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Learning the Lingo of a Small Business Bookkeeper

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When you start a small business, you probably are focused on the big picture. You’ll be thinking about products, customer service, your point of difference, customers, staff and profit projection. One of the last things on your mind is a bunch of acronyms, such as BAS, IAS, GST and PAYG. 

Wondering what they all mean, are they important, and how they apply to your business? 

Good news! These are all related and are something that we can take care of for you, so you have more time to focus on the business. 

Firstly, all of these (GST, PAYG BAS & IAS) are tied in together. Here is a very brief overview of how they all work. 

GST
GST is a Goods & Services Tax applicable for most goods and services sold in a business or enterprise with a GST turnover of over $75,000 ($150,000 for NFP organisations), or if you provide taxi-travel. It is a 10% tax applied at point of sale and in Australia, most businesses include this tax in the advertised price. There are some exemptions to products and services eligible for GST so make sure to double check if your sales are subject to GST. You must be registered for GST, issue tax invoices for taxable sales and obtain tax invoices for any business purchases. You, or your bookkeeper, can claim GST credits, account for GST throughout the year and lodge activity statements or annual returns to report sales and purchases and calculate whether you need to pay GST to the ATO or receive a refund. 

PAYG 
PAYG stands for Pay As You Go and refers to two different ways Australian businesses report and pay tax to the ATO, which are PAYG instalments and PAYG withholding. 

PAYG withholding refers to when an employer withholds the income tax from their employees’ wage payment and pays this tax directly to the ATO on the employee or contractor’s behalf. You generally will enter the PAYG instalment program automatically if the business owes income tax in a tax return. 

Next, a PAYG instalment is an additional payable item that you might become obligated to include once a tax return has been completed. This is an amount payable towards the business’ income tax. 

BAS 
BAS stands for Business Activity Statement. It is a summary of all your tax obligations as a small business, such as GST, PAYG, fringe benefits and any other taxes you are eligible for. Your BAS is usually due quarterly. This is your GST collected less GST paid plus any PAYG withheld along with claims for any Fuel Tax Credits and Wine Equalisation Tax.

IAS
An IAS is an Instalment Activity Statement. These are usually used to remit PAYG withholding or instalments where this isn’t included in the BAS. Businesses may be required to complete both quarterly BAS and monthly IAS. 

Instead of spending your time on these, why not engage a professional to take these tasks off of your to-do list? AK Professional offer bookkeeping services ranging from quarterly BAS lodgements through to full service monthly or weekly bookkeeping packages, so you know that this is taken care of by a qualified and trusted professional.