How to handle discrepancies and errors in your BAS?
Handling discrepancies and errors in a Business Activity Statement (BAS) can be stressful and time-consuming for any business. A Business Activity Statement (BAS) is a document that reports a business’s taxable sales, GST collected, and GST credits for a specific period of time, typically on a quarterly or monthly basis. The BAS is used by the Australian Taxation Office (ATO) to calculate and assess the GST and other taxes that a business is liable to pay. It is also used to claim GST credits for GST included in the price of goods or services that a business has purchased. BAS preparation plays an important role for business and the company must submit its BAS on time to avoid penalties and fines from the Australian Taxation Office (ATO).This blog post will discuss how a company can handle differences and errors in its BAS.
Steps to handle discrepancies and errors in their BAS
1. Identify the problem:
One of the first steps in fixing discrepancies and errors on a business accounting system is to identify what’s wrong. This could be identifying a missing invoice, calculating GST incorrectly, or any other issue that affects the accuracy of the BAS. Once you know what needs to be fixed, it’s important to take action as soon as possible so that your company doesn’t have an IRS tax bill due sooner than expected. By quickly identifying and remedying problems early on, you can avoid potential complications down the road
2. Gather supporting documentation:
Once you have identified the problem, gather all evidence related to it, such as invoices, receipts, and bank statements. This will be necessary in order to rectify the issue with the ATO and provide proof of corrective action. For example, if an invoice is missing from a business’s records, they must request a copy from their supplier. If incorrect data has been entered into a system or calculation was made incorrectly – this would fall under correcting figures on BAS – then gathering documentation will help ensure that corrections are accurate and supported by facts. Having everything needed to substantiate your claims helps build trust between you and the agency responsible for administering tax laws
3. Make corrections:
If an error is detected in the BAS, make necessary corrections using accounting software. This could include updates to GST calculations, changing total sales figures, or correcting other information on invoices. If incorrect or missing information is found on an invoice, contact the supplier for a corrected invoice. It’s important to correct any errors as soon as possible so that data in the BAS are accurate and up-to-date. Once all corrections have been made, it is essential to review the BAS again to ensure accuracy of changes and that numbers reflect reality accurately
4. Review and submit:
Make sure the revised BAS is accurate and complete before submitting it to the ATO. This step ensures that business complies with requirements set by the ATO, as well as ensuring correct tax has been paid. It is important to check deadlines for submission in order to avoid penalties or fines.
5. Keep records:
It is important to keep track of discrepancies and errors as well as the steps taken to correct them for a minimum of five years in order to support an ATO request. By doing so, businesses can demonstrate that corrections made to their BAS were actually accurate and meet requirements set by the government agency. It is also crucial to maintain records of all supporting documentation, such as invoices, receipts, and bank statements, in order show the ATO that corrective actions have been taken correctly and conform with company policies
6. Communicate with the ATO:
If you receive notification from the ATO regarding an error or discrepancy on your BAS, it is important to communicate with them and provide any necessary documentation. The ATO may request additional information, such as corrected invoices or supporting documents. It’s crucial to respond promptly in order to comply with their requests; otherwise, penalties may be imposed.
Why is it important to prevent discrepancies and errors?
It is important to note that some errors may need to be corrected and require additional tax payment. In such cases, working with a tax professional or accountant is important to ensure compliance with the ATO’s requirements. They can advise on the best course of action and help to minimize any additional tax liability.
Prevention is always better than cure. By ensuring that your bookkeeping is up-to-date, accurate, and reconciled, you can minimize the chances of discrepancies and errors in your BAS. Some of the steps a business can take to prevent discrepancies and mistakes include the following:
Maintain accurate and up-to-date records:
One of the most important steps a business can take to prevent discrepancies and errors is maintaining accurate and up-to-date records. This includes keeping track of all financial transactions, such as sales, purchases, payments, and other relevant transactions. This will ensure that the business has accurate information on which to base its GST calculations and will make it easier to identify and rectify any errors.
Use accounting software:
Accounting software can help to prevent discrepancies and errors by automating many of the tedious tasks involved in bookkeeping. This will ensure that all financial transactions are recorded accurately and consistently.
Reconcile accounts regularly:
One important step in preventing discrepancies and errors is reconciling accounts periodically. This process involves comparing bank statements to records stored within accounting software, in order to identify any discrepancies or mistakes. Doing so will help prevent larger problems from arising down the line.
Review and double-check the figures:
Before submitting your BAS to the ATO, it is important to ensure that all figures are accurate and complete. This includes verifying GST calculations, taxable sales totals, and any credits claimed. Doing so will help you identify any potential errors before they’re submitted to the Australian Taxation Office (ATO).
Work with a tax professional or accountant:
Working with a tax professional or accountant is another way to prevent discrepancies and errors. They can advise on the best practices for bookkeeping and compliance with the ATO’s requirements, as well as review and submit the BAS on behalf of the business.
Keep records of all supporting documents:
It is important to keep records of all supporting documents, such as invoices, receipts, and bank statements, for a minimum of five years. This will be necessary if the ATO requests further information or conducts an audit.
By taking these steps, a business can prevent discrepancies and errors in its BAS, ensure compliance with the ATO’s requirements and save time and money in the long run.
Conclusion
In summary, discrepancies and errors in a Business Activity Statement (BAS) can occur for a variety of reasons, but by identifying the problem, gathering supporting documentation, and making corrections can help you during BAS preparations. We provide BAS accounting services that will make you stress free.
Business owners should prepare a business activity statement (BAS) each quarter in order to report and pay their taxes with the Australian Taxation Office. This varies depending on your company’s registration status, as monthly BASs are common for businesses without formal registrations while quarterly BASs are more commonly used for companies with registered forms.
