How to Lodge BAS Correctly: Avoiding Common Mistakes
Filing your Business Activity Statement (BAS) is a key part of managing your business tax affairs in Australia. Many business owners find the process of how to lodge BAS confusing, especially with strict due dates, multiple reporting requirements, and the risk of penalties from the Australian Taxation Office (ATO). Whether you’re a sole trader or running a small business, knowing how to complete your business activity statements BAS accurately can help you avoid common mistakes and keep your tax obligations in check.
Understanding the Business Activity Statement
Getting your head around the business activity statement is the first step to staying on top of your tax obligations. The BAS is a form you lodge with the ATO to report and pay certain taxes, including Goods and Services Tax (GST), Pay as You Go (PAYG) withholding tax, PAYG instalments, and other taxes like Fringe Benefits Tax (FBT) and Luxury Car Tax (LCT).
Your business activity statement BAS helps the ATO monitor your business income and business expenses, making it important to get the details right every reporting period. Most businesses registered for GST or with an annual turnover above the threshold must lodge a BAS, whether you’re a sole trader or a company. If you’re unsure about your requirements, a registered tax agent or BAS agent can provide guidance tailored to your situation.
What Does a BAS Include?
When you lodge your BAS, you’ll need to report on several areas, depending on your business structure and activities. The main sections include:
Goods and Services Tax (GST): Reporting GST collected on sales and GST paid on purchases, including GST credits.
PAYG Withholding: Reporting tax withheld from employee wages.
PAYG Instalments: Pre-paying income tax on your business income.
Other Taxes: Such as fringe benefits tax, luxury car tax, wine equalisation tax, and fuel tax credits.
Your BAS form is tailored to your business and may include only the sections relevant to you. The ATO sends a pre-addressed envelope with paper forms, but most businesses now lodge online for convenience.
Who Needs to Lodge a BAS?
If your business is registered for GST, you’re required to lodge a BAS for each reporting period. This applies to most businesses with an annual turnover of $75,000 or more, or $150,000 for non-profit organisations. Even if you’re under the threshold but have chosen to register, you’ll need to report GST information and pay tax as needed. Sole traders and small businesses often find this process easier with the help of a tax or BAS agent registered with the Tax Practitioners Board.
BAS Lodgment Frequencies and Deadlines
Your reporting period depends on your business size and ATO requirements. Most small businesses lodge quarterly, but some may need to lodge monthly or even annually. The due date for each BAS varies, so it’s important to check your specific deadlines on the ATO website or through ATO online services. If you lodge online, you may be eligible for a two-week extension. Missing a due date can result in penalties, so setting reminders is a good habit.
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Common BAS Lodgment Mistakes
Many businesses make similar mistakes when preparing and lodging their BAS. Understanding these can help you avoid issues and keep your business tax affairs running smoothly.
Lodging Your BAS Late
Missing the due date is a common error. Whether you lodge quarterly, monthly, or annually, it’s vital to submit your completed BAS on time. Late lodgment can lead to penalties and interest charges from the ATO. Using online services or payroll software can help you stay on track.
Reporting Incorrect GST Amounts
Mistakes with goods and services tax are frequent. These include claiming GST credits on ineligible expenses, not reporting GST paid accurately, or misunderstanding which sales are subject to services tax GST. Double-checking your GST information before you lodge a BAS can prevent costly errors.
Claiming Ineligible Business Deductions
Some business owners claim personal expenses as business expenses or overstate deductions. Only claim what relates directly to your business income, and keep records to support your claims. If you’re unsure, a registered tax agent or BAS agent can help clarify what’s allowed.
Failing to Reconcile Business Accounts
Reconciling your accounts before you lodge your BAS is essential. This step ensures the amounts you report for GST, PAYG withholding, and other taxes match your business records. Overlooking this can lead to discrepancies and potential ATO reviews.
Poor Record Keeping
Accurate record keeping is the foundation of correct BAS lodgement. Keep tax invoices, receipts, and records of all business income and expenses for at least five years. This makes it easier to complete your BAS form and respond to any ATO queries.
Best Practices for Correct BAS Lodgment
Following a step by step guide can make the BAS process less stressful and help you avoid common traps.
Keep Accurate and Complete Records
Maintain clear records of all sales, purchases, wages, and other business transactions. This includes details needed for GST, PAYG withholding, and any other taxes you report on your business activity statement.
Use Accounting and Payroll Software
Modern accounting and payroll software can simplify BAS preparation by tracking GST, PAYG withholding tax, and business expenses automatically. Many programs are compatible with standard business reporting (SBR) and allow direct lodgment with the ATO.
Set Up a BAS Schedule and Reminders
Mark your reporting period and due dates on your calendar. The ATO app and myGov account both offer reminders for when your business activity statements are due.
Understand Each BAS Label
Take time to learn what each section of your BAS form asks for, especially if you report on Fuel Tax Credits, Wine Equalisation Tax, or Luxury Car Tax. If you have questions, your tax agent or BAS agent can explain what’s needed.
How to Lodge Your BAS
There are several ways to lodge your BAS, each with its own benefits.
Lodging Online
Most businesses now lodge online using ATO online services, business tax affairs online, or through their myGov account. Lodging online is quicker, more secure, and allows you to pay tax directly from your nominated bank account. You can also use SBR-enabled accounting or payroll software for seamless submission.
Lodging by Paper Form
If you prefer, you can complete your BAS form using the pre-addressed envelope provided by the ATO and post it through Australia Post. While this method is still available, it takes longer and doesn’t offer the same flexibility as online options.
Using a Registered Tax or BAS Agent
A registered tax agent or BAS agent can lodge your BAS on your behalf, help you avoid mistakes, and provide advice on your business tax affairs. Agents registered with the Tax Practitioners Board can also negotiate payment plans if you’re unable to pay by the due date.
What to Do If You Make a Mistake
Mistakes can happen, even with the best intentions. If you realise you’ve made an error after you lodge your BAS, you can usually correct it in your next business activity statement or by submitting a revised BAS. The ATO website has clear instructions, or your tax agent can help you make the necessary adjustments.
If you’re struggling to pay, the ATO offers payment plans to help you manage your tax obligations without added stress.
Conclusion
Lodging your BAS correctly is a vital part of running a business and meeting your tax obligations. By understanding how to lodge BAS, keeping accurate records, using online services, and seeking help from a registered tax or BAS agent when needed, you can avoid common mistakes and keep your business tax affairs in order.
If you want peace of mind and more time to focus on your business, our friendly team at ACT Tax Group is here to help. We support small businesses, sole traders, and families across Australia with tailored advice, BAS lodgement, and ongoing support. Reach out today for help with your next business activity statement and take the stress out of tax time.