some work to be done before you can complete and lodge your BAS.
Whether you are using a manual process or an accounting program, there are certain steps you should take to ensure the information reflected in your activity statement is correct.
For this reason, there are many advantages to hiring a registered BAS Agent including enjoying a an extra 4 week extension for lodgement and payment.
When you’re lodging your BAS on your own, the process in itself is not difficult, made easier by lodging online but, depending on how well you kept your records, it can be time consuming.
Accuracy is vital, as mistakes can lead to penalties.
For the purposes of this blog, we will examine the process using Xero Online Accounting, however the general principles apply to other accounting systems and manual records.
Step 1 Preparing your Information
Are your bank accounts, credit cards and other accounts reconciled on the dashboard?
Ensure there are no unreconciled bank statement lines for the period you are reporting on.
Check the account transactions tab for any unreconciled (orange) transactions for the period. If there are, investigate them as they may be duplicates or missing bank statement lines (see below)
Step 2 Bank Statement Reconciliation
Check that the Xero statement balance reflects the balance of that account in your internet banking.
Go to Manage Account (or the 3 vertical dots) button and choose Reconciliation report.
Go to the second tab called “bank statement” and select the date range for the quarter. Select reconciled only and click update.
Match the opening balance and closing balance with your actual bank statement or internet banking.
If these match, publish the report.
If they do not match, there may be missing or duplicate transactions. These need to be investigate before going further.
Step 3 Review Aged Payables
Select the Aged Payables report from the Report menu (click on the star to save as a favourite)
Select the date as the last month of the quarter. Review the report to ensure that the aged payables listed are accurate and outstanding.
Step 4 Review Aged Receivables
Select the Aged REceivables report from the Report menu (click on the star to save as favourite)
Select the date as the last month of the quarter. Review the report to ensure all aged receivables are accurate and outstanding.
Step 5 Review Activity Statement Transactions by Tax rate report
Select Activity Statement from the Reports Menu. Choose the current reporting period.
Go to the second tab “Transactions by Tax rate” which lists all the transactions entered for the reporting period grouped by their tax rates.
Review the list, looking for any transactions that may have been incorrectly reconciled with a wrong tax rate.
Under the BAS Excluded header, you will find transactions like wages and salaries, superannuation and PAYG withholding, GST, loans, drawings etc. These are correct as GST is not included in these types of transactions.
If you need to make any changes, click on the transaction with an error to view and edit. Go back and refresh the activity report.
Step 6 Prepare the Activity Statement
If you have payroll ensure the Gross Wages (W1) and Tax withheld (W2) amounts are prefilled. If not, review your payroll settings to ensure the different earnings rates are included at W1.
If you have a PAYG instalment, you will need to manually add to the report at the relevant area.
Step 7 Lodge your BAS
Once you are happy that all transactions are correctly included, click on Publish.
You now have the option to lodge your BAS directly from Xero (please contact us if you need assistance setting this up).
Otherwise you can lodge via the Business Portal or myGov depending on your business type.
Lodging online gives you an extra 2 week extension. Lodging via a Registered BAS Agent gives you 4 week extension.
Step 8 Reconciling your Payment or Refund
To reconcile your BAS payment or refund, a time saving tip is to create a bill (or credit note) which can then be matched to the payment(receipt) on the bank feed.
Where you have PAYG withholding and/or instalments, you need to split the payment/receipt between the different accounts. If you don’t, you will find that the GST, PAYG Withholding Payable and Income Tax payable accounts will not reflect the true balance of the liabilities.
Step 9 Lock Date
This last step ensures that no changes can be made to the period you have just completed. You may need the assistance of your adviser if you don’t have the requisite access level to do so.
Go to settings, advance settings, financial settings and “Lock Dates”. Choose the date for the end of the reporting period you have lodged.