What Is BAS and why is it important?

What is a BAS and Why is it Important?

If you are a small business founder chances are you’ve come across the term BAS. But what exactly is a BAS, and why does it matter?

Firstly, what does BAS even stand for and what is it for?

BAS stands for Business Activity Statement. It is a form submitted to the Australian Taxation Office (ATO) by businesses to report and pay various tax obligations, including:

- Goods and Services Tax (GST)

- Pay As You Go (PAYG) withholding (for employees’ wages)

- PAYG instalments (for income tax)

- Fringe Benefits Tax (FBT)

- Luxury Car Tax (LCT) and more (if applicable).

Ok, So Who Needs to Lodge a BAS?

Businesses registered for GST—those with an annual turnover of $75,000 or more ($150,000 for not-for-profits)—are required to lodge a BAS. Even if your business doesn’t reach this threshold, you can voluntarily register for GST and will then need to lodge a BAS.

Key Components of a BAS

When completing your BAS, you’ll typically report on:

1. GST Collected and Paid: The GST you’ve collected on sales and the GST you’ve paid on business expenses.

2. PAYG Withholding: The tax withheld from employee wages.

3. PAYG Instalments: Prepaid amounts toward your income tax liability.

4. Other Taxes: Such as FBT or LCT, depending on your business activities.

Why is the BAS Important?

Well firstly, like it or not, if you are registered for GST generally you have to lodge one and so lodging your BAS ensures your business remains compliant with ATO requirements. But more than that it helps your business in a number of ways:

-  Allows you to claim back GST you have paid on business expenses.

- Helps you plan for  income tax obligations, preventing surprises at the end of the financial year.

-  Keeps you on top of your employer obligations for your employees tax.

How Often Do You Need to Lodge?

Most businesses lodge their BAS either monthly, quarterly, or annually, depending on their reporting cycle. For many small businesses, quarterly reporting is the most common.

Tips for Managing Your BAS

1. Keep Accurate Records: Use accounting software to track your income and expenses in real time.

2. Understand GST and Deductions: Familiarise yourself with what you can and cannot claim.

3. Seek Professional Help: If BAS feels overwhelming, an accountant or bookkeeper can help ensure everything is accurate and submitted on time.

4. Set Reminders: Missing the BAS due date can lead to unnecessary fines, so mark it in your calendar.

Finally, these are the important dates to remember

The ATO provides specific lodgement deadlines, typically 28 days after the end of each quarter. For example:

- Quarter 1 (July – September): 28 October

- Quarter 2 (October – December): 28 February

- Quarter 3 (January – March): 28 April

- Quarter 4 (April – June): 28 July

Monthly BAS lodgements are due on the 21st of the following month.

We hope this has left you a little less confused and a little more empower to understand your BAS.

If you need assistance with your BAS or have questions about your specific tax obligations, feel free to reach out.

A little help can go a long way in keeping your business compliant and stress-free.