S & H Tax Accountants

Category: Tax

Differences between BAS and IAS
Running a business comes with a lot of financial responsibilities, and as a business owner, you’ve probably come across terms like BAS (Business Activity Statement) and IAS (Instalment Activity Statement). While they may sound similar, understanding the differences between these two statements is crucial for maintaining compliance and staying on top of your tax obligations. In this article, we’ll break down the nuances of both BAS and IAS and provide actionable advice to help you navigate through them with ease.

So what is BAS?

Let’s start by demystifying the BAS, shall we? The Business Activity Statement is a form that all Australian businesses use to report and pay their tax liabilities. It’s a summary of all the business taxes you have paid or will pay to the government in a specific period. It can include the following payments, if they apply to your business:
- GST
- Pay as you go (PAYG) income tax instalment
- Pay as you go (PAYG) tax withheld
- Fringe Benefits Tax (FBT) instalment
- Luxury Car Tax (LCT
- Wine Equalisation Tax (WET)
- Fuel tax credits
If your business is registered for GST, you’ll need to lodge a BAS. If your business turnover is less than $20 million, you can choose to lodge monthly or quarterly. If your turnover is more than $20 million, you must report monthly.

BAS statements are issued by the ATO either monthly or quarterly. A form needs to be lodged with the ATO and payment made to the ATO by the due dates as follows.

For monthly BAS: within 21 days of the end of the month on the form
For quarterly BAS: as above for IAS

Understanding IAS

Now, let’s look at the Instalment Activity Statement (IAS). While the IAS may seem similar to the BAS, there are some key differences you should be aware of.

The IAS is the simpler of the two forms and is only issued quarterly. It’s without GST and some other taxes. Businesses that are not registered for GST, and individuals who are required to pay Pay as You Go (PAYG) instalments or PAYG withholding (such as self-funded retirees), use this form to pay PAYG. The ATO will tell you what your GST instalment amount is and if applicable, what your PAYG instalment amount is.

The instalment amounts will be payable as follows:

IAS Key Dates
- July – September Quarter is due 28 October
- October – December Quarter is due 28 February
- January – March Quarter is due 28 April
- April – June Quarter is due 28 July
How to Navigate BAS and IAS

Understanding the differences between BAS and IAS is one thing, but knowing how to tackle them effectively is another. Here are some actionable tips to help you navigate through these statements with confidence:
- Stay Organised: Maintain accurate records of your business’s financial transactions, including sales invoices, purchase receipts, and tax-related documents. This ensures that you have all the necessary information when it comes time to complete your BAS and IAS.
- Use Online Accounting Software: Consider using accounting software to streamline the process of preparing and lodging your BAS and IAS. These tools can automate calculations, track your GST obligations, and generate accurate reports, saving you time and reducing the risk of errors.
- Seek Professional Guidance: If you find the complexities of BAS and IAS overwhelming, don’t hesitate to seek help from a qualified BAS or Tax Agent who can lodge these form for you. They can provide personalised guidance, ensure compliance, and help you maximise your tax benefits.
- Stay Informed: We keep up-to-date with the latest ATO guidelines and regulations related to BAS and IAS. The ATO website offers valuable resources and updates that can keep you informed about any changes that may affect your business.
Wrapping Up

Understanding the differences between BAS and IAS can help you run your business with less stress. And staying on top of your BAS and IAS requirements not only keeps you compliant but also sets a solid foundation for your business’s financial success.

We’re here to help you navigate the world of business, BAS and IAS. If you have a question, please don’t hesitate to get in touch.

These two statements are very important to businesses, as the BAS is the summary of all of the businesses taxes that you have paid in that specific time period, usually quarterly whereas the IAS does not have the GST tax and some other business taxes. If your business needs help in completing these forms, then please feel free to contact S & H Tax accounting. Our team consists of experienced and very well-qualified accountants, who always aim to provide you with the best level of service possible. Book a business consultation with S & H Accountants today, call us at 03 8759 5532 or email us at info@sahtax.com.au.
17/10/2023
Superannuation Guarantee Increase – 1 July 2023
For small business owners and payroll managers, staying up-to-date on the latest superannuation changes is essential. And, with the Australian Superannuation Guarantee (SG) set to increase from 10.5% to 11% from 1st July 2023, it’s important to understand what this means and how it could affect your business. As an employer, this increase, and subsequent increases, will have an impact on your payroll management and accounting systems.

