Welcome back to the blog!!

By far, my most common queries are related to the BAS or Business Activity Statement. And as we’ve just finished a quarter, this is starting to be top of people’s minds and most certainly top of every bookkeeper's mind.

Unfortunately, the ATO has not been kind enough to call it what it is – a GST return. Anyone reading from New Zealand will thank their lucky stars theirs is called that!!

So, the BAS. And PAYG. And anything else related to tax feels really grey and under-explained in laymans terms. Let’s start at the beginning. You are a business that is registered for GST. Every quarter (or month depending on preference or revenue) you need to lodge one of these returns and either make a payment or receive a refund. If you have employed a bookkeeper and they are a BAS agent, they can lodge this return for you. Or you can do it or an accountant can do it.

Bear in mind the following:

• If you lodge it it is free, but you need to do all the work.
• If a bookkeeper does it, it’s normally a small cost (ask about our rates) or included in a fixed rate package.
• An accountant/tax agent may charge more than a bookkeeper or it’s included in the fixed rate contract.
• It’s always handy to have a bookkeeper prepare your books. They are equipped with the knowledge that you need to remain tax compliant as well as making sure you claim the maximum that you’re able to. When they’re lodging online they also receive the BAS agent extensions due to the BAS agent program. Remember not all bookkeepers are BAS agents. After a change in laws, bookkeepers needed to gain the registration. Check they have it!!

Back to the basics. If you are GST registered, everything you sell in Australia– products or services – must include GST, unless it’s on the GST exempt list. In the same way, there are a huge amount of things, besides basic groceries and a few products, that include GST on them so you can claim the GST back from them. What the BAS does is record all the amounts of GST you’ve charged and you subtract all the GST you’ve paid and get a figure. Either that is a positive or a negative and you’ll make a payment or expect a refund. This is why it’s called a Business Activity Statement. It collates your business’ financial activity.

You either run your BAS on an accruals or cash basis. An accrual-based BAS is based on when the invoice is DATED and once you are over a certain threshold of turnover you have to report this way. A cash basis BAS is based on when the invoice/bill was PAID.

If you employ staff and your annual turnover is less then $1m, you’ll include the PAYG tax that you’ve withheld from their pay in this return. If you have a turnover of more than $1m, you’ll lodge the PAYG and pay it monthly.

This PAYG (Pay As You Go) tax is different from the one you pay as a sole trader or when there is an income tax payment plan set up. This amount is what you held back from your employees wages before you paid them.

If you have been in business for more than a year, you may be required to, or choose to pay an income tax percentage. This is based on the previous years earnings and is worked out as a percentage. This is helpful as you don’t have to then pay a massive end of year tax bill. More on that to come.

So to recap:

• The BAS is for GST to be paid/refunded
• The BAS is where you pay the employees PAYG tax if you have employees
• Speak to your bookkeeper about your product/service to see whether you are on the GST exempt list.
• Have great accounting software (like Xero) to record all your transactions, and keep the tax man at bay!
• GST is calculated on a cash or accruals basis. This comes down to choice (under $2m) or requirement (over $2m turnover). Most small businesses will run on a cash basis to begin with.

Until next time,
Helen

As an agile and progressive bookkeeping business, times are always a-changing! We pride ourselves on not only making sense of our clients dollars but also helping them achieve their vision and their goals. We love nothing more than to see them grow and flourish, and we want to do the same for other bookkeepers.

At the moment we are on hunt for an EA/Junior bookkeeper gun to round out the team and provide some much needed support to the Director (me)!

Some key attributes required for the role are:

• A positive, can-do attitude
• Organised and methodical
• Enjoy working behind the scenes
• A great time manager
• Ability to work automously
• Very strong communication skils - written and verbal
• Client focused
• Willingness to learn
• Ability to work on multiple client files concurrently

Skills & Qualifications

• Intermediate Xero knowledge
• has/in the process of getting at least a Cert IV in Bookkeeping

I'd love to hear from you if this sounds like you and please pass it on to anyone you may know! You can reach me at helen@dollarsandsense.net.au and we can set up a time to chat.

Looking forward to finding the next member of the team!

Helen

Remember alphabet soup when you were growing up? That mash of letters in a tomatoey soup? I remember trying to make words out of the letters and trying to find all the letters that make up my name. There are certainly times that I look at all the acronyms associated with tax and small business ownership and I feel like it’s a regular ol’ mashup of letters and trying to make a word out of it is like battling with a bad hand in Scrabble.

You know the ones – ABN, ACN, BAS, GST, PAYGW, PAYGI, etc etc. It certainly seems like another language and often it’s not quite that clearly explained what you need, what they are and how to apply them. And if you’re dealing with a bookkeeper or accountant, then they’re probably throwing them around willy-nilly to confuse the issue. Not that we mean to, it’s just we use them every day and forget that not everyone does!

So, here’s a quick crash course in what they are and how they may mean something to you!

The first one you’ll hear as you start down the business ownership road is the ABN and the ACN. The ACN is your Australian Company Number and you’ll have to have one of those if you’ve registered as a company. One will be issued for you.

The ABN is the Australian Business Number and anyone, a sole trader, partnership, company, trust; that intends to carry on a business enterprise and have dealings with the ATO will need one of these. They are relatively straight forward to apply for with the Australian Business Register (ABR) on www.abr.gov.au. Another acronym for you! While you’ve got your application in for that you can tick a box for them to issue you with a TFN – Tax File Number- so you can lodge your tax.

Three down, about 70 million more to go!

Ok, you’re registered for business and trading! The next step is: do you need to be registered for GST and if so, when is the next BAS due?
GST is the 10% Goods and Services Tax that you need to pay if you are going to be making more than $75 000 in a 12month period. Your BAS is your Business Activity Statement, which pulls together all your incomings and outgoings for the month, basically all your business activity. (More on this to follow in a later article).

On your BAS you’re going to report things like your GST that you’ve charged customers, and the GST you’ve paid to suppliers. You’re also going to report a variety of PAYG payments. PAYG stands for Pay As You Go, and there are 2 main ones. PAYGW is the tax that you withhold from your employee’s gross salary and then pay directly to the ATO. That’s why is called Pay As You Go Withholding. The 2nd one is PAYGI, and that is your Pay As You Go Instalment, which is an instalment for your income tax that the ATO (another one!) will sometimes calculate based on your past tax returns and it is an instalment to pay towards the end of year tax return separate from the BAS. You can elect to pay this quarterly if you like to so that you’re not slapped with a massive bill at the end of the year.

The ATO is our Australian Taxation Office and is the Grandmaster of Acronyms. The only thing with more abbreviations is a teenager’s text message.

Have I missed something? I’m sure I have! Your bookkeeper can often be a massive help to try and understand all these terms and it’s a great idea to have a sit down with them and go over it. Haven’t got a bookkeeper yet but you’re thinking of one? Head back to the website and see what we offer, and drop us a line for a no-obligation chat!

CU next time!

Helen