Four mistakes startups make with their BAS

Don’t get penalised for something silly like not accurately recording your income. As a startup, you are responsible for ensuring you meet all your business GST obligations.*

Here are the top four mistakes startups make, and how to avoid them, according to Tony Greco, General Manager, Technical Policy, Institute of Public Accountants.

1. Not realising you’re required to lodge a BAS statement

Ask yourself whether you’re going to be profitable straight away, making more than $75,000 per annum in your first year. If you answer yes, then you are required to register for GST and lodge your BAS statement.

“Tax compliance is part of doing business and should be just as high on your priority list as running your business and becoming profitable,” says Greco.

You may be too busy running the day-to-day, so if you don’t want to do it yourself, make the decision to partner up with someone who can pay attention to that aspect of the business, rather than not think about it at all, explains Greco.

However, make sure you need to lodge a BAS statement before spending too much time on it.

“Some startups may take quite a long time to get funding and they’re not doing much invoicing. If you’re not going to reach [$75,000] in the year ahead, you don’t need to register for GST,” says Greco.

2. Missing the deadline

If you’re registered for GST you need to lodge a BAS for each agreed reporting period, either monthly or quarterly. The due dates for monthly reporting are typically the 21st of the following month. Quarterly lodgement dates are on the 28th of February, April, July and October.

If you don’t submit on time, you’ll receive a failure to lodge penalty of $180.

3. Incorrectly claiming GST on all expenses

A common mistake is claiming GST on things where there was no GST in the first place, says Greco.

Don’t assume everything has GST – bank charges, paying wages or sometimes registration on motor vehicles do not have GST, he says.

4. Inaccurate reporting due to human error

If your accounting systems haven’t been set up properly, coding errors can creep in where inappropriate expenses are going into the wrong accounts.

“It’s recommended you have an accountant or bookkeeper if you’re not comfortable with coding, understanding how GST works or deducting tax from pay packets. Leave it to someone who can do that administration and compliance for you.”

If you want to prepare an error-free BAS:

• Understand your obligations and deadlines
• Get professional help or look at software that someone can oversee
• Have good record-keeping practices to get the compliance bedded down simply so you can focus on running your business.

Written by Thea Christie

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