Bookkeeping Requirements
Tools to help with BAS Preparation
With the ATO’s spotlight increasing on businesses, our Bookkeeping Team are doing everything possible to make ensure our Business Activity Statement (BAS) clients are complying with the ATO’s requirements.
This useful guide should explain what information we may need when preparing your BAS and give some useful tools to help you provide this information.
Sending in your Information
Uploading receipts
If you are not already uploading your receipts or supplier invoices to your bookkeeping software, this is the one thing you should regularly do! Not only will it help us to prepare your BAS, but the software will store copies of your receipts in the event of an audit or if you ever need to return a purchase. Don’t forget, you may have to keep some documents for up to 10 years!
You can upload any of your business documents including but not limited to bank statements, loan documents, invoices, receipts, insurance policies and rego papers at any time, rather than emailing or posting them at the end of the quarter. The sooner we receive your information the better.
It is important to remember that under Tax Law, if you are operating a business you are required to keep ALL records explaining declared income and expenses, whether it is a $5,000 sale or a $2.00 deduction.
How do I upload receipts and to my bookkeeping software?
Uploading or capturing receipts to your software is very easy. You just need to download software app, take photos through the app, and follow the prompts. Easy as that!!
Each software is slightly different to check out the links if you need help.
Bank Accounts
Bank Statements
Why are these required?
For accounts which have a bank feed with your bookkeeping software, every now and then, the software does not always get it right. Sometimes bank transactions are missed or even duplicated, throwing out the bank balances.
For both bank fed, and manually processed accounts, occasionally there may be misallocated transactions, incorrect dates, incorrect transfers, or other bookkeeping tasks performed incorrectly that are interfering with the bank account balances.
If the account is not bank fed, we are always going to need the bank statements to make sure all transactions have been included.
For these reasons, we ask for bank statements at the end of each BAS period to allow us to check to ensure this is working properly and perform the Bank Reconciliation.
It is much cheaper and easier to identify this at this time, then to identify and have to go back and fix it at year end and by performing this task regularly, it also ensures your figures are more accurate, complete and providing you better information for your decision making.
What you need to provide?
In an ideal world, for all accounts you will provide us with the full 3 months bank statements (bank, credit card, loans) which show all transactions with the balance after each transaction. This means if there are any errors, we have the opportunity to review the whole period without having to come back to you for more information.
Bank Fed Accounts
With that said, most of the time it is working properly, so just the statement for the quarter ending date (ie: 30 June, 30 September, 31 December, 31 March) for any bank fed accounts showing the account balance as at these dates is sufficient and if any issues, we can come back to you for further statements (but of course, this does slow us down and does add time to your bookkeeping).
Non-Bank Fed Accounts
If your account is not bank fed (due to not being linked or not being available to be linked for things such as some loans and credit cards), we will always require the full 3 months statements each quarter. While PDF’s can be used, having this in the format of CSV allows us to generally import it rather than process one transaction at a time which saves you a lot of time and money!
New Bank Accounts
If you open any new bank accounts, it is important that you let us know straight away so we can organise new bank feeds to your bookkeeping software. The longer you leave it, the more manual data we need to add to your software.
What if I can’t provide the full statements
If you are not able to provide a bank statement, a csv transaction listing with balances is just about as good. Otherwise, a snapshot of your bank showing balance at quarter end from your online banking can also be acceptable, though less ideal.
Unfortunately, if we cannot confirm your bank balances, we cannot ensure your accounts are complete and therefore can’t accurately complete your BAS. The sooner we get the bank statement, the sooner we can complete the first step of our BAS preparation. Remember, as a business, you are obligated to keep your records for up to 10 years for general transactions and all records for some transactions for up to 10 years after the disposal in some instances (capital assets, depreciation items etc) so bank statements are some of the easiest records you can get and are something you should be regularly filing.
If you don’t have online access – get it! Business life is much easier with it!!
Remember, a bank fed, reconciling account takes 5 minutes to check. A non-bank fed, non-reconciling account can take hours to process. Ensuring this process is running smoothly saves you time and money.
Bank Reconciliations
What is a bank reconciliation?
A bank reconciliation (or bank rec) is the process of ensuring that your accounting software and bank account match. Your accounts are considered reconciled if they provide the same balance on any given date.
It is an important process that helps ensure accurate records and keeps your accounts up to date, performing bank reconciliations will also give you a chance to monitor your accounts for fraud and other irregularities.
What you need to provide?
Ideally, if you are doing your businesses books, you should be processing bank recs for each bank account monthly.
If your bank account reconciles with your bank account and there are no outstanding transactions, you just need to let us know your bank accounts have been reconciled.
If your bank accounts do not reconcile we will need a full bank account for that period.
How do I process my own bank reconciliations?
Each bookkeeping software has slightly different process in completing a bank rec
Supplier and Subcontractors
Paying Suppliers & Subcontractors
We need to stress the importance of not paying a subcontractor or supplier before receiving an invoice. It is also crucial to check if a supplier is registered for GST before paying an invoice, as you may not be able to claim the GST credits if they are not registered.
We recommend, when a new supplier is being considered, or prior to any payment to a new supplier you check their GST registered status. You can easily do this through the Australian Government’s ABN lookup website - https://abr.business.gov.au/.
