Running a small business comes with plenty of moving parts—managing customers, marketing your services, staying on top of expenses, and keeping operations running smoothly.
But one area that often catches business owners off guard is tax planning, particularly when it comes to the Business Activity Statement (BAS) and Goods and Services Tax (GST).
Many small businesses experience cashflow stress not because they aren’t profitable, but because they haven’t budgeted for the tax they owe.
The good news? With a little planning and the right advice from your accountant or bookkeeper, you can take control of your BAS obligations and avoid unnecessary financial pressure.
Why BAS Matters for Small Business
If you’re registered for GST, you’re required to lodge a Business Activity Statement—usually quarterly, but sometimes monthly depending on your turnover. Your BAS reports:
- GST collected on your sales
- GST paid on purchases
- PAYG withholding if you have staff
- PAYG instalments depending on your tax position
Because GST is paid at the time of purchase but not forwarded to the ATO until your BAS is due, it’s easy to fall into the trap of spending that GST before lodgement time arrives. This often leads to a cashflow crunch: the BAS deadline comes around, and suddenly there’s a significant bill you hadn’t budgeted for.
Why You Must Put GST Aside
One of the clearest truths in small business finance is this: GST is not your money. You’re simply holding it in trust until it’s time to pay it to the Australian Taxation Office.
By failing to separate GST from your general business income, you risk spending funds that were never truly yours to begin with. When your BAS is due, you may find yourself scrambling—chasing late invoices, delaying supplier payments, or dipping into personal savings to cover the amount owed.
Creating a habit of transferring the GST component of each payment into a separate bank account can make a world of difference. Not only does this protect your cashflow, but it also gives you a more accurate picture of your actual earnings and operating capital.
Budgeting for BAS: A Small Business Essential
Effective tax planning means anticipating your BAS liability ahead of time—not just calculating it at the end of the quarter. Start by tracking your GST collected and GST credits monthly, even if your BAS is quarterly. Many accounting platforms such as MYOB, Xero, or QuickBooks provide real-time GST reports, helping you avoid surprises.
If your business experiences fluctuating income, budgeting becomes even more important. Seasonal industries, trades, and service providers often have peaks and troughs in cashflow, making it critical to plan for GST, PAYG instalments, and other tax obligations.
Top 5 Tips to Stay on Top of Your BAS and GST
- Move GST into a Separate Bank Account
As soon as income hits your business account, transfer the GST portion. This creates a built-in buffer and removes the temptation to spend it.
- Review Your BAS Position Monthly
Don’t wait for the end of the quarter. A quick review each month helps you stay aware of how much you owe and reduces last-minute surprises.
- Use Accounting Software to Automate Tracking
Most modern software accurately tracks GST on sales and purchases. Automated reminders and real-time dashboards help you make informed decisions.
- Build BAS Payments Into Your Cashflow Budget
Treat BAS like any other bill. Planning for it ensures you always have funds ready, even during slower trading periods.
- Get Advice From Your Accountant or Bookkeeper
BAS, GST, and tax planning can be complex. A professional can advise you on how much to set aside, help you optimise your tax position, and ensure your lodgements are accurate and on time.
Final Thoughts
Tax planning isn’t just a compliance requirement—it’s a smart business strategy. By understanding your BAS obligations and consistently putting GST aside, you protect your cashflow and keep your business running smoothly. With the right systems in place and guidance from your accountant or bookkeeper, you can avoid stress, stay compliant, and focus on what matters most: growing your business.
If this article has inspired you to think about your unique situation and, more importantly, what you and your family are going through right now, please get in touch with your advice professional.
This information does not consider any person’s objectives, financial situation, or needs. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation, or needs.
(Feedsy Exclusive)