If you’re running a business, you know that you need to suddenly become an expert on taxes, bookkeeping and how to keep everything in order and ready to go at tax time. Other than keeping your receipts and invoices, one of the most important things that you need to organise is GST and BAS.
Goods and Services Tax and Business Activity Statements are a part of life when it comes to running a business that’s earning more than $75,000 per year in Australia. When you are earning more than $75,000 you must register your ABN for GST within 21 days of your turnover exceeding the relevant threshold.
Once you are registered, you’ll then need to start submitting a BAS either monthly, quarterly or annually.
Your BAS includes:
- Goods and services tax (GST)
- Pay as you go instalments (PAYG)
- PAYG withholding tax
- All other business taxes including luxury car tax, wine equalisation tax and fuel tax credits
Processing your GST and BAS documents correctly means that you’re less likely to run into any issues with the ATO.
What Can Trigger a GST or BAS Audit?
The ATO doesn’t mess around when it comes to getting things right. So, to avoid an audit, you need to fulfill your legal obligations for your business. If you’re not filing your BAS as you are operating, you could trigger an audit.
A GST or BAS audit may be triggered by even just one of the following:
- Failure to lodge BAS statements
- Large GST refunds
- Over-claiming GST input tax credits
- Under-reporting GST
- Businesses that report strongly different GST amounts than other industries
- Sudden change in business to international financial arrangements
Additionally, if you’ve got a few employees that have been let go, or that you may have butted heads with in the past, they’re able to tip off the ATO.
You’re not always going to be best friends with all of your employees. And that’s okay. But you need to make sure that you treat all your employees with respect, particularly if they know that your books aren’t quite up to scratch!
And if you do have that issue with an employee, make sure everything is in order, so if they do decide to dob you in the ATO isn’t going to find anything incriminating.
How to Avoid an Audit
Don’t let your business fall into a pattern of lazy bookkeeping and messy filing. It sounds simple, and with the right bookkeeping systems and software it can be!
Here are a few tips that can help you keep your business on the right track:
- Keep detailed GST reports for each quarter that reflects your invoices, purchases, GST collected and paid – as well as all transactions that do not attract GST.
- Keep a copy of all your receipts, tax invoices, bank statements, credit card statements and cash register receipts. Make sure to scan these receipts in and keep them electronically! Paper receipts fade, statements get lost. So as soon as you get them, get them saved (and backed up!) on your computer.
- Create a balance sheet for profit and loss reports for each quarter
- Keep backups of your accounting data
- Because payroll is often a part of GST reporting, keep a copy of your payroll reports used to report PAYG
Avoid Audits with XERO Bookkeeping Software
As I mentioned before, there are a lot of systems and software that can help make all your reporting as simple as possible.
Xero is one of the most robust software systems on the market that you can use to get a handle on your books. It has some of the best features available on the market and you can integrate so many other programs with it like Stripe and PayPal, keeping all of your information in one place.
Prepare and Lodge BAS with Xero
Xero can do a lot of the heavy lifting for you! Xero has a BAS feature that collects everything that you need to calculate GST automatically and even submit it to the ATO directly from Xero!