For an invoice to be valid in the eyes of the ATO, it must have the following:
- Business Name.
- ABN – If no ABN is supplied you must withhold 47% of the invoice amount.
- Invoice Date.
- Description of item or service sold.
- Total Amount.
- GST Amount (if any).
Taxable Payments Annual Report (TPAR)
What is TPAR?
TPAR is an annual reporting method used by the ATO's to cross referencing and data match payments made by businesses to subcontractors,
TPAR is another area that ATO have identified as an area of focus and penalties may apply if the yearly reports are not lodged on time. It is imperative that the figures are reported correctly.
If you are registered for TPAR, the ATO will require you to record the subcontractors name, ABN and contact information within your bookkeeping software. You will need to report this information to the ATO each financial year, together with the amounts you have paid the subcontractor (including any GST).
How do I prepare TPAR reports myself
What does the Bookkeeping Team need?
If you are not recording your suppliers contact information including their ABN in your booking software when you pay invoices, can you please send us their information as you pay them so we can keep your TPAR reports up to date through the financial year, rather than us having to ask for them and you having to chase them up just before the TPAR lodgement date.
Acquisition or Disposal of Assets
Why are these required?
If you purchase any new vehicles, plant and equipment or office equipment that is over $1,000, this is considered an asset. Purchases need to be allocated accordingly on the Balance Sheet in your bookkeeping software so it can be depreciated appropriately. While some different thresholds apply for tax deductibility, those are handled as part of end of year tax entries.
What you need to provide?
When you purchase any assets, can you please provide any invoices/contracts/receipts including any loan documents that relate to the purchase. The same applies when sell any of your assets, we will also need the receipts/contracts/sale documents.
For motor vehicle purchases we need the sale of contract from the car yard, or a receipt and transfer papers and stamp duty assessment if it is a private sale. If you purchase the vehicle using finance/loans, we will need the documents showing the loan and interest amounts so we can make sure you are able to claim the full costs of the purchase.
Vehicle Registrations and Insurance
Why does the Bookkeeping Team require these?
Did you know that most of the costs relating to vehicle registrations are not subject to GST, and the GST on insurance policies is not always applicable on the full policy amount.
Being able obtain a copy of the rego paper is important to us so we can ensure they vehicles are owned by the correct entity to confirm we are including any deductions in the correct area.
What you need to provide?
For us to be able to claim the correct GST amount we require a copy of each registration renewal (rego paper) and the Insurance policy invoice (potentially multiple pages), otherwise GST will not be claimed on any of the registration or insurance amount.
If you use premium funding to pay your insurance in instalments, we will require a copy of the premium funding loan agreement for the loan fees as well as the insurance policy for the GST amounts.
Payroll
Single Touch Payroll (STP)
A reminder that you are required to report your employee's tax and super information to the ATO on the day you physically pay the employee or prior to the payment day. It is important that the day you physically pay your employees is the same date you have recorded on their payslip. If you submit you STP on a date after you have paid your employees or a different amount, you are not complying with the STP requirements and may be contacted by the ATO. Your bookkeeping will automatically flag the STP to the ATO as non-compliant if it is reported late.
It is imperative that you physically pay your employees the exact amount on their payslips otherwise your payroll account will be out and will require us to reconcile the account which can be time consuming and costly.
Superannuation
The ATO have advised that they are targeting businesses who are not paying their superannuation on time and will be fining and charging interest on any late payments. Whilst your super is due quarterly (28th day of the following month the quarter end), you can pay your employees super more regularly. We can help you process your super payments monthly or quarterly if we are not already doing so. By paying smaller more regular payments, this can help with your business cash flow.
Late super is not tax deductible to the business and interest is accrued daily, so it can become a significant cost to the business when super is not paid on time.
Record Keeping Requirements
Capturing Receipts
If you are not already uploading your receipts or supplier invoices to your bookkeeping software, this is the one thing you should regularly do! Not only will it help us to prepare your BAS, but the software will store copies of your receipts in the event of an audit or if you ever need to return a purchase. Don’t forget, you may have to keep some documents for up to 10 years!
Capturing receipts to your software is very easy. You just need to download software app, take photos through the app, and follow the prompts. Easy as that!! You can Capture any of your business documents including but not limited to bank statements, loan documents, invoices, receipts, insurance policies and rego papers at any time, rather than emailing or posting them at the end of the quarter. The sooner we receive your information the better. For more information on how to use Capture please let us know and we are more than happy to help you with this.
It is important to remember that under Tax Law, if you are operating a business you are required to keep ALL records explaining declared income and expenses, whether it is a $5,000 sale or a $2.00 deduction.
Electronic Signatures
Can you please make sure you are promptly reviewing and signing the electronic documents we are sending you. These documents can sometime be time sensitive so it is important that you are signing the documents so we can get them lodged on time, as penalties may apply from the ATO for late lodgements.
How You Can Help Us
The most important part of you BAS is making sure you send in your relevant paperwork within the first 30 days following the BAS period. Unfortunately, if we don’t receive it within this timeframe, we cannot guarantee it will be prepared by the due date.