As a business owner, I hope you’ve paid attention to a new initiative by the ATO called Simpler BAS. If you haven’t heard of it, then maybe it’s time to hire a bookkeeper or switch to another.
What is Simpler BAS?
It is a new way of reporting your BAS, simplifying your BAS with fewer mandatory figures to report. It is part of the government’s efforts to reduce red tape for businesses, which is one of SME’s biggest gripes over the years.
With the Simpler BAS, you are only required to report:
• G1 Total Sales
• 1A GST on sales
• 1B GST on purchases
This means you don’t have to report figures such as export sales, GST-free sales, capital purchases and non-capital purchases in your BAS.
The Simpler BAS applies to all small businesses with a GST turnover of less than $10 million. It came into effect on 1st of July 2017. However, this doesn’t change how often or when you lodge your BAS.
It also doesn’t change your bookkeeping routines, the process to produce your BAS, your record keeping and tax return. And I think this is the key point that many small business owners miss.
Simpler, not easier BAS
Although you have fewer calculations, everything else remains pretty much the same. There is an equal amount of due diligence and hours that go into producing your BAS.
A lot of the bookkeepers I talk to have complained that business owners seem to think that this makes their job, or our job easier. SMEs who are already time poor get excited by the word, “simpler”.
Fundamentally, nothing has changed. The GST laws haven’t changed. If you don’t understand how to apply GST in your business and the exemptions, you will still need a bookkeeper or BAS agent to explain it thoroughly to you.
If you are not using a proper accounting software to record all your transactions and plan your finances, you still need a bookkeeper to set it up and train you. If you’ve never produced a BAS yourself, you still need a bookkeeper to help you out.
These are the common misconceptions I’ve heard around Simpler BAS.
1. It saves a lot of time.
I think it does save some time, but not substantially. Like I’ve said, the process, care and due diligence that goes into producing your BAS remains the same. You are just reporting differently.
Furthermore, you still need to keep all your documents and organise your records. You must keep evidence for all your purchases and transactions, whether GST applied or exempted. There is no escaping that. And you still need to file your tax return as before.
2. Simpler means I can do it myself.
When it comes to something as serious as taxation, please seek professional advice. As a business owner, your time and expertise is best left for running and growing your business.
If you are a new, growing or complex business, then hiring experts such as bookkeepers and accountants will take a load of your shoulders. Believe me, you want to err on the side of caution when it comes to your taxes.
Previously, I had a new client approach us after receiving a dreaded letter from the ATO that they will be audited. Apparently, the sales reported in their BAS did not match with the GST On Sales figure that the ATO was projecting.
Upon investigation, I found that they did indeed pay the correct amount of GST. This issue could have been avoided had they done a few simple checks on their BAS before submitting. Although the crisis was resolved quickly, it certainly gave my client a few grey hairs.
3. I can produce Simpler BAS with my accounting software.
Contrary to popular beliefs, not all accounting software are up to date with this new change. You need to check with your provider to see if your latest version supports Simpler BAS. Xero is already on board with Simpler BAS so you don’t have to worry about a thing if you are using Xero. In fact, your bookkeeper may have discussed it with you beforehand.
One of our corporate values is reliability. You can rely on us to provide high quality work in a timely manner, even when it’s just a simple BAS report. We want to let you do what you love best – growing and running the business without worrying whether you will get in trouble with the ATO.
I know it’s Halloween this month, so let us take the spookiness and scariness out of your BAS, and make your way to a wonderful Christmas this year.
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Specialising in Xero bookkeeping, Notch Above is a Brisbane bookkeeper and BAS Agent located in Alderley that offers Xero setup, as well as training and ongoing support. Notch Above can take care of all the bookkeeping tasks you would rather not do, like bank reconciliations, supplier payments, payroll services, debtor control and BAS returns.
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