Quarterly BAS Preparation: A Step-by-Step Workflow

Making BAS Preparation Routine

For many Australian business owners, BAS preparation is a quarterly source of stress. It should not be. With the right workflow and the right tools, BAS preparation can be completed in under an hour for most small businesses.

The key is maintaining good bookkeeping practices throughout the quarter so that when the BAS deadline approaches, most of the work is already done. This guide provides a structured workflow you can follow every quarter.

The Weekly Habit That Makes BAS Easy

The single most impactful thing you can do for BAS preparation is to spend 15-30 minutes each week on your bookkeeping. During this time:

1. Review and reconcile new bank transactions
2. Check that SortBooks has categorised transactions correctly
3. Enter any invoices or bills that have not been captured automatically
4. Follow up on any outstanding items from the previous week

When you do this consistently, your books stay current throughout the quarter. BAS preparation becomes a review and submission process rather than a catch-up exercise.

The BAS Preparation Workflow

Week 1 After Quarter End: Reconciliation

Day 1-3: Bank Reconciliation

Reconcile all bank accounts, credit cards, and loan accounts through to the last day of the quarter. In Xero:

1. Go to each bank account and process any remaining transactions
2. Confirm the Xero balance matches the bank statement balance
3. Investigate and resolve any discrepancies

If you have been reconciling weekly, this step takes 15-20 minutes. If you have fallen behind, it could take several hours.

Day 3-5: Accounts Receivable and Payable

• Review outstanding customer invoices. Are any that should have been paid still showing as outstanding? Follow up with customers.
• Check that all supplier bills for the quarter have been entered. Look through your email for any invoices you might have missed.
• Write off any bad debts that are confirmed uncollectable.

Week 2: Review and Adjustments

GST Code Review

Run the GST Detail Report in Xero for the quarter. Review the transactions in each GST category:

• GST on Income: Are all taxable sales coded here? Are any GST-free or input-taxed items incorrectly included?
• GST on Expenses: Are all GST-claimable expenses here? Are any BAS-excluded or GST-free items incorrectly included?
• GST Free: Are these genuinely GST-free supplies?
• BAS Excluded: Wages, bank transfers, and other non-GST items should be here.
• Input Taxed: Financial supplies and residential rent.

Common items to check:

• Bank fees should be BAS Excluded, not GST on Expenses
• Wages and superannuation should be BAS Excluded
• Insurance may have mixed GST treatments (check the invoice)
• International purchases may be GST Free rather than GST on Expenses
• Government charges vary - some include GST, others do not

PAYG Withholding

If you have employees, check your payroll reports for the quarter:

• Confirm total gross wages match your payroll records
• Verify total PAYG withholding is correct
• Ensure all pay runs for the quarter have been finalised

PAYG Instalments

If you pay PAYG instalments, decide whether to use the ATO's instalment amount (Option 1) or calculate your own based on actual income (Option 2).

If your business income has changed significantly from the previous year, Option 2 may be more appropriate to avoid over-paying or under-paying.

Week 3: Generate and Review the BAS

Generate the BAS in Xero

Go to Reports then Activity Statement (or BAS Report) and generate the return for the quarter. Xero will calculate all the BAS fields based on your transaction data.

Review Each Field

Go through each field of the BAS and compare it to your expectations:

• Does the total sales figure look right for the quarter?
• Does the GST collected match approximately 10% of your taxable sales (if all sales are standard rated)?
• Does the GST paid match your expense patterns?
• Is the PAYG withholding consistent with your payroll?

If any figure looks unexpected, drill down into the detail to find the cause. It is far better to find and fix an error now than to amend the BAS later.

Comparison to Prior Quarters

Compare your BAS figures to the previous quarter and the same quarter last year. Significant variations should have an explanation. If your revenue is up 30%, that might be great business growth. If your GST on expenses is up 50%, something might be miscategorised.

Week 4: Lodge and Pay

Lodge the BAS

You can lodge directly from Xero (if using the standard BAS) or through the ATO Business Portal. If you use a registered BAS agent, they lodge on your behalf and may have extended deadlines.

Pay the Amount Owing

If you owe GST or PAYG, pay by the due date to avoid penalties and interest. Payment options include BPAY, direct debit, credit card, or bank transfer.

Record the Payment

When the payment appears in your bank feed, reconcile it against the BAS liability in Xero. This keeps your balance sheet clean and ensures the payment is not double-counted as a business expense.

Automation Reduces BAS Effort by 80%

When you use SortBooks throughout the quarter, the BAS preparation workflow becomes dramatically simpler:

• Transaction categorisation is handled by AI, so there is no backlog of uncategorised transactions at quarter-end
• GST coding is applied automatically to each transaction as it is categorised
• Bank reconciliation is largely complete because transactions have been processed continuously

Your BAS preparation shifts from "categorise three months of transactions and then prepare the BAS" to "review the automated categorisation and submit." This is the difference between hours of work and minutes of review.

BAS Deadlines

For quarterly lodgers, the standard deadlines are:

• Q1 (July-September): 28 October
• Q2 (October-December): 28 February
• Q3 (January-March): 28 April
• Q4 (April-June): 28 July

If you lodge through a BAS agent, extended deadlines may apply. Check with your agent for specific dates.

The Goal: BAS on Autopilot

The ultimate goal is to make BAS preparation so routine that it barely registers as a task. With consistent weekly bookkeeping habits, AI-powered automation through SortBooks, and this structured quarterly workflow, BAS goes from a quarterly headache to a 30-minute administrative task. That is time well invested for peace of mind and ATO compliance.