Published: August 2025

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Preparing and lodging a Business Activity Statement (BAS) is a critical task for Australian small and medium businesses (SMBs) registered for GST. The Australian Taxation Office (ATO) requires businesses to report GST, PAYG withholding, and other tax obligations through BAS, ensuring compliance and accurate tax calculations.

This step-by-step guide provides a clear, practical approach to preparing and lodging your BAS in 2025, with examples and tips to simplify the process for SMBs.

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What is a BAS?

A Business Activity Statement (BAS) is a form submitted to the ATO to report and pay GST, PAYG instalments, PAYG withholding, and other taxes. GST-registered businesses must lodge BAS monthly, quarterly, or annually, depending on their turnover and ATO requirements. The BAS reconciles GST collected on sales with GST paid on purchases, determining whether you owe the ATO or are entitled to a refund. It also includes employee tax withholdings and instalments toward your annual tax liability.

Accurate BAS preparation prevents penalties, which can reach $1,650 for late lodgments in 2025, and ensures compliance with ATO standards.

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Why BAS Preparation Matters

• Compliance: Meets ATO requirements, avoiding fines and audits.
• Cash Flow Management: Tracks GST and tax obligations, preventing surprises.
• Tax Credits: Allows claiming GST credits on business purchases.
• Financial Clarity: Provides insights into sales and expenses.

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10 Steps to Prepare and Lodge a BAS in 2025

Follow these steps to ensure your BAS is accurate and compliant.

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Step 1: Confirm Your GST Registration and Lodgment Frequency

Verify your GST registration status and lodgment schedule (monthly, quarterly, or annual) via the ATO Business Portal at https://www.ato.gov.au/Business/Business-activity-statements-(BAS)/.

• How to Do It: Check your ATO correspondence or myGov account.
• Example: A Sydney retailer confirms quarterly BAS lodgment for a $100,000 annual turnover.
• Tip: Businesses with turnover under $20 million typically lodge quarterly.

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Step 2: Gather Financial Records

Collect all relevant financial data, including sales invoices, expense receipts, and bank statements.

• How to Do It: Use accounting software like Xero or MYOB to organise records.
• Example: A Melbourne caterer gathers $15,000 in sales invoices and $5,000 in expense receipts for Q1 2025.
• Tip: Keep records for five years, per ATO rules.

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Step 3: Record All Sales Transactions

Log all taxable sales, including GST, in your accounting system.

• How to Do It: Categorise sales and note 10% GST (or GST-free sales).
• Example: A Brisbane consultant records $11,000 in sales, including $1,000 GST.
• Tip: Use software to automate GST calculations.

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Step 4: Track Business Expenses

Record expenses eligible for GST credits, such as supplies or utilities.

• How to Do It: Ensure expenses have valid tax invoices, per ATO guidelines.
• Example: A Perth tradie logs $4,400 in equipment purchases, claiming $400 GST credit.
• Tip: Exclude personal expenses to avoid errors.

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Step 5: Calculate GST Collected and Paid

Determine net GST by subtracting GST paid from GST collected.

• How to Do It: Use software or ATO’s GST calculator.
• Example: A Canberra retailer collects $2,000 GST on sales and pays $800 on expenses, netting $1,200 owed.
• Tip: Verify calculations to avoid BAS errors.

Use our free GST calculator here

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Step 6: Review PAYG Withholding (If Applicable)

Include employee tax withholdings if you have staff.

• How to Do It: Use Single Touch Payroll (STP) reports from payroll software.
• Example: An Adelaide cafe withholds $3,000 in PAYG for five employees.
• Tip: Submit STP via software like MYOB, per ATO rules at https://www.ato.gov.au/Business/Single-Touch-Payroll/.

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Step 7: Calculate PAYG Instalments (If Applicable)

Include prepayments toward your annual tax liability if required.

• How to Do It: Check ATO’s pre-filled instalment amount or calculate based on income.
• Example: A Queensland freelancer pays $2,500 in quarterly PAYG instalments.
• Tip: Adjust instalments if income changes significantly.

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Step 8: Reconcile Accounts and Complete the BAS Form

Ensure all transactions match bank statements, then enter data into the BAS form.

• How to Do It: Use software reconciliation tools; fill sections like G1 (total sales), 1A (GST on sales), and 1B (GST on purchases).
• Example: A Hobart retailer reconciles accounts and reports $20,000 in sales (G1), $1,818 GST (1A), and $500 GST credits (1B).
• Tip: Double-check entries to avoid penalties.

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Step 9: Lodge the BAS

Submit your BAS to the ATO by the due date (e.g., 28 October for Q1 2025).

• How to Do It: Lodge online via the ATO Business Portal, myGov, or through a registered tax agent.
• Example: A Melbourne caterer lodges BAS on 25 October 2025, paying $1,200 net GST.
• Tip: Set calendar reminders for due dates.

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Step 10: Pay or Claim Refunds

Pay any owed amounts or claim refunds for excess GST credits.

• How to Do It: Use bank transfer for payments or await ATO refunds (typically within 14 days).
• Example: A Brisbane consultant receives a $500 refund for excess GST credits.
• Tip: Monitor bank accounts for payment confirmations.

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Common Mistakes to Avoid

• Incorrect GST Calculations: Misreporting GST leads to penalties up to 75% of underpaid tax.
• Missing Deadlines: Late lodgments incur fines up to $1,650 (2025 rates).
• Inaccurate Records: Mixing personal and business transactions complicates BAS.
• Ignoring STP: Failing to report PAYG withholding risks non-compliance.

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Tips for Streamlining BAS Preparation

• Use Software: Xero or MYOB automates GST calculations and BAS reporting.
• Engage a Bookkeeper: Professionals ensure accuracy and compliance.
• Keep Digital Records: Store invoices and receipts in the cloud for five years.
• Review Quarterly: Regular checks reduce year-end stress.

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Q&A

Who needs to lodge a BAS in Australia?

GST-registered businesses with turnover over $75,000 (or $150,000 for non-profits) must lodge BAS, per ATO rules.

How often do I lodge a BAS?

Monthly, quarterly, or annually, based on turnover. Most SMBs lodge quarterly.

What happens if I lodge my BAS late?

You may face penalties up to $1,650 (2025), per ATO guidelines at https://www.ato.gov.au/Business/Business-activity-statements-(BAS)/.

Can I claim GST credits without a tax invoice?

No, valid tax invoices are required for GST credits, per ATO rules.

How do I know if my BAS is correct?

Reconcile accounts and use software to verify calculations before lodging.

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Scale Suite Services for BAS Preparation and Financial Management

For Australian small and medium businesses preparing BAS, Scale Suite offers expert financial management services at https://www.scalesuite.com.au/services/finance. Our team streamlines BAS preparation, ensuring accurate GST calculations, PAYG reporting, and timely lodgments using cloud-based tools like Xero and MYOB. We provide comprehensive bookkeeping, payroll, and financial reporting to maintain ATO compliance and simplify your financial processes.

Scale Suite delivers tailored solutions to enhance your business’s financial efficiency and support sustainable growth in 2025 and beyond.