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Don't Lose Your Money To The ATO For BAS Errors

Author: Harry Hoang | Tailored Accounts CEO

Our clients often asked us why we spend two to three hours preparing one set of business activity statements (BAS) every time when we can easily export BAS from MYOB, believing that we should not be ‘double-handling’ as this wasn’t cost-effective. 

Since I started Tailored Accounts in 2009, I have always insisted on ‘double-handling’ because we come across errors each time we review our clients’ BASs. Most of the time, the mistakes in their lodgement were in favour of the Australian Taxation Office (ATO).

Correspondingly, in my response to the clients, I explained that we did not want them to lose their hard-earned money over BAS errors.

Let me share with you the detailed steps and measures that we take to prepare our clients’ BASs:

1. Check to ensure all bank, credit card, overdraft, loan, and petty cash accounts are reconciled with the original bank statements at the end of every BAS quarter. 

2. Print the monthly profit and loss (P&L) report for the BAS quarter and check for abnormalities in income or expenditure in the three months. Also, compare this quarter’s P&L report with the P&L report from the previous quarter in the same financial year, as well as the P&L report from the same quarter but the previous financial year to detect any unexpected transactions.

3. Print out the balance sheet at the end of the BAS quarter. Note the balances for the wage and salary, payroll, payable, Super expense and payable, and PAYG and GST accounts, and investigate any abnormalities. 

4. Proceed to perform other reconciliations by cross-checking payslips and accounts payable, accounts receivable, and payroll in the general ledger. 

5. Generate the general ledger exceptions report to review any abnormal transactions. This report will indicate any differences in the GST codes for the same types of purchases or sales by comparing the current transactions with previous transactions.

6. Review capital purchase transactions in the quarter, paying special attention to transactions related to equipment finance, lease, and rental. 

7. If you are using Xero, you should not lodge your BAS until you have generated the GST reconciliation report. On the last day of the BAS quarter, ensure that your GST payable is reconciled with the GST amount in the balance sheet before you lodge your BAS. 

8. Print the BAS and compare it with last quarter’s BAS and the BAS of the same quarter in the previous year, and ensure that your GST, PAYG, sales, and purchases are consistent across all three BASs.

9. Lodge and pay your BAS on time to avoid penalties, and record the BAS payment in your accounting system. If you encounter issues when completing your BAS, why not drop by the nearest Tailored Accounts office in Canberra, Goulburn, Sydney, or Brisbane?

Other than bringing our expertise closer to you as we expand beyond Canberra, Tailored Accounts gives you peace of mind by managing your business’ finances.

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End of Financial Year Preparation: Magical touch on your books!

With end of financial year (EOFY) fast approaching, the Tailored Accounts team is counting down to the last day of the financial year! Offices of accountants and bookkeepers will be filled with the hustle and bustle of time-critical challenges. You may wonder why EOFY often becomes such a hectic time for us. I hope this article can shed light on the inner processes of EOFY preparation.

Having worked in the accounting industry for more than a decade, I consider EOFY preparation as a chance to place extra effort to ensure accurate, up-to-date numbers as well as presentable reporting. These outputs are the results of, what I call, a magical touch on your books.

The following list articulates the main examples of magical touches that we exert to ensure your books are in the best order:

1.      The year-end payroll

During the financial year, we process 12 – 52 payrolls for our clients subject to their pay cycles. At the end of each month or quarter, our team reported the payroll information to Australian Taxation Office (ATO), including Gross Wage and Tax details. In addition to the accurate reports regularly lodged to the ATO, payroll reconciliations at year-end takes care and attention to ensure all requirements are met. Here are the core tasks that our team has been undertaking in the process of EOFY preparation:

  • Final super payment runs must be done before 25th June each year to ensure the last super payment is eligible for a tax deduction in the current financial year. Final salary sacrifice payment runs must happen on or before the same date to ensure all salary sacrifice arrangements are captured in the current year’s payment summary for employees. These particular tasks will require a few extra hours of work during the EOFY period.
  • Payment summaries are to be communicated to employees via email/post before 14th July. We ought to undertake a full year payroll reconciliation to ensure the accuracy of the information in payslips, Business Activity Statements (BAS), and payment summaries. This significant task requires half a day at a minimum, depending on the number of employees and complexity of the payroll structure.
  • Payment summary reports must be submitted to the ATO before 14th August in the following year. The task usually takes an hour to complete. To illustrate, 300 clients at Tailored Accounts are interpreted into a budget of minimum 300 hours for all payment summaries with no mistakes allowed.

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