Putting funds away for BAS, Tax and Super
As a sole trader or small business, if possible, it is best to put money aside throughout the year to help pay for your tax. Make sure you regularly set money aside, or are aware of future tax payments, so you are able to meet your tax responsibilities. A set routine for putting aside tax as you go is essential to avoid any tax-time panic.
A business activity statement (BAS) is issued by the ATO on a monthly or quarterly basis to businesses that have registered for an Australian Business Number (ABN) and GST. You’ll generally be liable to pay a penalty if you don’t lodge your BAS or pay your tax on time. You can make payments to the ATO in advance i.e. before your tax is due, as a way of putting away savings for your tax debts before you’re tempted to spend them. Alternatively, you can set up a separate bank account to house money for BAS or GST.
The easiest way to put funds aside for GST is to work on a ‘rule of thumb’ percentage, which you should be able to determine from your BAS statements, and then put this aside on a monthly basis. Similarly to GST, the best approach for putting aside income tax is to work out a percentage rate that’s appropriate for your circumstances, and then put aside that percentage of your income each month.
If you have employees, then you also need to set aside money for their PAYG withholding and superannuation. You can use the ATO tax tables to work out how much to withhold from each pay, alternatively, accounting software such as Xero and Quickbooks will work out PAYG responsibilities for you. Superannuation is currently 9.5% of a salary or wage. If you pay your employees a salary, then set this up as an automatic scheduled payment to make life easier. The easier you make it on yourself, the better your chances of success.
Getting expert advice will ensure you meet all of your tax and super obligations and could save you money. As a registered Tax agent Sciacca’s can help you with your tax and BAS statements advising you on how much money you need to put aside and how to effectively manage your business taxes. Call John Sciacca today for a no-obligation consultation on 07 3357 5553 or email firstname.lastname@example.org