As a business owner it is likely you have seen the term Business Activity Statement, or its acronym BAS, being floated around. Most business owners will have to deal with a BAS when their business gets to a certain size. So, the question is often asked, what exactly is a BAS?
To help out we have created this quick guide about BAS, covering what it is, whether you need to lodge it, and what information you will need to include within it.
What is a BAS?
A BAS, or business activity statement, is a form in which you report information on the GST and PAYG withholding collected while operating your business. These are often lodged once a quarter. They are used by the ATO to determine how much GST and PAYG withholding tax you owe to them. When submitting your BAS, you will often pay the money you collected for these taxes to the ATO.
You will need to lodge a BAS if you are registered for GST or you are employing staff. If you are not yet registered for GST it is likely you will not need to lodge a BAS, unless you are an employer. However, if your annual turnover exceeds $75,000 you must register for GST.
What is GST?
Goods and Services Tax, more commonly known as GST, is a 10% tax added to the price of goods and services you sell. You must collect this tax on behalf of the ATO and then pay it to them when you lodge your BAS. You are required to register for GST if your business has an annual turnover higher than $75,000.
A benefit of registering for GST is GST tax credits. The tax is only designed to affect the end consumer, not businesses. So, businesses can claim back GST they spent on products or services which were used in helping them conduct business. These GST credits are claimed on the BAS, offsetting the amount of GST you will be required to pay to the ATO.
What is PAYG withholding?
Your BAS can also be used to report PAYG Withholding if you are an employer. As an employer you are required to tell the ATO employee wages and withhold tax. You should also withhold tax contributions you make towards your own taxable income.
PAYG Withholding is withheld on your employees’ wages, hence the name. It can be difficult to calculate by yourself as it uses sliding scales of tax. Fortunately, your bookkeeper will be able to give you a hand with this.
Many business owners will be required to lodge their BAS at least once a quarter. It is therefore important that you understand what it is and which taxes you are required to report on it. BAS time is also a good opportunity to look over your business performance if you haven’t already. As you are looking at information regarding sales and expenses it is a great time to analyse these and see how you can improve.
If you need assistance with your BAS, PAYG withholding, or GST feel free to reach out to our bookkeepers. We are registered BAS agents so we can assist you in completing your BAS.