Did you know that there are many business owners who make BAS mistakes? BAS mistakes not only cost them money but can also put their business at risk. A Business Activity Statement (BAS) is a report that business owners need to file with the Australian Taxation Office (ATO) to state their Pay As You Go instalments, Goods and Services Tax (GST), and other tax payments.
Although BAS lodgment is a straightforward process, many business owners make mistakes, such as incorrect employee income reporting, incorrect GST, double-counting of purchases, etc. These could lead to compliance issues, impacting overall business growth. ATO has implemented processes to help you fix BAS mistakes without fines. Therefore, make sure you act as quickly as possible to save money, time, and unwanted stress. You can also seek professional advice or help when lodging BAS. If you are looking for the best tax accountant near me, then make sure they are familiar with BAS lodgment.
What are the Common BAS Mistakes?
Despite using accounting software, many business owners still make BAS lodgment errors. Whether you run a small business or a large organisation, a basic slip can affect your PAYG, GST, or cash flow. These reflect the most recurring mistakes that businesses constantly make. These are:
- Incorrect GST reporting: Entering the wrong code can affect your GST liability. For example, treating a GST-free sale as taxable or vice versa is considered a huge BAS mistake. Many companies take input tax credits on GST-free products or personal goods, such as bank charges. This can inflate GST claims while increasing the chance of an ATO review.
- Discrepancies in bank statements: Bank reconciliation in Melbourne plays an important role in matching business books against bank statements. BAS lodgment without reconciling accounting records and bank statements can lead to BAS mistakes. Redundant records, deposits, etc., are common mistakes that can result in serious blunders. Therefore, make sure you keep a separate personal and business account.
- Overlooked PAYG withholding: Many business owners forget to record salaries or wages in the BAS or record them in the wrong category, which can lead to payroll related issues.
- Quarterly BAS lodgment gaps can also lead to financial discrepancies, such as missing a few items when recording a refund.
What If You Make BAS Mistakes?
The ATO is aware of BAS mistakes that most businesses make. Therefore, they treat honest mistakes differently from non-compliance. If you identify a BAS mistake and disclose it quickly, you could prevent potential penalties. Penalties are usually imposed when a business repeatedly makes mistakes. In such a situation, filing a correction as soon as you notice the mistake can save you money and serious consequences. That’s why it would be better to seek help either from a registered BAS agent or a tax agent. You can also choose accounting services Melbourne to reduce the stress of lodging BAS on your own.
How Can You Fix BAS Mistakes?
- Make sure to review your BAS to identify discrepancies, such as incorrect GST reporting. You are required to check invoices, receipts, payroll entries, and other BAS components to find errors.
- You need to determine whether the mistake affects GST, PAYG, and other elements of BAS.
- If your BAS has minor errors, they can be corrected in your next lodgment. However, critical errors should be revised.
- You can ask a BAS agent or a tax agent to handle the process.
How Can You Avoid Making BAS Mistakes in Future?
Make sure to use accounting software as it will calculate GST and PAYG amounts automatically, reducing the risk of errors. Make sure you reconcile your bank statements and update your business books frequently. Staying updated with ATO rules can help prevent future errors. If you don’t want to make BAS mistakes, you can hire a BAS agent or tax agent and solve complex transactions while staying compliant with ATO.
Conclusion
Fixing the BAS mistake is not a difficult task. Make sure to act promptly when you notice mistakes and make changes accordingly. You can get in touch with Reliable Melbourne Accountants to prevent ATO penalties while meeting ATO obligations.