Tessa stared at the BAS report in Xero. 

The deadline was three days away. The numbers looked... big. Really big. 

"Mark, does this look right to you?" 

Mark glanced over her shoulder. "Dunno. What's it supposed to look like?" 

"I have no idea. That's the problem." 

The GST amount they supposedly owed the ATO was twice what Tessa expected. But was it wrong? Or had they just had a bigger quarter than she realised? 

She had no way of knowing, because she'd never checked the numbers before lodging. She'd just trusted that Xero got it right and hit submit. 

Turns out, Xero only gets it right if you've coded everything correctly in the first place. 

Sound familiar? 

WHY REVIEWING YOUR BAS MATTERS 

Your BAS (Business Activity Statement) isn't just a compliance thing you do to keep the ATO happy. It's a snapshot of your business finances for the quarter. 

GST collected. GST paid. PAYG withholding if you've got employees. Sometimes PAYG instalments if you're profitable enough. 

The numbers on your BAS should make sense when you look at them. If they don't, something's wrong – either with your coding, your reconciliation, or your understanding of what you're looking at. 

However, once you lodge your BAS, those numbers are locked in. 

Lodge it wrong and you'll either: 

• Overpay the ATO (not great) 

• Underpay the ATO (even worse – they'll send you penalty notices) 
• Trigger a review because your numbers don't match what the ATO expects 

None of these are fun. 

This is why you need to review your BAS before you lodge it. Not just generate the report and hit submit. Review it. 

WHAT YOU'RE CHECKING FOR

When you review your BAS in Xero, you're checking that: 

1. The numbers make sense for your business  

• Is the GST you collected roughly 1/11th of your revenue? (For businesses that charge GST) 

• Is the GST you paid reasonable for the expenses you've had? 

• Do the totals align with what you expected for the quarter? 

2. Everything's been coded correctly  

• No transactions sitting in the wrong category 

• GST codes are correct (GST on Income, GST on Expenses, BAS Excluded, etc.) 

• Capital purchases aren't being treated as regular expenses 

3. Your reconciliation is complete  

• All bank accounts are reconciled for the full quarter 

• No missing transactions 

• No duplicates 

4. The timing is right  

• You're reporting the right dates (1 Jan - 31 Mar, 1 Apr - 30 Jun, etc.) 
• No transactions from the wrong quarter sneaking in 

If any of these are off, your BAS will be wrong. 

STEP-BY-STEP: HOW TO REVIEW YOUR BAS IN XERO 

Here's exactly what to do before you lodge. 

STEP 1: Run Your BAS Report 

In Xero, go to Reporting – Activity Statement 

Make sure the date range is correct for the quarter you're lodging. 

The report will show: 

• G1 - Total sales (your revenue including GST) 

• 1A - GST on sales (what you collected from customers) 
• 1B - GST on purchases (what you paid on expenses) 

The bottom line will tell you either: 

• You owe the ATO “Payment Amount” (if you collected more GST than you paid) 

• The ATO owes you “Refund Amount” (if you paid more GST than you collected – common for new or growing businesses) 

Look at this number. Does it feel right for the quarter you've had? 

If the number is way higher or lower than you expected, something needs investigating. 

STEP 2: Cross-Check With Your Profit and Loss 

Open your Profit and Loss report for the same quarter. 

Your revenue on the P&L (excluding GST) should roughly match your BAS sales figures. 

If your P&L says you made $100,000 in revenue, your BAS should show around $110,000 in G1 (Total sales including GST). If these numbers don't align, you've got a coding problem. Something's been categorised wrong or GST codes are incorrect. 

(Note – check your Cash vs Accruals reports and registrations – this might be a good reason why your numbers don’t match) 

STEP 3: Check Your Bank Reconciliations

Go to Accounting > Bank Accounts and check every account is reconciled right through to the end of the quarter.  Ensure all of your accounts are linked up and that the balances are correct. 

If you've got unreconciled transactions from February but you're lodging your Jan-Mar BAS, those transactions won't be included. Your BAS will be incomplete. 

Reconcile everything first, then run the BAS report again. 

STEP 4: Review Your GST Coding 

This is where most mistakes happen. 

Click through to the detail of your BAS report. Xero will show you which transactions are contributing to each line. 

Look for anything that seems out of place: 

Common coding mistakes: 

• Personal expenses coded as business (that coffee you bought on Saturday morning that had nothing to do with work) 

• GST claimed on things that aren't GST-claimable (residential rent, bank fees, some government charges, and partial claims like insurances) 

• Income transactions with the wrong GST code  
• Duplicate transactions (same expense entered twice, once from bank feed and once manually) 

If you spot something wrong, fix it now. Edit the transaction, change the GST code or category, and re-run the BAS report. 