Here’s what you need to know about the SG increase.

What is Changing with the Australian SG and When?

Effective from 1st July 2023, the SG rate will increase to 11% of an employee’s OTE (Ordinary Time Earnings). This increase is part of a gradual, planned increase that will see the SG rate rise to 12% by 2025.

Who Will be Affected by the SG Increase?

All employers who pay their employees a wage or salary are required to make SG payments on their behalf. Therefore, all businesses employing staff in Australia will be affected by the SG increase.

The extent to which your payroll management is affected will depend on how your employment contracts are structured, most commonly being a base salary plus Super or a total remuneration package that includes Super.

What Can You Do to Prepare for the Australian SG Increase?

If you’re a small business owner or payroll manager, it’s important to start preparing for the SG increase now. Key steps you can take include:
- Reviewing your payroll systems and software to ensure they are set up correctly to calculate and apply the SG increase
- Budgeting for the increased SG payments and adjusting your cash flow projections accordingly
- Check your specific obligations on the ATO website
The Australian Superannuation Guarantee increase is an important change that will impact all businesses employing staff in Australia. We can help you understand your obligations and make sure you remain compliant so please get in touch if you need advice around this.

The Australian Superannuation Guarantee will impact all businesses in Australia thus, S & H Tax Accountants are here to help you. We understand that with this new increase, there will need to be changes in the payroll system as well as being financially prepared for this increase. Book an Appointment today with S & H Tax Accountants, you can call us on 03 8759 5532 or you can email us at info@sahtax.com.au.
13/06/2023
Employee vs contractor – what you need to know

Depending on the nature of your business, you may have workers who are employees or contractors, or you may have both. Each has their merits, but it’s important to review which are which in order to meet your tax obligations.

When you have an employee, you must withhold income tax as well as report on additional benefits. Contractors generally look after their own tax obligations.

It’s against the law to treat an employee as a contractor. Significant penalties apply if you do, so it’s important to get it right.

The simplest way to remember is:

An employee works in your business and is part of your business.
A contractor is running their own business.

But how can you be sure that you’ve got an employee or a contractor on your hands, especially with remote work blurring the lines between employees and contractors?

Does there come a point that you should actually be hiring a worker as an employee, when you thought they were a contractor?

There are six factors to consider:

1. Ability to subcontract or delegate

An employee is not able to subcontract or delegate the work. They must perform the outlined tasks themselves. If they can’t do the work themselves for any reason, say a prolonged illness, and someone else does it, this is substitution. Your business would then pay the other person to carry out those activities.

A contractor can delegate the work as long as they’re not obligated to do it themselves as per the contract. If your contractor can’t work, they would arrange for another qualified person to do it. You would pay your contractor as usual, who would then pay their subcontractor.

2. Basis of payment

An employee is paid a set amount per period of time. The most obvious example would be an annual salary or hourly wage.

Some employees are paid piece-work rates. They receive an amount per successful sale, or per the number of pieces produced. A commission basis would be a price per item structure.

A contractor, however, is paid an agreed-upon price in exchange for a predetermined result. Some contracts may specify the amount to be paid in increments as stages of the project are completed. But the key takeaway is that a contractor is paid when the agreed-upon result is achieved.

3. Equipment, tools, and other assets

If your business is responsible for providing the equipment, tools, and other assets required to perform the job, that’s characteristic of an employee.

If the worker is providing these items, they are likely a contractor.

4. Commercial risks

Employees do not bear commercial risk and they are not liable for correcting any defects in the work at their own expense. Instead, your business takes this responsibility. The worker will be paid for the time required to perform the task to completion.

A contractor assumes the commercial risk. They are responsible for fixing any mistakes on their own time. This extra work would fall under the umbrella of the terms set at the beginning of the project. Your business does not have to pay for any extra time taken or materials used, unless otherwise specified in the contract.

5. Control over the work

Employees have to complete the work the way the employer specifies. What work is done, where it’s done, how it’s done, and when it’s done are all up to the employer. The employee then completes the work as required.

