Bookkeeper, Accountant or Tax agent, Whats the difference?

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Bookkeeper, accountant or tax agent, what’s the difference?

Right now your business is growing and you know at minimum you will need to get your affairs in order for the end of tax season, you could be waiting on a large tax refund or know you will owe money to the Australian tax office and wish to determine the dollar value of this tax payment. As a new business owner you are also quickly becoming aware of the administration burden that comes with running a business.. The BAS reporting, insurances, payroll, invoicing, chasing payments and the list goes on.

As a tradesmen, chef, architect or barber you have up until this point focused on your craft and done the bookkeeping and administration on the side, however the administration in now starting to take up an uncomfortable amount of your time and taking away from the time you have available to get new clients and hone your craft.

One friend recommends their bookkeeper to you, another recommends his accountant and another says you should go with his tax accountant / tax agent, what’s the difference?

These titles can be different in various parts of the world, however if you live anywhere in Australia such as Sydney or Wollongong the different titles mean the following:

Bookkeeper: Bookkeepers are the first step to getting your financial system in order, categorizing and reviewing data to make sure that each transaction that takes place in your business is allocated to the correct account, which eventually flows through to the financial statements such as profit & Loss and the balance sheet. Bookkeepers also generally hold BAS agent certificates allowing them to lodge your business activity statements with the ATO which will include your PAYG tax withheld, GST and income tax installments. Bookkeepers will generally charge less than tax accountants but will not be able to lodge your tax returns or sign off on your financials, by law they should also leave it to a tax professional to set up your chart of accounts in your accounting system.

Bookkeepers Also assist with accounts payable, accounts receivable (Chasing up payment), invoicing, payroll, superannuation and general admin and troubleshooting with your accounting system, they do a lot of the ‘dirty work’ that tax accountants might not want to deal with.

BAS Agent: A BAS agent is an individual who is registered with the tax practitioners board to carry out functions such as business activity reporting, Installment activity statement, payroll and bookkeeping. They will not be able to lodge your tax return, or give you tax advice unless it relates to limited parts of the tax code such as fringe benefits or GST. Generally, BAS agents are bookkeepers who charge bookkeeping rates and also take care of general administration, they do not usually take care of high-end accounting functions such as strategy, budgeting or cost accounting. In most cases the titles BAS agent and bookkeeper can be used interchangeably, however it is possible to be a bookkeeper and not have a BAS agent certification.

Tax Agent: Tax agents are registered with the Tax practitioners board to lodge your tax return, give detailed tax advice, and take care of payroll and BAS reporting if needed. They are the link between businesses and the ATO and will generally also take care of bookkeeping depending on the size of their client base, however they may charge more than a straight BAS agent to manage your affairs. You could be better off hiring a bookkeeper or BAS agent for your day to day operations and consulting with a Tax accountant or ‘agent’ at the end of the year to lodge your return. Tax agents will generally also hold their CPA and can help set up business structures and plan ahead for the future tax consequences of your business strategy.

CPA or CA: A Certified public accountant or chartered accountant (Both relatively the same qualification) are accountants who have acquired the necessary practical experience and completed rigorous exams to give them a robust understanding of Australian accounting standards, Australian tax law and other useful insights to service clients as a public accountant. They will generally be well versed and knowledgeable in business development, costing, budgeting and high-end accounting functions. Although CPA or CA’s are generally also registered BAS or TAX agents they don’t have to be. This means that a CPA may only be able to lodge your tax returns if they are working for a CPA firm (where the firm has its tax agent certificates), unless they work for themselves and have personally got their BAS and Tax agent certificates. CPA’s will generally charge more than bookkeepers and may not spend their time getting into the nitty gritty of your invoicing and reconciliations ect (they will usually give detailed advice on the correct procedures to follow and review bookkeeping work at the end of the month or year).

Accountant: The term accountant can be used generally to describe all of the above titles and is used differently by various demographics. Someone who recommends their accountant to you could be referring to their bookkeeper or their tax agent/accountant.

So, who do you hire?

You can use the following summary:

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If you need bookkeeping & BAS services:

Hopefully this blog has given some insight into the type of financial services you need and clarified any misconceptions you might have had.

If you are in need of BAS agent or Bookkeeping services you can contact CTK Accounting here: ctkaccounting.com

CTK Accounting services the Illawarra, Sydney and the Southern Highlands.

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