Small business owners usually start a new venture because they’re passionate about their craft, their trade or their professional skills. But with the great joy of owning your own business comes great responsibility, particularly around tax time.
Fortunately, the Australian Taxation Office (ATO) is set to implement a welcome change to its GST reporting structure on 1 July 2017. The new ‘Simpler BAS’ is great news for small businesses, simplifying what you need to report on for your Business Activity Statement (BAS). Let’s look at what’s set to change.
Small business BAS 101
If your business is registered for GST, you need to lodge your BAS. This report outlines the business’s sales during that period; the GST you have charged and collected from your customers; the GST you have paid on purchases; and other tax records like fringe benefits tax (FBT), pay as you go (PAYG) instalments, PAYG withholding tax and fuel tax credits. You can choose to collate this information yourself or employ an accountant to do it on your behalf.
Welcome Simpler BAS
The ATO has introduced Simpler BAS in response to feedback from small business owners and tax professionals that its GST reporting requirements are cumbersome and time-consuming.
So, from 1 July 2017, you will only need to report three items instead of seven. These are:
- GST collected
- GST entitled to be claimed
- Total sales
- You will no longer need to report:
- Export sales
- Other GST-free sales
- Capital purchases
- Non-capital purchases
Small business benefits
Fewer items to report on your BAS means less time spent fiddling with figures and more time to concentrate on your business, especially if you do your own bookkeeping. It’s great news for existing businesses, but also for entrepreneurs, as accounting set-up will take less time.
There is a common fear among small business owners of not satisfying the ATO’s tax compliance rules and being penalised. By reducing the mandatory boxes to be ticked each financial quarter by more than half, Simpler BAS is likely to reduce your stress levels when it comes to tax time.
If you outsource your bookkeeping, it’s even possible to save money, with less time needed for your bookkeeper to prepare your BAS each quarter.
What the changes mean for accountants
Fewer levels of reporting on a BAS means accountants can spend less time double- and triple-checking data and tax compliance before lodgement.
Thus, their services can be streamlined, instead allocating that time to help their small business partners grow. Simpler BAS will give accountants more time to guide their clients on how to minimise tax, maximise future growth through financial goal setting and recognise and take advantage of sound business opportunities.
Warning: Ensure you are compliant
Managing your small business’s tax and reporting has never been easier thanks to cloud-based accounting software, like QuickBooks Online. The old shoebox full of receipts has been tossed out, and communication with accountants made simple.
These simplified GST reporting obligations should be a dream come true for small business owners, but if you use an accounting system and the software isn’t prepared for the change, it could be a nightmare. You could even find you are not complying with the regulations.
Over the past year, the ATO has worked with software companies like Intuit to trial changes to their accounting platform, making sure it’s ready to implement Simpler BAS reporting functionality. (Read more about our small business accounting software here.)
It’s important to stay up to date with any changes to tax regulation. Before the new BAS rules come into play on 1 July, make sure you check with your provider that the software is fully compliant and ready to roll out Simpler BAS.
The end of financial is just around the corner, so start thinking about how to simplify your reporting at tax time now.
To use QuickBooks Online and get ready for tax time, visit here.