STEP 5: Check For Missing Transactions 

Run a Bank Summary report for the quarter. 

Compare the total money in and total money out to your BAS figures. 

If your bank statement shows $150,000 came in but your BAS only shows $100,000 in sales, you're missing $50,000 worth of transactions somewhere. 

Maybe: 

• Your bank feeds stopped working 

• You forgot to import a statement 
• Transactions are sitting unreconciled 

Find the gap. Fix it. Re-run the BAS. 

STEP 6: Look at PAYG Withholding (If You Have Employees) 

If you run payroll, your BAS will include PAYG withholding – the tax you've taken out of employees' wages and need to pay to the ATO. 

Check the W1 and W2 figures match what you've paid and withheld through the quarter. 

If these don't match your payroll records, something's wrong with how wages have been processed. 

STEP 7: The Sniff Test 

Step back and look at the final number. 

If you owe the ATO: Does it make sense for the quarter you've had? If you've been busy and making sales, you should owe GST. If you owe $15,000 but you've only made $50,000 in sales, something's very wrong. 

If the ATO owes you: This can happen, especially if you've bought a lot of equipment or had a quiet quarter. But if you're getting a huge refund and you've been profitable, double-check your coding. 

Trust your gut. If the number feels off, it probably is. 

WHAT TO DO IF SOMETHING'S WRONG 

If you spot errors during your review, fix them before you lodge. 

For coding errors: 

• Edit the transaction in Xero 

• Change the category or GST code 

• Re-run the BAS report to see the corrected figures 

For missing transactions: 

• Import missing bank statements 

• Reconcile everything 

• Re-run the BAS report 

For reconciliation issues: 

• Work through unreconciled items 

• Match payments to invoices 
• Clear any duplicates or errors 

Don't just lodge it and hope for the best. Fix it first. 

KNOWING WHAT YOU'RE WORKING WITH 

Here's the bigger picture: reviewing your BAS isn't just about getting the numbers right for the ATO. 

It's about knowing what you're working with. 

When you understand what your BAS is telling you, you understand: 

• How much GST you're collecting (which tells you about your sales) 

• How much GST you're paying (which tells you about your expenses) 
• Whether your revenue and expenses are tracking where you expected 

This is the same principle that applies to everything else in your business finances. 

You can't make good decisions if you don't know what you're looking at. 

Your Profit and Loss tells you if you're profitable – but only if the numbers are coded correctly. 

Your bank balance tells you how much cash you have – but only if you understand what's already spoken for (GST, tax, unpaid bills). 

Your cashflow forecast tells you what's coming – but only if you're tracking your invoices and expenses properly. 

Every report in Xero relies on you coding things correctly and understanding what the numbers mean. 

Your BAS is just one example, but it's a good place to start because the deadline forces you to look at the numbers instead of ignoring them. 

WHAT TESSA LEARNED 

After Tessa reviewed her BAS properly for the first time, she found two mistakes: 

1. Two duplicate transactions from when the bank feed imported something she'd already entered manually
2. A whole month of fuel receipts sitting unreconciled because she'd been too busy to do her bank recs 

Once she fixed those, the BAS number dropped from "terrifying" to "about what we expected". 

She lodged it, paid what they owed, and made herself a promise: from now on, she'd review the numbers before the deadline, not three days before in a panic. 

Knowing what you're working with beats guessing every single time. 

YOUR BAS CHECKLIST 

Before you lodge your next BAS, work through this: 

☐ Run the BAS report in Xero for the correct quarter 
☐ Cross-check with your Profit and Loss – do the numbers align? 
☐ Confirm all bank accounts are reconciled to the end of the quarter 
☐ Review GST coding on major transactions 
☐ Check for duplicates or missing transactions 
☐ Verify PAYG withholding if you have employees 
☐ Do the sniff test – does the final number make sense? 
☐ Fix any errors you find 
☐ Re-run the report 
☐ Lodge with confidence 

READY TO UNDERSTAND YOUR XERO REPORTS? 

Reviewing your BAS is just the start. When you understand what all your Xero reports are telling you – P&L, Balance Sheet, Cashflow, Aged Receivables – you can make better decisions about pricing, spending, and where to focus your energy. 

The Unexpected Bookkeeper course teaches you: 

• How to read every key Xero report (not just run them) 

• What the numbers mean for your business 

• How to spot errors before they become problems 

• BAS preparation and lodgement step-by-step 
• Weekly co-working sessions to work through your bookkeeping with support 

You can't make good decisions if you don't know what you're looking at. 

Join Unexpected Bookkeeper today.