Small business bookkeeping explained – Part 1
We have a lot of clients who come to us after having fought, and lost, the battle to do their own small business bookkeeping. Some have gotten their books into such a tangle that they’ve put off coming to us because they feel so ashamed.
It’s a vicious circle and too many small business owners are needlessly putting themselves through it.
It can be daunting when your books are in a mess and you have no idea how to sort it out. It can be downright scary knowing that you may have incurred fees and fines for not meeting your tax obligations. It can also spell the end for your business if you don’t know what’s going on with your bottom line.
So in the spirit of supporting small business we thought we’d share some of our knowledge and try to detangle some of the information for you. If you’re planning to start a small business, or you’ve just started one, and you’re unsure about the bookkeeping side of things, then this is for you.
Over the next few weeks we’ll be explaining, in plain English, the most important aspects of small business bookkeeping. Of course you can save yourself the time and hassle and just have us do it all for you but if you’re not quite there yet then this info will be a big help.
The dread of BAS time can be a recurring nightmare for some small business owners.
Dreading deadlines is not how you want to be feeling in your business. There’s already so many demands on your time and you’re already feeling stretched. Not to mention the penalties if you do miss your BAS and PAYG lodgement deadlines can be painful.
Here’s a breakdown of BAS, what it is, and how it works
The business activity statement (BAS) is a form that all businesses must lodge with the Australian Taxation Office (ATO) to report their taxation obligations. These include pay as you go withholding (PAYGW), pay you go instalments (PAYGI), and fringe benefits tax (FBT).
When your business is registered for Good and Services Tax (GST) it essentially becomes a tax collector for the government. The GST you collect on your sales, less the GST you pay on your purchases, is then remitted to the government via the BAS.
How often this needs to be completed will depend on your business reporting obligations.
If you are not required by law to register your business for GST you only need to complete and lodge BAS on an annual basis.
If you are required by law to be registered for GST you will need to complete and lodge BAS on a quarterly basis. If your business earns Gross Sales of $75,000 or more you will be required to register for GST.
If you import goods and you are required by law to be registered for GST you will need to complete and lodge BAS on a monthly basis.
Finally, if you assume responsibility for doing and lodging the BAS yourself, the liability for any errors and short payment is on your shoulders. Seeking professional guidance on this can make all the difference.
If you need help and advice on BAS or any other bookkeeping matters give us a call or email us here.
Look out for the next post where we’ll be explaining PAYG: Pay As You Go withholding and installments.