Suspend belief for just a moment.
Open your mind to the possibility that something you have known for years is a myth. Imagine everything you know about accountants and bookkeepers is a lie. Well, a misapprehension perhaps.
I invite you to have a brand-new conversation about tax professionals, your accountant, your bookkeeper and the staff you might employ to manage some of your accounts and recordkeeping. And even those who help you decide strategies, processes and systems.
It’s also worthwhile to consider what is really important in the relationship. What matters most? How you refer to them, or their respective skills, experience and real-life know-how? Or what you think you know about what they do or should do?
The question could be answered quickly and easily, however, it is probably helpful for you to understand a little of the background to better understand your reality.
You can call me on 0419 976 705 for the answer, or you can read on!
What’s a bookkeeper? And what’s an accountant?
Everybody thinks they know. The truth is there is no clear definition of either.
To many the terms are interchangeable. To others they are distinct disciplines. Many who would consider themselves a bookkeeper, are far from it in the opinion of others with different skill sets. Many who consider themselves to be an accountant look down on “bookkeepers” and consider them unskilled and almost redundant in the current era of cloud accounting solutions. Many bookkeepers are unimpressed with accountants who they think take every opportunity to belittle them and the role they play.
The average business owner is nonplussed or just doesn’t know or care. But I say they should. After all, their understanding of their own business probably depends (at least in part) on the right choice for the right reasons.
There has been a long-standing tradition in Australia in particular, where bookkeepers at their various skill levels have routinely recorded transactions and completed reconciliations within a business. Accountants have assumed the mantle in relation to taxation matters.
In recognition of the high-level role of the latter, the ATO and its offshoot, the Tax Practitioners Board (TPB), accredited qualified accountants as a Registered Tax Agents. Accounting professional bodies introduced their own up skilling regimes and we see Chartered Accountants and Certified Practising Accountants as almost synonymous with external accounting. As a vehicle to upskill those who prefer to be bookkeepers, professional associations such as the Institute of Certified Bookkeepers focused on the professionalism in that stream of accounting. In recognition that professional and certified bookkeepers have a major role in the Australian business community, both as internal salaried employees and external contractors, the Tax Practitioners Board introduced a new registration, the Registered BAS Agent.
So, in addition to bookkeeper and accountant, we can add Registered Tax Agent and Registered BAS Agent to the titles which enhance everyone’s ability to sow seeds of confusion and misinformation.
Let’s quickly look at the role of the bookkeeper. The term derived originally from “the keeper of the books of accounts”. Incidentally, the term “accountant” originated similarly.
In broad terms bookkeeping can be categorised as:
- data entry and transaction recording
- debtor management
- creditor management
- inventory control
- accounts processing and invoicing
- accounts reconciliation
- cash flow forecasting
There are of course a number of other higher-level functions which could be added to the list, but to do so in this context would serve no particular purpose.
A cursory look at these tasks would show that accountants are also capable of performing them. At this processing level, it’s pretty clear that many who call themselves accountants are not likely to want to be known as a bookkeeper, despite often performing identical functions.
In Australia today there are many contract bookkeepers who are also Registered BAS Agents. Given the relatively short time this registration has been available, and the need to create a critical mass of professionals who are authorised to work with their clients in relation to “BAS Agent services” as proscribed by the Tax Practitioners Board, the real world business experience and relative skill levels of Registered BAS Agents can fluctuate from very narrow to very broad.
Registered Tax Agents are not immune from that same deficiency.
The other problem
Nothing is straightforward, is it?
To further complicate how difficult it is to bring credibility to a complex profession, there are literally thousands of consultants who offer business advice, including business financial advice, who have no qualification and no certification in either bookkeeping or accounting disciplines.
They variously come from an IT background, risk management, systems management, HR management and general business management. And yet in many quarters they are held in higher regard than a highly credentialled and professional Certified Bookkeeper.
What then is the difference between a Bookkeeper and an Accountant?
At this point, we need to set aside tax registrations and specific qualifications. We need to know that neither title is protected in Australia, and we should acknowledge that generally those known as accountants hold a higher tertiary qualification beyond Cert IV.
You may be surprised to learn that in fact there is NO DIFFERENCE in the functions anyone in either stream is permitted to undertake as an employee or an unregistered (with TPB) external contractor.
When we add back qualifications, training and most importantly, experience, the worth of the bookkeeper or accountant is enhanced, but in terms of functionality the titles and roles are still interchangeable.
We’ll then assume that those who choose to be known as bookkeepers seek registration as a Registered BAS Agent, and those who want to be known as accountants seek registration as a Registered Tax Agent. And this is where there comes a point of difference.
In broad terms accountants and bookkeepers who are Registered BAS Agents sit side by side with Registered Tax Agents with some restrictions on the extent of Tax advice they can offer. Not subordinate as some would have you believe. Side by side.
Not all BAS Agents are fully across the extent of the allowed areas of engagement and not all Tax Agents are across every aspect of their brief. Everyone has their strengths, and everyone has areas where they need to refer to others who have specific experience or expertise.
What is the point?
Understand that all bookkeepers and accountants are different and bring different skills. Understand that the big difference is experience and specific real-world skills.
Be mindful that only suitably qualified and experienced bookkeepers and accountants who are registered with the TPB are permitted by law to provide many bookkeeping and accounting services for a fee.
Not all accountants are Registered Tax Agents. Not all accountants are bookkeepers or understand business bookkeeping and accounting systems. Not all bookkeepers are Registered BAS Agents. Not all are interested in lodging tax returns or offering services beyond data entry and bank reconciliations.
And finally, before you dismiss someone from within either stream, look to your own needs and expectations, look to the legislative environment to understand the compliance rules and ask yourself – what is required, and who is best equipped to get the job done properly?
And assess the services on value, not price.
And then call me (Kieran May) 0419 976 705. I’ll be more than happy to continue the conversation.