Getting BAS lodgement right the first time

Start with the reconciliation

If your bank reconciliation is out, everything is out. There is a longer walk through how to reconcile in Xero if the green tick is the part you are unsure about. Not approximately, literally: every figure on the activity statement is derived from transactions that either did or did not make it into the file correctly.

The most common thing we find is a file where every line is marked reconciled and transactions from last financial year are still sitting in this one. The green tick tells you somebody clicked something. It does not tell you the period is closed.

A green tick means somebody clicked something. It does not mean the period is closed.

Then check the balances against what you lodged

Open your last lodged activity statement beside the file. We cover the reports that produce those figures in Xero reports and activity statement training. The GST and PAYG balances should agree to the cent. If they do not, something has been posted into a period you have already reported on.

1. Run the GST reconciliation report for the lodged period.
2. Compare the GST collected and GST paid figures to the statement.
3. Do the same for PAYG withheld.
4. Investigate any variance before you touch the current period.

Common cause. A duplicate supplier bill is the usual culprit. Entered twice, it inflates your costs and your GST on purchases at the same time, so the variance appears in two places and looks like two problems.

What to check for each label

How do you actually lodge a BAS from Xero?

Once the file agrees with itself, the lodgement itself is short. What follows is the order of decisions rather than a click path, because the interface moves and the decisions do not.

1. Confirm the period and the reporting basis. Cash or accruals changes which transactions fall into the period, and a file set up on one basis while the business reports on the other produces a statement that is internally consistent and still wrong.
2. Run the activity statement for the period and read it beside the GST reconciliation report. The activity statement tells you what it is going to lodge. The reconciliation report tells you what the file contains. Those are different questions, and comparing them is the check most people skip.
3. Resolve unfiled amounts before, not after. Transactions dated in an earlier period that were entered after that period was lodged will appear as unfiled amounts. They are not an error in themselves, but each one needs a decision: does it belong in this statement, or does the earlier period need revising?
4. Check the payroll figures against the payroll reports, not against expectation. W1 and W2 come from what was actually processed. If the wages accounts have not been reconciled, the payroll reports and the file will disagree, and single touch payroll will already have reported one of them.
5. Lodge, then record the lodgement in the file. A statement lodged and not marked as lodged is the reason next quarter's opening balances will not agree.

If you lodge through an agent, the same checks still belong to you. The agent lodges what the file says. Handing over a file that has not been reconciled moves the work rather than removing it, and it usually arrives back as questions.

If Xero is connected to the ATO for lodgement, the connection changes how the statement is transmitted. It does not change any of the five decisions above, and it does not check the file for you.

If you find a variance

Do not adjust the current period to make the numbers line up. Find the transaction, correct it in the period it belongs to, and lodge a revision if the difference is material. Papering over a variance moves the problem forward a quarter and makes it larger.

Before you lodge the next one

If the balances do not agree and you cannot find why, that is worth half an hour rather than a quarter of guessing. Book a Call Today and we will look at the file with you.