When you’re running a small business, engaging the right support to help you fulfil your tax obligations and keep your business in good shape is vital. But the terminology used can sometimes be confusing. Quite often you’ll hear the phrases: tax agent, BAS agent and accountant used interchangeably but the perception that they all do the same thing is wrong. There are important differences between the roles and it’s important to understand them so that you get the right support. So what is a BAS agent and what is the role of a tax agent and accountant and how do they differ?
What Is A BAS Agent?
So let’s start with a BAS agent. As we highlighted in a recent blog, BAS Requirements For Small Business, it stands for Business Activity Statement and it is used to report on and pay several different types of taxes including Goods and Services Tax (GST) and Pay As You Go (PAYG) instalments. A BAS agent is therefore authorised to prepare and lodge a BAS return on a business’ behalf and provide advice on your day to day business taxes, primarily limited to your GST and PAYG obligations.
Regulation for BAS agents was introduced in 2010 to ensure that contract bookkeepers, who had traditionally assisted small business owners with their GST and PAYG, were appropriately qualified to offer this support. Following the amendment of the Tax Agent Services Act, to become a Registered BAS Agent you need to have 1000 hours of experience in providing these services, have professional indemnity insurance and pass the ‘fit and proper person’ test. This set in place a distinction between the role of a bookkeeper who may be doing data entry and bank reconciliations for example and someone qualified to prepare your BAS statement. Many bookkeepers had to complete or update their knowledge, primarily around GST legislation, to continue offering this service.
While this isn’t quite as detailed as the requirements for a Registered Tax Agent, it means that those completing your BAS have a level of experience specific to these needs and are legally accountable to the Tax Practitioners Board. A good BAS agent can prove invaluable to your business as they can make it so much easier for your accountant to offer sound advice based on an accurate picture of your business financials.
What Is A Tax Agent?
The role of a tax agent is a little different to this. Tax agents are more specialised and qualified in tax law. Providing they are registered with the Tax Practitioners Board they are licensed to prepare and advise on a broader range of tax issues including but not limited to an income tax return and they are suited to working with growing businesses. When it comes to doing your business taxes, they will review all your annual income and expenses and ensure that you get all the relevant tax deductions available to you. Keeping your business tax liability at a reasonable level is critical when you’re running a small business. A good tax agent is therefore essential as they take away the pressure of needing to understand the ins and outs of your tax liability, what you can claim as expenses and deductions and what you can’t.
So how do these roles differ from that of an accountant?
What Is The Role Of An Accountant?
An accountant is the heavyweight when it comes to managing and growing your business. A good accountant will perform a number of critical roles for a business including (but not limited to) ensuring that you are operating under the right business structure, helping you with strategic planning, financial management, tax planning, wealth and risk management. A good accountant will be your trusted business advisor, keeping you on track and explaining the implications of your key business decisions to maximise for business and financial success.
So whereas a BAS agent and a tax agent are both involved in dealing with lodgment and compliance, the role of the accountant is to help you take a longer-term view of your business and to help set you up to achieve your business goals. While an accountant should effectively be able to perform both of the above roles, their level of expertise to advise on a much broader range of issues means that their hourly rate is typically higher. This means you are better off engaging the right professional for the right job. Each professional performs a unique but important role, depending on the needs of your business and working with all of them at the right time ensures you are covered in terms of both compliance and business growth.
And what if you can find a bookkeeper who is also a BAS agent and Tax agent and who works directly with professional accountants and business advisors? This is the ideal scenario for a business owner as you can essentially get it all done in one place! And that’s exactly how we’re set up at Numera! Having your bookkeepers and accountants working hand in hand is the best solution for a business owner as you can be sure everyone is working on the same page, seamlessly.
If your business needs support with BAS preparation and lodgement, don’t hesitate to give us a call on 07 3002 4880. The team at Numera are both Registered BAS agents and Registered Tax agents and we have experience with all the major accounting software packages, including Xero BAS, MYOB, Quickbooks and Reckon. With significant experience across a wide range of industry sectors, we are able to support you with all the standard bookkeeping services as well as advising on the most appropriate accounting method for your business.
