How to Prepare and Lodge Your Business Activity Statement (BAS)
For businesses operating in Aotearoa, understanding how to prepare and lodge your Business Activity Statement (BAS) is crucial. While the term BAS is more commonly associated with Australia, in the local context, businesses need to focus on GST returns and other compliance requirements. This guide will help you navigate the process effectively, ensuring compliance and optimising your financial management.
Understanding GST and Compliance Requirements
Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. Businesses with an annual turnover exceeding $60,000 are required to register for GST and file regular returns. These returns are akin to the BAS in Australia, serving as a summary of your business’s tax obligations.
Key Components of Preparing Your GST Return
1. Tracking Income and Expenses
Accurate record-keeping is essential for preparing your GST return. This involves tracking all income and expenses related to your business operations.
- Sales Records: Keep detailed records of all sales, including invoices and receipts. Ensure GST is correctly applied to taxable sales.
- Expense Records: Maintain records of all business expenses, ensuring GST is claimed on eligible purchases. This includes invoices from suppliers and receipts for business-related purchases.
2. Calculating GST Payable and Receivable
To prepare your GST return, calculate the GST payable on sales and the GST receivable on purchases.
- GST Payable: This is the GST collected on sales. It is calculated as 15% of the total taxable sales.
- GST Receivable: This is the GST paid on business expenses. It can be claimed back, reducing your overall GST liability.
3. Using Accounting Software
Utilising accounting software can streamline the process of preparing your GST return. Software like Xero and MYOB can automate calculations, generate reports, and ensure compliance with tax regulations.
- Automated Calculations: Accounting software can automatically calculate GST payable and receivable, reducing the risk of errors.
- Report Generation: Generate GST reports that summarise your tax obligations, making it easier to complete your GST return.
Lodging Your GST Return
1. Determine Your Filing Frequency
Your GST filing frequency depends on your annual turnover:
- Monthly: For businesses with a turnover exceeding $24 million.
- Two-Monthly: For most small to medium-sized businesses.
- Six-Monthly: For businesses with a turnover under $500,000.
2. Filing Your Return
GST returns can be lodged online through Inland Revenue’s myIR portal. Ensure all information is accurate and complete before submission.
- Online Lodgement: Log in to your myIR account and follow the prompts to file your GST return. Ensure all figures are correct and supported by your records.
- Payment: If you owe GST, ensure payment is made by the due date to avoid penalties and interest charges.
Tips for Effective GST Management
1. Regular Reconciliation
Regularly reconcile your accounts to ensure all transactions are accurately recorded. This helps identify discrepancies early and ensures your GST return is accurate.
- Monthly Reconciliation: Reconcile your accounts monthly to catch errors and maintain accurate records.
- Bank Reconciliation: Ensure your bank statements match your accounting records to verify all transactions are accounted for.
2. Stay Informed About Tax Changes
Tax regulations can change, affecting your GST obligations. Stay informed about any changes to ensure compliance and optimise your tax management.
- Inland Revenue Updates: Subscribe to updates from Inland Revenue to stay informed about changes to GST regulations and filing requirements.
3. Consult a Tax Professional
If you’re unsure about any aspect of preparing or lodging your GST return, consider consulting a tax professional. They can provide expert advice and ensure your business remains compliant.
- Professional Advice: A tax advisor can help you navigate complex tax regulations and optimise your GST management.
Preparing and lodging your GST return is an essential aspect of running a business. By maintaining accurate records, utilising accounting software, and staying informed about tax regulations, you can ensure compliance and optimise your financial management. Whether you manage your GST return independently or seek professional assistance, a proactive approach to GST management can enhance your business’s financial health and minimise the risk of non-compliance.