Contractors are not subject to the same rules. They decide when and how the work is done, so long as it meets the obligations laid out in the contract. For example, a contractor could choose to work three 10-hour days to complete a job, rather than working four 8-hour days.

6. Independence

An employee works within a business. They complete tasks as required until they leave the job.

A contractor operates independently and may have any other number of contracts on the go with other companies. They can freely accept and refuse other work. Their obligation is complete when they deliver the specified outcome.

Final thoughts

It can be confusing to make the determination between an employee and contractor, but it’s important that you do so in order to meet your tax obligations and play by the rules. Contact us to learn more about your tax obligations for employees and contractors. If you have any questions then feel free to call S & H Tax Accountants Cranbourne. S & H tax Accountants offer services to small business as an accountants. We are experienced advisors in Cranbourne and Accountants in Malvern East area. Book an appointment with S & H Accountants today! Call us on 03 8759 5532 or you can email us on info@sahtax.com.au

14/11/2022
The differences between wages, salary, commission, and bonuses

There are a few different methods that employers use to pay their employees, and while they may have similarities, they each also have their own implications for your business and its employees. On top of that, there may be a blended model at play, in which you offer two types of compensation at once, such as a wage and bonuses.

How you pay your employees will impact your finances and your reporting requirements.

Read on to learn the differences between the main ways of earning money in the workplace.

Wages

Most entry-level positions offer an hourly wage in exchange for work. An hourly wage might be $10. So if the employee works 8 hours that day, they would be compensated $80 for that day.

There are minimums set by law which vary depending on where the business operates. Typically, the minimum wage is directly related to the cost of living in that area.

Generally, there are a set number of hours that can be worked in a week, and working beyond that maximum entitles the employee to a higher rate of pay. There may be premiums associated with working undesirable shifts, or an even higher rate of pay that employees are entitled to for working on holidays.

Because of the number of hours worked, the specific days worked, and overtime, the amount an employee will potentially earn each year can vary widely when paid with hourly wages.

Salary

A salary is the standard compensation for management and upper-level positions. It is an agreed-upon annual total, where a certain number of hours worked per week is expected – typically 35 to 40. There will be other requirements outlined, such as how many days per week are expected.

Depending on the schedule, the total salary is divided into equal payments for each pay period. Often, a salary is agreed to as an annual figure, with each payment equally divided by the number of payments. If you pay an employee a salary of $60,000 a year once a month over 12 months, you would pay $5,000 each payment, not accounting for any deductions.

How a company manages its payment schedule will vary from company to company.

Any other pay, such as overtime worked, commissions earned, or bonuses, are separate from salary. Many companies don’t offer overtime pay for extra hours worked, but they may offer commissions or bonuses for performance.

Commission

This is a form of compensation that is based on performance. The amount an employee receives can vary drastically, depending on how well they perform in a pay period.

Commission is typically a calculated percentage of the value of goods or services sold. It is meant as an incentive to drive employees to make sales. For example, you may offer to pay $1,000 as a commission for each car sold. An employee who sells 10 cars in the pay period would receive $10,000 commission.

All earnings made by commission are counted as taxable income.

Some salaried or hourly positions offer a commission on top of regular earnings. However, some positions, especially those in sales, can be based solely upon commission. This means that if the employee doesn’t sell anything, they don’t get paid.

Bonuses

A bonus is a compensation type that is not guaranteed. It is usually tied to some kind of company goal, usually driven by sales or performance. A bonus might be awarded on an individual basis, or for a team or other work group.

The idea behind a bonus is to create an incentive to meet a specific goal. It is rewarded when the goal has been reached, or evaluated at specific times. Bonuses are offered on top of a wage, salary, or commission.

Because of the unofficial structure, bonuses are loved by some and loathed by others. It can be motivating to receive a bonus, as it’s completely separate from what an employee already earns. However, it can also leave employees feeling disgruntled if they feel they weren’t supported well enough to reach the goal and therefore missed out on the bonus. If the goals are unrealistic, employees may also struggle with motivation even if they are offered a bonus.