Whether you’re an established business or you’re just setting up your first small business, developing good bookkeeping habits will stand you in good stead when it comes to understanding how your business is performing. Keeping track of your income and business expenses, regular invoicing and management of your payroll are all part of the job. So what processes should small business owners put in place to keep things in good order. Here are 5 top bookkeeping tips for small businesses:
1. Choose The Right Accounting and Bookkeeping Software
Investing in an accounting software program can make a world of difference for small businesses trying to manage their bookkeeping. It’s worth having a good look at the various options available. Among the most popular packages are MYOB, Xero, Reckon and Quickbooks but there are many more out there.
Many small business owners now choose cloud or online accounting packages as they enable you to work on your data from anywhere that you have internet access. It also means that your accountant and bookkeeper can work on files remotely and simultaneously.
It’s also worth noting that some accounting and bookkeeping firms specialise in one or two packages. So if you are looking for advice on which accounting software will best suit your needs, it’s best to look for advisors who work with all packages. The team at Numera have experience with all the major packages and can offer independent bookkeeping tips and advice about which software will best suit your needs.
And it’s worth remembering that you can claim the monthly software subscription costs as a business expense.
2. Keep Business And Personal Banking Separate
If you are a new small business owner, one of the top bookkeeping tips is to set up business bank accounts straight away. Make sure that all business transactions are processed through these accounts so that you can easily see day to day expenses and income.
Once your business is up and running it can be much harder to untangle your business finances and get a clear view of your financial data and cash flow in your bookkeeping and accounts.
If you or your bookkeeper are spending time processing personal transactions it’s a waste of time and resources. If your personal finances are mixed up in the business financial data, they will have to be entered into the bookkeeping software and coded to drawings. If you are paying a bookkeeper to do this, it can add unnecessary costs to your bill.
It’s also a good idea to set up a business savings account to set aside money from your business earnings to pay your tax obligations. You may also want to consider applying for a business credit card.
3. Understand Your Tax Obligations
Taking some time to understand your tax obligations may not sound that exciting but it’s definitely one of our top bookkeeping tips for small businesses. You would be amazed at how many small business owners, many of whom have been in business for a long time, don’t fully understand their business tax requirements and how they differ to individual income tax.
Make time to understand the basics such as when your small business is required to register for GST and what your BAS reporting requirements are. That way you can feel confident that you staying compliant with ATO rules and guidelines.
And it’s not only about understanding how much tax you may be liable for. Keeping accurate records of your spending and business expenses can also ensure that you get any tax deductions that you may be entitled to.
4. Learn The Most Valuable Bookkeeping Reports
Most good bookkeeping and accounting software packages allow you to easily generate a wide range of reports to help you understand how your business is performing. However, they are only useful if you actually understand what they’re telling you.
One of our top bookkeeping tips for small businesses is to invest some time in learning which bookkeeping reports are the most valuable for your business.
The accounts receivable report and balance sheet are among the most important accounting reports for your small business. Start by spending some time getting familiar with these and build your financial literacy from there.
5. Know When To Outsource To Professional Bookkeepers
As a small business owner, you have a million and one things to do every day. Making enough time to stay on top of your bookkeeping might be just a step too far, particularly as your business starts to grow. Knowing when to engage the services of a professional is another of our top bookkeeping tips for small businesses.
A good bookkeeper can help your business in so many ways. Keeping accurate financial records will make life much easier for your business when it comes to remaining compliant with ATO requirements, such as BAS reporting, as well as helping you get meaningful advice from your accountant.
At Numera Bookkeeping Services, we provide more than most traditional bookkeepers. With significant experience across a wide range of industry sectors, we are able to support you with all the standard bookkeeping services as well as BAS preparation and lodgment, accounting software support for packages including Xero, MYOB, Quickbooks and Reckon as well as payroll outsourcing and accounting support services.
Work with the Brisbane bookkeepers you can trust. Give us a call today on 07 3002 4880 or email firstname.lastname@example.org to find out how we can help your business.
We often get asked about the BAS requirements for small business and in particular which businesses are eligible for Simpler BAS reporting. If you are a small business owner and you are registered for GST, you will be aware that you are required to lodge a Business Activity Statement (BAS) every month or quarter. As part of the Federal Government’s initiatives to reduce red tape for SME’s, they introduced simpler BAS reporting in 2017. If you’ve only recently started your business you may not have realised that prior to July 2017 the reporting requirements for businesses with a turnover of less than $10 million, was a whole lot more complicated than it currently is. So just what are the BAS requirements for small business and what information do you have to report? Let’s start with the basics…
What Is A BAS?
