Are you responsible for filling out a business activity statement each month in Australia? If so, you’ll know how tricky it can be to make sure all the details are correct. From deadlines to classifications and measurements, there are a lot of factors at play when completing your activity statement accurately. Unfortunately, many people don’t realise just how important accuracy is until they get hit with late fees or other penalties due to incorrectly filed paperwork. In this blog post, we’re going to show you why accuracy matters in your monthly filings and help guide you through some common mistakes that occur on activity statements so that you can save yourself from costly consequences!
What is An Activity Statement?
An activity statement is a document that is filled out by businesses and sent to the ATO each month. It tracks the financial activities of your business, including sales, income, GST (goods and services tax) and other taxes. The activity statement also provides you with an opportunity to claim any credits you may be eligible for.
Why Accuracy Matters in An Activity Statement
Here are 5 reasons why accuracy matters in your activity statement.
- It Prevents penalties: Late fees and other penalties are costly and can easily be avoided by making sure all of the details on your activity statement are accurate before you send it off.
- Keeps you compliant: Making sure that all of the information on your activity statement is correct ensures that you are compliant with the ATO’s regulations.
- Prevents errors: Double-checking your work before submitting it can help prevent costly errors and mistakes in the future.
- Improves tax refunds: Accurate information on your activity statement helps ensure that you receive any refunds or credits you may be eligible for.
- Increased productivity: Having accurate and up-to-date information on your activity statement can help increase productivity in other areas of your business.
Common Mistakes to Avoid On Your Activity Statement
Creating an activity statement can be a daunting task, especially if you’re new to the game. It’s a document that shows all the transactions that have occurred for a specific period, and it’s used to track the flow of money in and out of a business. An accurate and clear activity statement is vital to keep track of your finances, make important decisions, and ensure compliance with tax laws. Unfortunately, there are common mistakes that individuals and businesses make when preparing an activity statement. Here are some of these mistakes and how to avoid them.
1. Failing to reconcile accounts
One of the most significant mistakes individuals and businesses make when preparing an activity statement is not reconciling their accounts. This involves comparing the bank statements to the accounting records to ensure that they match. If there are discrepancies, it can lead to an inaccurate activity statement. It’s crucial to reconcile accounts regularly to avoid errors and ensure the accuracy of your financial records.
2. Incorrect recording of transactions
Another common mistake when preparing an activity statement is recording transactions incorrectly. This could be due to human error, computer glitches, or faulty software. Recording transactions incorrectly can cause errors that can have a significant impact on your activity statement, which could lead to incorrect tax reporting. To avoid this mistake, ensure all transactions are recorded accurately, and triple-check your work.
3. Not including all income and expenses
A common mistake individuals and businesses make when preparing an activity statement is failing to include all income and expenses. Many people think that only significant transactions should be included. However, all income and expenses should be recorded for a specific period, no matter how small or insignificant they may seem. Failing to do so can lead to an inaccurate activity statement, which could lead to late-payment fees or penalties.
4. Forgetting to categorise transactions
Another common mistake when preparing an activity statement is failing to categories transactions. Transactions should be classified into the appropriate category: assets, liabilities, revenue, or expenses. Failing to do this can lead to financial misstatements, which could impact your financial plan and business strategy. The correct categorization of transactions helps you to evaluate your financial status better.
5. Not retaining financial records
Lastly, but not least, individuals and businesses often make the mistake of not retaining financial records. Financial records should be kept for a specified period outlined in the tax law in your region. Retaining financial records ensures that you can provide documentation when required and can help you to prepare future activity statements.
How a BAS Expert In Sydney can Help You Avoid Common Errors
There are several ways that a BAS expert in Sydney can help you avoid common errors when preparing an activity statement. Here are some ways that BAS services in Sydney can help you:
- The experts can review your activity statement and identify any errors or mistakes.
- They can help to ensure that all transactions are recorded correctly and reconciled properly.
- They can provide advice on how to categories transactions correctly so that your activity statement is accurate and up to date.
An experienced BAS agent will be able to assess your documents and financial records, identify any errors or discrepancies, and provide solutions or advice to ensure accuracy. They will also work with you to ensure that all transactions are properly recorded and categorized according to the tax laws in your region.
Preparing an activity statement can be a daunting task, and mistakes are all too common. Avoiding the most common errors can help you to ensure the accuracy of your financial records and avoid penalties or late-payment fees. BAS services in Sydney can provide valuable assistance and guidance to help individuals and businesses prepare accurate activity statements. By following these tips, you can ensure your activity statement is accurate and up to date.
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