A crucial part of the financial end of any business is its business activity statements (BAS). When an e-commerce accountant handles them, they're sure to be done right. That's something a skilled professional needs to manage because it dictates the goods and services tax (GST) payment you will make. Read on to learn more about BAS mistakes and GST payment reduction.
Typical BAS Mistakes to Watch Out For
MISTAKE: Having GST Credits That Are Unclaimed
When spending for goods and services as a business expense, the GST paid can be claimed as GST credit on BAS. Sometimes, it's also known as input tax credit. The amount of GST a business should pay on sales of services and goods is lowered through GST credits.
MISTAKE: Paying GST with a Method That Isn’t Cash
Certain small businesses have their turnovers aggregated (turnover of business proper and turnover of entities that are closely associated) under $10 million. In those cases, there are two GST payment methods available: cash and accrual, or non-cash.
Cash basis GST payments are great for cash flow. It means that GST does not get paid before it's necessary to do so.
Paying on an accrual or non-cash basis will mean that the GST being paid is during the BAS period when customers are invoiced. While that may seem like more time to pay, it might not be within the same BAS period as payments from customers come in. That's particularly true for payment terms that are within 30, 60, or 90 days.
Paying for GST on a cash basis, on the other hand, allows payments to be made within the same BAS period as customer payments coming in.
MISTAKE: GST-Free Sales Being Included in the Accounting
There are certain services and goods that are exempted from GST. This includes certain health and medical services, as well as food. If you are running a business that sells products or offers services that are exempted from GST, no GST is needed from sales.
Facts You Should Know About BAS
1. Bad debt from a customer's non-payment can be written off as a tax-deductible expense with certain provisions:
Debt is counted as business income within the previous or current financial year.
Debt has been formally written off (by you or your ecommerce accountant) in accounting records before the financial year ends.
No success after genuinely trying to retrieve the owed amount.
2. BAS mistakes can be corrected through the next BAS submission or a statement revision on the original.
3. Returns of goods sold and reported on BAS should be reflected in the next BAS through adjustment.
Business activity statements (BAS) play a crucial role in the finances of a business. That's largely since they're the basis for paying the correct goods and services tax (GST). However, there are still many typical mistakes people make when it comes to their BAS, such as not paying for GST on a cash basis, having GST credits that are unclaimed and GST-free sales being made part of the accounting.
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