How to Manage BAS and GST in Xero: A Step-by-Step Guide for Tradies

“Don’t let BAS be a pain in the…toolbox. We’ll help you get it sorted—no dramas!"

Are you a tradie feeling lost when it comes to understanding your business's financial health? Mate, this tutorial is for you.

Xero makes generating and understanding financial reports simple, clear, and stress-free.

Reports might sound complicated, but this guide will show you how to create and use them step by step.

Staying compliant with the Australian Taxation Office (ATO) is crucial for tradies, and that means lodging your Business Activity Statement (BAS) and managing GST correctly. Xero makes it easier than ever to handle these tasks with confidence. Follow this guide to manage your BAS and GST step by step.

Step 1: Set Up GST in Xero

1. Go to Settings from the dashboard and select “General Settings.”

2. Under “Financial Settings,” choose “Tax Rates.”

3. Ensure GST is enabled for your account and set the default GST rate (usually 10%).

4. If you work with GST-free items (e.g., exports), add a tax rate for “GST Free.”

Step 2: Record GST on Invoices

1. When creating an invoice in Xero, make sure to select the appropriate tax rate for each line item.

   • Example: Materials might be GST-inclusive, while labor could be GST-free.

2. Double-check totals to ensure GST is calculated correctly before sending the invoice.

Step 3: Track GST on Expenses

1. When entering bills or receipts, specify the GST paid for each item.

2. Use Xero’s “Create New Bill” function and select GST-inclusive or GST-free as applicable.

   • Example: Fuel expenses may include GST, while some tools purchased second-hand might not.

Step 4: Generate a BAS Report in Xero

1. Navigate to “Accounting” in the top menu and select “BAS Return.”

2. Choose the date range for the BAS period (monthly, quarterly, or annual, depending on your setup).

3. Review all GST collected (sales) and paid (expenses) to ensure accuracy.

Step 5: Lodge Your BAS

1. Export the BAS report as a PDF or CSV for your records.

2. Log in to the ATO’s Business Portal and use the details from the Xero report to lodge your BAS online.

3. If you use a tax agent, send the BAS report to them for review and submission.

Step 6: Reconcile GST Payments

1. Once you pay your GST to the ATO, reconcile the payment in Xero to keep your books accurate.

2. Match the transaction in your bank feed to the BAS payment.

Pro Tips for Tradies:

• Set Reminders for BAS Deadlines: Avoid late fees by marking your BAS due dates on your calendar.

• Review Transactions Regularly: Check GST allocations weekly to avoid errors at BAS time.

• Consult an Expert if Needed: If BAS still feels overwhelming, Contigo Accounting can help.

Conclusion

Managing GST and lodging your BAS doesn’t have to be stressful. With Xero, you can streamline the process and ensure you’re always ATO-compliant.

Need help setting up GST or managing your BAS? Contact Contigo Accounting today for a free consultation. We’ll make it stress-free—too easy!

Checklist: Managing BAS and GST in Xero for Tradies

Use this checklist to keep your GST and BAS management in Xero straightforward and stress-free!

• Log in to Xero and navigate to Settings > Tax Rates to ensure GST is enabled and set the default GST rate (usually 10%).

• When creating invoices, apply the correct GST rate for each line item (e.g., materials vs. labor).

• Track GST on expenses by specifying GST-inclusive or GST-free for each bill or receipt entered.

• Generate your BAS report in Xero by going to Accounting > BAS Return and selecting the correct date range.

• Review GST collected (sales) and GST paid (expenses) to confirm accuracy.

• Export the BAS report as a PDF or CSV and lodge it through the ATO’s Business Portal or send it to your tax agent.

• Reconcile GST payments in Xero by matching them to the corresponding bank transactions.

• Set reminders for BAS deadlines to avoid late lodgment fees.