GST-registered businesses: book-keeping and BAS tips

Are you a GST-registered freelancer, contractor or sole trader business? If so, these tips about book-keeping, BASs and your responsibilities in regard
to the Australian Tax Office (ATO) may be helpful.

When to do your book-keeping

Book-keeping – recording your earnings and expenses in your book-keeping program – doesn’t take very long if you keep it up-to-date. For my small business, it takes up to half an hour a week or about an hour a month. If I get behind and have to do it all at the end of the quarter, it takes about four hours
to input the information for the quarter into my book-keeping program and complete and lodge my BAS statement.

For small GST-registered businesses, it’s usually best to input everything into your accounting program and do your bank reconciliations at the end of
every month. Then you don’t have a heap of book-keeping to catch up on when the BAS is due to be lodged with the ATO at the end of the quarter.

However,  in very busy periods it’s often practical to let your book-keeping slip behind rather than spend valuable customer-hours on book-keeping;
in the knowledge that you’ll have to catch up on your book-keeping before your BAS is due.

When I do my book-keeping

Every year my two busiest periods are May/June, and November/December.  In early May, everyone starts rushing to get their reports or policy documents
or publications edited and proofread or their transcripts finished so they can be invoiced and pay their bills by the end of the financial year. In
early November, everyone suddenly realises Christmas is on its way and they need to wind up their reports and other documents prior to the new calendar
year. I don’t really try to keep my book-keeping up-to-date in those two quarters because I am flat out working long hours to keep my clients happy
and make money.

Every new calendar year, I’m two or three months behind in my book-keeping; but this isn’t a big problem because luckily, the tax office gives us longer to complete the BAS; it is not due until late February.

Being a few months behind in my book-keeping is not a disaster at those particular times of year because January is the quietest month of
the year.

The GST you collect is not yours. Ever.

A long time ago when I was still in the early days of learning to manage my business, while completing my BAS I discovered that I’d accidentally spent
all of that quarter’s GST money that I’d been collected for the ATO. I’d had some unexpected expenses that quarter and in those days, I obviously had
limited book-keeping skills or this wouldn’t have happened. The  tax office sympathised when I rang them up to explain: ‘A lot of small businesses
have made the same mistake.’ They gave me extra time to pay them back their GST and I survived my first near-financial disaster.

This experience taught me to never accidentally spend the tax office’s GST again. I use a system whereby I always know exactly what is mine and what belongs
to the tax office. Thus I’m always able to pay my quarterly BAS bills on time.

So for those of you who own a GST-registered business and are still new to managing your own business: don’t ever forget that the GST you collect does
not belong to you.

When to lodge your tax return

Once your April-June BAS is lodged, you can start thinking about lodging your tax return for the previous financial year.

When to lodge your tax return depends on a few things.

If you are afraid you are going to be faced with a huge tax bill, you’re better off lodging your tax return early so you can plan how to pay it. On the
other hand, if you’re expecting a refund from the tax office then the sooner you receive the refund, the better.

As July is a quiet time of year for my business, straight after lodging my BAS I make an appointment with my accountant to get my tax return done as quickly
as I can; so that by the time August arrives and the busier period starts again, my tax return has been almost or fully completed and lodged, and I’m
freed up to focus on looking after my clients. 

Image: Licence purchased from Adobe Stock October 2023

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