Final Thoughts

Whatever payment structure your company follows, make sure you are consistent and fair as an employer, and follow all applicable laws. Contact us to learn more about different forms of compensation and what they mean for your bottom line. S & H Accountants Melbourne offer payroll service for small businesses. Contact S & H Tax Accountants Melbourne to discuss your payroll needs.

05/09/2022
Tax tips for new business owners
Want to avoid paying more than you should come tax time? Or a frantic last-minute search for missing financial records?

New business owners have a lot on their plate, and can easily lose track of an approaching tax deadline or financial data needed to submit their return.

The organization is key when preparing for tax time. As is taking advantage of the many tools and resources out there to support new entrepreneurs.

Set yourself up for success by following these four pillars of the painless tax prep.

1. Commit to clean bookkeeping from day one

Year-round, effective bookkeeping is the best way new business owners can minimize tax season stress. With the wide range of accounting software out there, there’s no reason to rely on time-consuming manual methods that leave room for error.

All-in-one options like Xero, KashFlow, and QuickBooks automate your most important bookkeeping processes, including:
- Tracking expenses;
- Tracking sales and income;
- Creating and sending invoices and
- Managing inventory.
With your financial records all in one place and up-to-date, you’re better positioned to maximize your refund, while avoiding penalties associated with incorrect or incomplete tax returns.

2. Capture every business expense

Each year, 21% of small business owners claim less than half of their business expenses, largely because they don’t have a reliable system for documenting expenditures while on the go.

Without carefully logged receipts, entrepreneurs must forfeit valuable tax deductions, sacrificing cash they could be funneling back into their business.

Cash in on claimable expenses by using a mobile app to record receipt data, track mileage and generate expense reports. As an added bonus, many of these tools sync with your all-in-one accounting software.

3. Separate business from personal

Right from day one, small business owners should clearly divide their personal and business expenses. Differentiating between the two will make it much easier to claim deductions on your tax return – and support those claims in case of an audit.

Recommended steps to separate your business and personal finances include:
- Create a separate bank account for your business, and designate a credit card solely for business purposes (this will help you track expenditures while building up your credit and borrowing power);
- Never combine business and personal expenses (for example, if you buy printer ink for your home and your business at the same time, ask for two separate receipts);
- Pay yourself a set salary from your business checking account each month (this will help you determine how your income, as well as the business, will be taxed).
4. Always consult with an accountant

Not sure exactly what you can claim as a business expense? Wondering which accounting software to use or how to interpret local tax regulations?

Consult with an accounting professional to put your mind at ease – well before the filing deadline! In addition to managing the nuts and bolts of tax preparation, regular meetings with an accountant will help you continuously improve bookkeeping practices and better understand the financial workings of your small business.

Those organizational strategies you commit to now will promote positive relations with your local tax authorities – and the long-term financial health of your company.

As we all are aware that tax season is here, this time of year can be very stressful as businesses will need to make sure they have all of their financial records accurate and organised as well as making sure they have every expense listed. S & H Tax Accountants are aware of the stress, however we are here to help. Our firm offers services to not only individuals but also businesses, our accountants are well qualified and vastly experiences. We pride ourselves in maintaining top tier level of service to our clients, our firm also provided advice to businesses in need. Book an appointment today with S & H Tax Accountants, call us at 03 8759 5532 or email us at info@sahtax.com.au
08/03/2022
4 Reasons Your Business Should Consider Digital Receipts

Receipts are vital to successfully running a business. You need receipts to track your purchases and expenses. Your clients need receipts for their tax purposes and to manage their finances. Paper receipts have been around a long time, so many people are used to them and may even be resistant to moving away from them.

Thanks to technology, paper receipts are becoming more a thing of the past. There are environmental reasons for the move. Paper receipts require millions of trees and billions of gallons of water to produce, and they emit carbon dioxide (CO2), so going paperless can be a good thing for the environment.

Here are more reasons why your business should consider eliminating paper receipts.

1. Decreased costs

Receipts eat into your profits. It costs money to buy the paper and the ink–more than it costs to have an email receipt emailed to clients. Your business saves money by not printing receipts for every customer and instead having the receipts emailed.

On a per-unit basis, receipts might not seem like a big cost, but over the course of a year or a few years, they can add up to thousands of dollars.