BAS stands Business Activity Statement and is a statement you submit to the Australian Taxation Office (ATO) to summarise how much revenue your business has generated along with some key expenditure figures. It is used to report on and pay several different types of taxes including Goods and Services Tax (GST), Pay As You Go (PAYG) instalments, PAYG withholding tax and any other tax obligations or credits that you have as a business. The ATO uses the information you submit in your BAS to work out your GST bill or refund. So effectively your BAS determines how your tax liability is assessed.
Who Has To Lodge A Business Activity Statement?
If you’re registered for GST then you will have to complete a Business Activity Statement. GST registration is required if your business has a projected annual turnover of more than $75,000. So while you may not need to be registered for GST as soon as you start up your business, if you are likely to reach this threshold, it’s probably wise to register for GST. You have 21 days to register once your business’ gross income (excluding GST of 10%) exceeds the $75,000 limit.
BAS Requirements For Small Business
If you are registered for GST and your turnover is less than $10 million per year, you’re now eligible to report your BAS using the Simpler BAS reporting format. However, if your turnover is more than $10 million you will have to complete the more detailed BAS statement.
With the Simpler BAS, you are only required to report:
- G1 Total Sales
- 1A GST on sales
- 1B GST on purchases
The following information is not required:
- G2 – Export sales
- G3 – GST-free sales
- G10 – Capital purchases
- G11 – Non-capital purchases
Your BAS must be lodged by the 21 st of each month if you pay monthly, or the 28th of October, February, April, and July if you pay quarterly. Most GST-registered businesses complete a Business Activity Statement every quarter but you will need to ask your bookkeeper to check with the ATO whether you need to do it more frequently.
It’s important to remember that you need to submit a BAS even if you did no business during that reporting period and if you are late lodging you might be charged a penalty by the ATO. You can lodge your BAS online, by post, by phone, or through your bookkeeper or accountant.
The simpler BAS requirements certainly help small businesses in terms of reducing the paperwork. However, it doesn’t change the requirement for good bookkeeping and record-keeping. Despite not having to report on as much data, you will still need this information for other reporting. Maintaining accurate, detailed records will help your accountant support you to grow your business, reduce your tax obligations and increase profitability.
As a registered BAS Agent, the team at Numera Bookkeeping help businesses to maintain detailed records and develop efficient processes to give your business the best chance of minimising their tax obligations and growing your profits. Our Brisbane bookkeepers help you to put in place back-end processes and monthly reporting that put you in the best possible position for an accountant or business advisor to get an accurate view of the business and be able to advise you without having to second guess your figures. Using a bookkeeper also means that you stay up to date with any changes in ATO reporting rules and expectations.
If your business needs support with BAS preparation and lodgement, don’t hesitate to give us a call on 07 3002 4880. The team at Numera has experience with all the major accounting software packages, including Xero BAS, MYOB, Quickbooks and Reckon. With significant experience across a wide range of industry sectors, we are able to support you with all the standard bookkeeping services as well as advising on the most appropriate accounting method for your business.
The end of the financial year (EOFY) can be a really busy time for small business owners. As well as managing the day to day running of your business, you may also be thinking about year-end bookkeeping and accounting tasks, how to ensure that your financial records are in order and how to minimise your tax liability before June 30. To help you prepare we’ve put together an EOFY bookkeeping information checklist for small business.
EOFY Bookkeeping Information Checklist
- Ensure that your Business Activity Statement (BAS) lodgements are accurate and up to date for the year to date.
- Pay your superannuation guarantee (SG) contributions by July 28 and ensure that your contributions are accurate and up to date for the year to date. If you have prior quarters outstanding, it’s best to contact your bookkeeper or accountant for advice as soon as possible.
- Reconcile your payroll and superannuation accounts.
- Reconcile your GST accounts.
- Prepare and lodge your Q4 BAS by July 28.
- Ensure your GST and PAYG withholding accounts are reconciled to the June BAS.
- If you are not yet reporting to the ATO via STP, prepare PAYG Employee Payment Summaries after the last payroll of the year is processed and ensure they are given to employees by 14th July. You will also need to lodge your Annual 2019 PAYG Payment Summary with the ATO by 14 August 2019 to avoid penalties.
- If you are already reporting to the ATO via STP, you are exempt from providing payment summaries to your employees and from lodging a PAYG payment summary annual report for the amounts you’ve reported through STP as long as you undertake the finalisation declaration by 31 July 2019.
- If your business carries stock complete a stocktake of inventory by 30 June.
