Invoice Check: Why You Should Verify Your Supplier’s ABN and GST Before Paying

When running a business, paying invoices might feel like a routine task, but it's crucial to ensure everything is in order before hitting ‘pay’. One of the key steps to safeguarding your business is verifying the details on invoices from your suppliers. Checking for a valid ABN, correct dates, and GST accuracy can save you from potential headaches down the line.

Here’s why it’s important to take a few moments to review your supplier’s invoice before making payment.

Ensure the ABN is Valid

The first thing you should look for on any invoice is the supplier's Australian Business Number (ABN). Why? Because a valid ABN shows that the business is registered with the Australian Taxation Office (ATO) and is operating legally. If your supplier doesn’t have a valid ABN on their invoice, you may need to withhold 47% of the payment and send it to the ATO. This is part of the No ABN Withholding Rule, and failing to comply can cause unnecessary tax complications for both you and your supplier.

To avoid these issues, always check that your supplier’s ABN is valid by using the ATO’s ABN Lookup tool. It only takes a minute but could save you from potential tax penalties.

Verify GST Registration

Not all businesses are registered for GST. The ABN Lookup tool will also tell you whether or not your supplier is registered for GST. This is important because if they are registered for GST, their invoice should clearly list the GST amount. On the flip side, if they’re not registered for GST, they shouldn’t be charging it at all.

Mistakes around GST can lead to overpaying or under-claiming GST credits, which can be a costly and time-consuming error to fix later. Double-check the supplier’s GST registration to make sure everything lines up.

Correct GST on the Invoice

Once you’ve verified that the supplier is (or isn’t) registered for GST, check that their invoice reflects this correctly. If they’re registered for GST, you should see a breakdown of the total price and the GST amount. This ensures you’re not overpaying or under-claiming when it comes time to lodge your BAS. If they’re not registered, their invoice shouldn’t include any GST, and if it does, it’s a red flag that something’s not right.

By confirming that the GST amount is accurate, you’re protecting your business from potential ATO issues and ensuring you can claim the right amount of GST credits.

Check the Invoice Date

Another quick but important check is making sure the date on the invoice is accurate. This is especially important when dealing with multiple financial periods, as you want to make sure the expense is recorded in the correct period for BAS and tax reporting purposes. An incorrect date might not seem like a big deal, but it can lead to bookkeeping complications, especially when preparing for BAS or end-of-year tax reporting.

Why These Checks Matter

While it might seem like extra work upfront, taking a few moments to review the invoices you receive can save you a lot of hassle later. A quick check of the ABN, GST registration, and other details ensures that you’re paying the correct amount, claiming the right GST credits, and keeping your books accurate and compliant.

Failing to do these checks could lead to overpayments, ATO penalties, or delayed processing of your tax returns – none of which any business owner wants to deal with.

Bottom Line

Before you process payments, always double-check your supplier’s invoices for a valid ABN, correct GST information, and accurate dates. These small steps go a long way in protecting your business from errors and ensuring smooth financial operations.

If you need help with managing your invoices or want to ensure everything is compliant and accurate, reach out to us. Our bookkeeping services can assist you in staying on top of all your financial details, so you can focus on what matters – running your business!