Ask yourself one question: who currently checks that your bank reconciliation agrees with your bank statement, and how often? If the answer is the person who prepares your tax return once a year, you are paying year-end rates for work that should have been done monthly.
- A bookkeeper keeps the file right through the year. An accountant works from the file at year end
- If you pay someone to prepare your activity statement, they must be registered with the Tax Practitioners Board to do that work
- You can check anyone's registration yourself on the public register, in about a minute
- A file that is already right makes the year-end work smaller, and cheaper, than a file that is not
- Most businesses need both roles, and the handover point between them is where money is lost
What does a bookkeeper actually do?
A bookkeeper maintains the accuracy of your file while the year is still happening. That means reconciling your bank accounts, entering and matching bills, chasing what customers owe you, running payroll, preparing your activity statement, and making sure the numbers on your dashboard are true on the day you look at them.
The important part of that description is the timing. Bookkeeping is a monthly discipline, not an annual task. Its value is that you can make a decision on Tuesday using a figure that is correct on Tuesday, rather than finding out in October how March went.
If your bank reconciliation is out, everything is out, and nobody discovers that at year end for free.
What does an accountant do that a bookkeeper does not?
An accountant works from the completed file rather than inside it. Year-end financial statements, income tax returns, the tax consequences of a decision, business structure, and the advice that depends on a full picture of the year all sit with the accountant.
The distinction people miss is that an accountant's work is downstream. It starts with your file and assumes the file is right. If it is not, the first part of the engagement is spent reconstructing what happened, and that is the most expensive way to buy bookkeeping. Nobody's year-end rate is the right rate for finding a duplicate supplier bill from November.
Who is allowed to lodge my activity statement?
You can prepare and lodge your own activity statement for your own business. What is regulated is doing it for someone else for a fee: a person or firm charging you to prepare or lodge your activity statement must be registered with the Tax Practitioners Board to provide those services, and preparing an income tax return for a fee requires registration as a tax agent. The line is drawn at a fee or other reward. Providing a BAS service or a tax agent service for one requires registration unless an exemption applies, and a BAS service is defined in section 90-10 of the Tax Agent Services Act 2009 as ascertaining, or advising about, your liabilities, obligations or entitlements under a BAS provision. Reward is broader than money and reaches barter and future work. Doing it unregistered carries civil penalties into the tens of thousands. See BAS services at the Tax Practitioners Board.
This is worth understanding rather than assuming, because it is the one part of the arrangement you cannot see from the outside. Not every bookkeeper is registered to do this work, and a bookkeeper who is not registered is not doing anything wrong by declining it. The problem only arises when nobody has checked.
How to check, in about a minute. The Tax Practitioners Board maintains a public register. Search the name of the individual or the business, and it will tell you what they are registered for and whether the registration is current. Do it before you engage anyone, and do it again if your provider changes hands. It is called the TPB Register, and alongside registered agents it lists certain unregistered ones and recorded breaches of the Code of Professional Conduct. Search the TPB Register.
There is a second reason it matters. Using a registered practitioner can offer protection from certain administrative penalties where a mistake was theirs rather than yours, provided the conditions are met. That protection does not exist if the person doing the work was never registered to do it. What it covers is specific: penalties for a false or misleading statement, and penalties for failing to lodge on time. It applies where you gave your agent all the relevant information and the error came from the agent not taking reasonable care. It does not apply where the agent was reckless or deliberately disregarded the law. See safe harbour at the Australian Taxation Office.
Do I need both?
Most businesses do, and the two roles are not competing. A useful way to think about it: the bookkeeper produces the file, the accountant interprets it, and the quality of the second depends entirely on the first.
| Work | Where it belongs |
|---|---|
| Bank reconciliation, weekly or monthly | Bookkeeper |
| Payroll and single touch payroll reporting | Bookkeeper |
| Activity statement preparation | Bookkeeper or tax agent, registered for that work |
| Year-end financial statements | Accountant |
| Income tax returns | Registered tax agent |
| Business structure and tax planning | Accountant |
| Teaching your team to run the file | Either, and rarely offered by either |
The handover point is where the money is. If the file arrives at year end reconciled, with the liability accounts agreeing to what was lodged, the year-end engagement is a review. If it does not, it becomes an investigation, and you pay investigation rates.
What does a wrong file actually cost?
Three things, and only one of them is a fee. The first is the extra year-end work, which is billable time spent finding what should not have needed finding. The second is the decisions you made during the year on numbers that were not true, which is unmeasurable and usually larger. The third is the position you are in if a lender, a grant body or the Australian Taxation Office asks for something and the file cannot support it.
None of that requires anyone to have been careless. The most common cause we see is simply that nobody owned the monthly work, so it happened when there was time, which was quarterly, which was late.
What should I ask before engaging anyone?
Five questions, and the answers tell you more than any quote.
- Are you registered with the Tax Practitioners Board for the work I am asking you to do, and what name should I search on the register?
- Who owns the Xero subscription, me or you, and what happens to my file if we part ways?
- What will I receive each month, and by which date?
- Will you reconcile the liability accounts against what was lodged, or only the bank?
- Will you show my team how to do the parts we should be doing ourselves?
Question two catches people out more than any other. If the subscription is in your provider's name, your file is in someone else's account, and the time to discover that is not the day you decide to move.
Question five is worth asking even when the answer is no, because it separates two different arrangements. Some businesses want the work taken away entirely. Others want to run the file themselves and need someone to set it up properly and teach them. Both are legitimate, and they are not the same engagement.
Where we fit
If you want the monthly work off your desk, that is what our bookkeeping and compliance services cover. If you would rather run the file yourself and just want it set up correctly with your team trained on it, our Xero training packages are built for that instead. Plenty of clients start with the second and never need the first.
Either way, the place to start is a look at the file you have now. Bring the report that does not look right to a free thirty minute Initial Discovery Session, and we will tell you which of the two you actually need.
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