2. Increased efficiency

It takes time to print out the receipts, change the printer paper and otherwise ensure the receipt printer is working properly. Meanwhile, your customers and clients are waiting for their receipt to be printed out as the line behind them grows longer.

Beyond that, how often does a client contact you because they’ve lost their receipt and need a copy? Emailing receipts allows the customer to store the receipt in their email, rather than searching for a piece of paper they might have lost or filed in the wrong spot. Your team saves time by not having to reprint those missing receipts.

Additionally, with digital receipts your online system efficiently generates better, more accurate reports. Consider how easy it would be for employees to take a photo of their expenses on their smartphone and have their expense report auto populated, rather than filling it out manually. Or have the system automatically tell you how much you’ve spent so far this year on office supplies, without you adding up each receipt.

Shredding receipts also takes up an enormous amount of time that could be better spent in other tasks. Having your receipts online saves you the time and hassle of shredding, and keeps client information confidential.

3. Digital receipts are easier to share

If you have someone doing your bookkeeping or accounting for you, it’s easy to email your digital receipts to that person, rather than having to store them and then mail them or deliver them in person. There’s also no risk that the receipt will be crumpled, torn or otherwise unreadable.

4. Additional marketing opportunities

Although you can include some marketing with a printed receipt–maybe a coupon or a link to your website–digital receipts give many more marketing opportunities. An e-receipt gives you the chance to share individualised product recommendations or new promotions. They also enable you to grow your email list and accumulate customer data, allowing you to follow up with clients and customers.

Final Thoughts

Even though many people are used to paper receipts, there are many good reasons for your business to switch to digital receipts. There are environmental benefits and practical reasons that can have a positive impact on your business.

15/11/2021
If my business is making a profit, where is the cash?

Some small business owners find themselves in the difficult position of running a business that appears to be profitable but still has no money in the bank. It’s an important situation to address. After all, a lack of adequate cash flow is one of the main causes of small business failure.

Here are three reasons profitable businesses have little money in the bank, and what business owners can do to address these situations.

1. Using business money for personal reasons

Owners may be using their business bank account as a personal bank account, withdrawing the money as they see fit. Of course, business owners need to earn a living. Instead of using the business account like a personal account, entrepreneurs should give themselves a wage and transfer that from the business account to their personal account at set intervals. If their personal money runs out, they can’t go back to the business account for more money until their next withdrawal date.

Regular use of the business account, even for relatively small amounts, adds up and can have a drastic effect on a business’s cash flow.

2. Not collecting payments

Businesses need to make money, and they do so when customers pay their bills. Not sending out invoices in a timely manner, not following up when customers fail to pay and not conducting adequate credit checks on customers all put cash flow in jeopardy.

It’s best for business owners to send out invoices with clear payment terms and follow up immediately if customers violate those. They can also put procedures in place to avoid customers who are unlikely to pay for work done or to mitigate the damage if clients attempt to get away without paying. Requiring deposits, for example, are a great way to manage both cash flow and customers.

3. Not preparing for tax season

Many small business owners see taxes as something they can worry about later. Then tax season rolls around and they don’t have enough money set aside to pay the collector. In some cases, a business may have suddenly had a large profit increase but not increased the amount set aside for taxes.

Business owners must treat their taxes as a regular expense. Set money aside each month to pay taxes. If there is a drastic increase in profits, set aside even more money. Being prepared is far better than being caught with too little.

Final thoughts

There are steps business owners can take to ensure that their business makes a profit and has money in the bank. First, they should learn how to read and understand their balance sheet and debtors’ ledger. These show how much money is coming in and where it’s going. It also highlights which customers aren’t paying their bills.

Entrepreneurs should also avoid using the business bank account for personal expenses. Instead, they should pull a set amount of funds to their personal account and limit their personal expenses to that amount.

Finally, business owners must understand their liabilities. Liabilities affect how much cash is available for their business and even small liabilities add up quickly. Know how much is owed, how much is paid monthly and when those bills are due.

By keeping track of the money coming into their business and where it goes when it leaves, entrepreneurs can get a better handle on ensuring their business not only makes a profit but actually has money in the bank.

Got a question about your business? Let’s talk.

12/03/2021