BAS Preparation Made Easy: A Step-by-Step Guide for Sole Traders and Small Business Owners

As a Sole Trader or small business owner, keeping track of your finances and taxes can be a daunting task. And if you’ve registered your business for GST, one of the most important forms you'll need to complete is the Business Activity Statement (BAS). A BAS is used to report your GST, PAYG withholding, income tax instalments and other taxes to the Australian Taxation Office (ATO).

Don't worry, though. Preparing your BAS doesn't have to be difficult. Here's a step-by-step guide to help you through the process.

Step 1: Gather Your Information

Before you start to prepare the BAS Form, you'll need to gather all of the necessary information. For most small businesses this includes:

• Your business income figures, including the total value of income and the total GST collected
• Your business expense figures, including the total value of purchases and the total GST paid
• Any tax withheld from employee’s wages
• Your PAYG instalments (prepayments of your income tax liability)

There are some other taxes, instalments and credits that may need to be reported on your BAS but the above are the most common so that’s what we’ll deal with in this article. 

When gathering your information to prepare your BAS it’s very important that you check your invoices and receipts to confirm if you’ve charged or been charged GST and you also need to check the rules to confirm if you’re eligible to claim GST on your expenses. You can find out more information about claiming GST credits on purchases here: https://www.ato.gov.au/Business/GST/Claiming-GST-credits/. 

If you’re unsure about whether you can claim GST, it’s best to talk to a BAS or tax agent to assist. 

You’ll also need to confirm whether you are registered to report on a cash or accruals basis as this will change the amounts you report in your BAS. 

• Most small businesses report on a cash basis. This means that you only include sales, purchases and GST if you’ve received or paid the cash in the period.
• Some businesses choose to, or are required to, report on an accruals basis. This means that sales, purchases and GST are reported when the invoice is sent/received and not when actual payment has been made.  

Step 2: Understand the BAS Form

Once you have all of the information you need, take some time to familiarise yourself with the BAS Form that you can access via Online Services for Business . Most small businesses will be using the simplified BAS form so the form will ask for information about your total sales, GST on sales, GST on purchases, PAYG withholding, and instalments.

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Step 3: Complete the BAS Form

With your information and understanding of the form in hand, it's time to start completing the BAS. There are several sections of the form that you may need to complete, depending on your business. 

We’ll work through the most relevant sections and labels below:

Goods and services tax (GST)

• G1 - This is where you report your total sales (including GST) for the quarter/month. This includes all sales and other income regardless of whether you charged GST on the amount. 
• 1A - This is the label to report the total GST included in your sales. 
• 1B - This is the label to report the total GST included in your purchases. Purchases includes both your normal operating expenses as well as any asset purchases. 

PAYG tax withheld

• W1 - This is the total wages and salaries you’ve paid to your employees. This doesn’t include superannuation though. 
• W2 - This is the PAYG withholding amount you’ve withheld from those wages. 

PAYG instalment

• T7 - If you’re using option 1 to calculate your instalment amount this is where you enter that amount. The PAYG instalment is generally provided by the ATO unless you’re varying that amount. 
• T8, T4 & T9 - These are the labels to use if you’re varying your PAYG instalment amount for the quarter/month. 

Once you’ve filled out the above amounts the form should give you to the total amount owing to the ATO. This is calculated as:

• GST on sales
• Plus PAYG withholding from wages
• Plus PAYG instalment
• Less GST on purchases

It's important to be accurate and honest when filling out the form, as failure to do so can result in penalties.

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Step 4: Lodge the BAS Form

Once you've completed the BAS Form, it's time to lodge it with the ATO. You can lodge the form online, via mail, or in person. The ATO states that most businesses that lodge their own BAS, prepare and lodge online via several available options.

When it comes to the frequency of lodging your BAS, there are three options: monthly, quarterly, or annually - with quarterly being the common frequency for Sole Traders and small businesses.

The frequency that you lodge will depend on the size of your business and your reporting obligations and is often chosen when you register your business for GST but can be changed later.

It's important to lodge the form on time to avoid any late penalties. For businesses that lodge quarterly, the due date for lodgement and payment is generally 28 days after the end of the quarter.  If you use a registered tax or BAS agent, different dates may apply.

Quarterly lodgement

If your annual turnover is less than $20 million, you'll typically be required to lodge a BAS quarterly.

The quarterly lodgement dates for the BAS for 2023 are:

• Quarter 1 (January – March): Due 28 April 2023
• Quarter 2 (April – June): Due 28 July 2023
• Quarter 3 (July – September): Due 28 October 2023
• Quarter 4 (October – December): Due 2 January 2024

Monthly lodgement

If your annual turnover is $20 million or more, you may be required to lodge monthly. 

The due dates for monthly BAS lodgments will typically be the 21st day of the following month. For example, if you need to report for January 2023, the due date will be 21st February 2023.

Annual lodgment

If you're a small business with an annual turnover of less than $75,000 and have chosing to register for GST voluntarily you may be eligible to report annually.

The due date for annual BAS lodgments is typically 28 February of the following financial year or the lodgement due date for your tax return. For example, if you need to report for the financial year 2022-2023, the due date will be 28 February 2024.

Please note that these are general guidelines and it's always best to check with the Australian Taxation Office (ATO) or a registered BAS or tax agent for the most up-to-date information and to confirm the lodgement frequency and dates that apply to your specific circumstances. You can also check your BAS form to confirm the frequency that you’re registered for.

In conclusion, preparing your Business Activity Statement (BAS) doesn't have to be a difficult or overwhelming task. By following these simple steps, you'll be well on your way to successfully completing and lodging your BAS. Gather your information, understand the form, complete the form, and lodge the form. With a little preparation, you can ensure that your BAS is done right the first time.

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Note: The information in this blog post is for informational purposes only and does not constitute professional tax advice. Please consult with a tax professional for specific advice related to your business.