- Review your Aged Creditors and Aged Debtors and write off any bad debts.
- Check any amounts held in suspense accounts.
- Collate your receipts.
- Update your asset register if you have purchased new assets.
- Reconcile all your accounts to 30 June including all business bank accounts, petty cash accounts and any other accounts you may have in your accounting software.
- Make sure you are ready for Single Touch Payroll (STP) and the July 1 deadline for all business entities, if you are not already reporting using STP. Again, your bookkeeper or accountant can assist you with getting set up so contact them immediately to avoid falling behind.
Aside from ensuring your financial records and accounts are all up to date, there are also a couple of other areas that you may want to consider before the all-important June 30 deadline to potentially reduce your tax liability:
- Pre-purchase insurance, memberships or subscriptions for an immediate deduction.
Remember that the threshold for instant asset write-off now stands at $30,000. If you purchase an asset (new or second hand) costing less than $30,000 and it is used or installed ready for use from 3 April 2019, you can claim a deduction for the business portion. Different thresholds apply for assets purchased before that date:
- from 29 January 2019 until before 7.30pm AEDT on 2 April 2019, the threshold is $25,000
- before 29 January 2019, the threshold is $20,000.
There’s a lot to think about as a small business owner. Remember that a bookkeeper can help your business in so many ways. If you require any support with BAS preparation and lodgment and keeping your payroll in order, Numera Bookkeeping Services have a team of experienced bookkeepers available to help. Work with the Brisbane bookkeepers you can trust. Give us a call today on 07 3002 4880 or email email@example.com to find out how we can help your business.
You may have heard that there are some important changes about to happen in how and when businesses will report wages/salary, superannuation and PAYG information to the Australian Tax Office (ATO). Single Touch Payroll will be implemented for all employers from July 1 2019. But what is Single Touch Payroll (STP) and how will it affect your small business payroll reporting requirements?
So What Is Single Touch Payroll?
Businesses used to report their wage activity once a year but with STP all businesses will need to submit a digital report to the Australian Taxation Office (ATO) every time they run a payroll. So instead of finalising your payroll records and reporting at the end of the financial year, from July 2019 all businesses will need to report every payday.
How Does This Affect Payroll Reporting Requirements?
One of the other stipulations of the STP regulations is that business owners will need to undertake STP reporting online using compliant payroll, accounting or business management software. You will need to report in a specific format called Standard Business Reporting (SBR). If you are already using STP compliant accounting software such as Xero, MYOB, Quickbooks or Reckon, then the process is quite simple once it has been setup. However, if you have previously used paper forms to report your payroll activity then you will need to change software or find a service provider who can do this for you. Contact our accounting software support team to discuss the options available.
If you employ four people or less there are a number of low cost / no cost standalone STP software options that keeps costs to a minimum i.e. under $10 / month.
So you will no longer need to produce:
- a payment summary annual report for the ATO showing how much the business paid in salary / wages, PAYG withholding and superannuation contributions
- a payment summary for each employee showing the same
You will just need to advise the ATO when you have run your last payroll of the year. Employees wishing to see the details that would have been on their payment summary, can log into myGov to obtain the information.
The Options For Switching To Single Touch Payroll
In terms of small business accounting compliance requirements for the new STP regulations, you will need to be ready to submit ATO-compliant reports every time you run your payroll. What this means is:
- If you are already using online payroll software, this should be capable of managing the task. Just double-check it produces ATO-compliant reports and get help from your bookkeepers to ensure it is set up properly.
- If you are using desktop payroll software, you’ll need to find a service that can upload your payroll reports, convert them into the ATO’s required format and submit them on your behalf.
- If you are using spreadsheets or submitting paper reports you will need to have that data converted into a compliant digital report and submitted on your behalf.
While there is an amount of short term pain in getting set up to run with the new regulations and achieving Single Touch Payroll compliance, in the long run, the automation and reduction in end of year reporting will make compliance less difficult. Now is the perfect time to consider outsourcing the payroll process to further reduce the time burden on your business.
Numera’s Brisbane Bookkeeping Services include Payroll Outsourcing and can help with all your payroll processing requirements. Our accounting software support team can also help you decide which software you need, and set it up to ensure single touch payroll compliance and managing your payroll on a monthly basis.
Work with the Brisbane bookkeepers you can trust. Give us a call today on 07 3002 4880 or email firstname.lastname@example.org to find out how we can help your business.