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DIY BAS? Do you Love it or Hate it?

As a business owner, is it easy to lodge your own BAS? How can you do this? Should you? Or could you be missing out on credits by not engaging a professional? For those who want to continue lodging their own BAS, we provide some tips on making sure you don’t miss any ATO credits.

Pros and Cons of the DIY BAS

PROS

Doing your own BAS and lodging it with the ATO can save you money, if you do it correctly. The number one reason business owners lodge their own BAS is to save money. 

The next most popular reason business owners choose to DIY their BAS is so they can retain control over their accounts. As a business owner, I can certainly relate to this. Some business owners actually like ticking everything off and lodging quarterly. There is a sense of accomplishment. You can check everything as you go, keeping an eye on where your finances are going.

For every business owner we have met that has lodged their own BAS, every single one of them is unsure everything is correct. Every one hopes they have captured everything but are not entirely sure.

CONS

Those are the two pros I can think of. Lets deal with the cons now:

  1. Cost: Although engaging a BAS agent can be expensive, in our experience, the money saved on owners lodging their own BAS has been used in hiring a BAS agent to correct their errors. We regularly hear from business owners who need their accounts cleaned up (sometimes at the behest of the ATO or the bank to get a loan) and unfortunately, the cost to repair the accounts can almost cover what the cost would have been to start and continue correctly.
  2. Accuracy: BAS agents spend many years learning all the complex GST rules. If you have done your own BAS, you may not have claimed the correct amount of GST. This can include over claiming GST (Which you may need to repay later), under-claiming GST and also reporting incorrect deductions. We have so many true stories to tell of clients that have not claimed GST correctly. the section on ‘Common Errors’ have all happened and we have corrected these for clients
  3. Risk of Audit: If the ATO sees a red flag in your reporting, they can schedule you for a random audit. These are invasive and difficult to substantiate. You will need to prove accuracy. 
  4. DIY BAS are due by the 28th of the month following the end of the quarter. If you use a BAS agent, you get an additional four weeks to lodge and pay

 

Common Errors for DIY BAS

If you are going to lodge your own BAS, look out for the following common errors:

Not Claiming GST on Mobile Phones

Do you know that if you buy a phone on a mobile plan, the GST is claimed at the start in one go? Then the repayments on the phone plan are GST free? You need to carefully look at the GST component of your telephone bill and claim the correct amount of GST paid each month. Don’t forget to claim the phone purchase at the beginning

Not Claiming GST on Motor Vehicles

If you have bought a motor vehicle on finance, you need to setup the loan as a liability and make payments to this liability. Most business owners will do this in a basic way and forget to enter the purchase of the motor vehicle. The GST paid is claimed as paid at the purchase date. So if you were to buy a motor vehicle for $50,000 and arrange finance. The GST included (which could be about $4,545) can be claimed in your next BAS. Don’t forget to do this or you are missing out on GST credits you have paid. 

You can enter the invoice for the motor vehicle purchase and pay it off to the loan account.

Over Claiming GST in BAS

Did you know that GST is not included on water and rates, and on vehicle registration (only TAC component). There is also no GST on some food products bought for the office (like milk). AirBNB and many overseas transactions (but not all) are GST free. There is a very long list of items that do and do not include GST. You need to check each and every tax invoice as suppliers may also be under the GST threshold and have not charged GST on their invoices. 

Reconcile your Bank Accounts

Another big mistake we see often is when business owners do not reconcile their bank account in the accounting system with the bank statement. The balance could be out due to double entry of transactions or missing transactions from bank feeds. This will create incorrect transactions for your BAS that may need to be corrected later. 

Not Claiming GST on Imports

Do you import goods into Australia? This can be a big one. If you do, you may be aware that GST is charged by customs and not by the supplier. Eg. If you purchased $100,000 AUD of goods from China, the Chinese supplier will not include the GST on the invoice. The goods are GST Free. Customs however, will issue you with an invoice for $10,000 (GST on the purchase) plus custom costs. The mistake we see often is when business owners enter this invoice as inclusive of GST. If the customs invoice totals $11,000 ($10,000 GST and $1,000 other costs). You need to claim back the $10,000 in GST in full. If you accidentally enter this as GST inclusive, you will only claim back 10% of the total which is $1,100. That is a GST loss of $8,900. Every accounting software has it’s own method of recording GST on imports so check with your software provider

 

What Other Options Do Business Owners Have?

As a business owner, you can choose to continue lodging your own BAS and follow our basic tips to avoid common errors, or

We do offer a BAS check and lodge service that will check over all your accounts once a quarter and fix anything you have misallocated and lodge the BAS through the ATO portal. Contact us for more info

You can also ask your tax agent to lodge the BAS. They usually lodge the figures you have in the accounting system without checking them and often fix everything up at the end of the year if you have asked them to. 

 

If you would like to chat more about your situation, hit the live chat or contact us

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