3 Ways To Prepare For Bas Time

BAS (Business Activity Statement) time can be one of the most daunting periods for small business owners. Lodging your BAS with the Australian Taxation Office (ATO) is not just a matter of compliance; it’s a critical aspect of managing your business’s financial health. However, with the right preparation, you can transform BAS time from a stressful scramble into a streamlined process. In this blog post, we'll delve deeper into three essential strategies to ensure you're well-prepared for BAS time, keeping your business finances in check and avoiding costly mistakes.

Organise Your Financial Records
One of the most important steps in preparing for BAS time is ensuring that your financial records are organised, up-to-date, and accurate. The BAS requires you to report on your business’s income, expenses, and GST obligations, which means that every transaction must be accounted for. Here’s how you can get your records in order:

Implement a Robust Record-Keeping System:
A good record-keeping system is the foundation of effective BAS preparation. Whether you’re using a digital accounting platform like Xero, QuickBooks, or MYOB, or maintaining a more manual approach, consistency is key. Regularly update your records with all business transactions, ensuring that every sale, purchase, and financial movement is accurately documented.

Categorise Transactions Correctly:
Properly categorising transactions helps in easily identifying which transactions include GST and which don’t. This is crucial because incorrect categorization can lead to errors in your BAS, potentially resulting in fines or additional scrutiny from the ATO.

Reconcile Your Accounts Regularly:
Don’t wait until BAS time to start reconciling your accounts. Regular reconciliation (monthly or even weekly) ensures that your financial records are accurate and that any discrepancies are identified and resolved promptly. This practice will save you significant time and stress when BAS time comes around.

Keep Source Documents on Hand:
Ensure that all source documents such as invoices, receipts, and bank statements are easily accessible. These documents are crucial if the ATO requests evidence for your claims or if you need to verify any transaction details during the BAS process.

Review and Manage Your Cash Flow
Cash flow is the lifeblood of any business, and managing it effectively is essential for meeting your BAS obligations. Here’s how you can ensure your cash flow is in good shape ahead of BAS time:

Understand Your GST Liability:
Before lodging your BAS, it’s crucial to understand your GST liability. This involves calculating how much GST you’ve collected from sales and how much you can claim back from purchases. By knowing your GST obligations in advance, you can ensure that your business has enough cash on hand to cover the payment without putting a strain on your finances.

Set Aside Funds for BAS Payments:
To avoid a last-minute scramble, consider setting aside funds for your BAS payments throughout the quarter. This can be done by regularly transferring a portion of your income into a separate account dedicated to tax obligations. This proactive approach ensures that when BAS time arrives, you’re financially prepared to meet your obligations without impacting your day-to-day cash flow.

Monitor Your Cash Flow Regularly:
Keep a close eye on your cash flow to identify any potential shortfalls or issues before they become critical. This not only helps in BAS preparation but also gives you a clearer picture of your business’s overall financial health. Regular cash flow monitoring allows you to make informed decisions, such as delaying non-essential expenses or seeking additional financing if needed.

Plan for Payment Options:
If your cash flow is tight, it’s important to know that the ATO offers payment plans for BAS liabilities. However, these plans need to be arranged ahead of the due date. Consulting with a tax professional can help you explore these options and avoid penalties for late payments.

Consult with a Bookkeeper or Tax Professional
While it’s possible to prepare your BAS on your own, working with a professional can provide peace of mind and ensure accuracy. Here’s why consulting with a bookkeeper or tax professional is a smart move:

Expert Guidance and Compliance:
Bookkeepers and tax professionals have the expertise to ensure that your BAS is completed accurately and on time. They stay updated with the latest ATO regulations, which means they can help you avoid common pitfalls and ensure that you’re claiming all eligible deductions. Their guidance can prevent costly mistakes that could result in fines or audits.

Maximising Deductions and Credits: A professional can help you identify deductions and tax credits that you may not be aware of, maximising your returns. They can also assist with more complex aspects of BAS, such as adjustments for capital purchases or dealing with different tax codes.

Streamlining the BAS Process:
By working with a professional, you can streamline the entire BAS preparation process. They can set up systems to automate data collection, categorization, and reporting, making future BAS periods even easier to manage. This not only saves you time but also reduces the stress associated with BAS lodgment.

Focus on What You Do Best:
Perhaps the most significant benefit of working with a professional is the time and mental energy you save. Instead of spending hours grappling with your finances, you can focus on what you do best—growing your business. Meanwhile, your bookkeeper or tax professional takes care of the details, ensuring that your business remains compliant and financially healthy.

BAS time doesn’t have to be a source of stress. By organising your financial records, managing your cash flow effectively, and consulting with a professional, you can ensure that your BAS lodgment is smooth and error-free. These steps not only help you stay compliant with ATO regulations but also give you a clearer understanding of your business’s financial health, allowing you to make informed decisions and plan for the future. Remember, the key to successful BAS preparation lies in consistent, proactive financial management. Start implementing these strategies today to make your next BAS period a breeze.

Jess
Your Finance Side-Kick
Luxe Advisory