When you’re running a small business, engaging the right support to help you fulfil your tax obligations and keep your business in good shape is vital. But the terminology used can sometimes be confusing. Quite often you’ll hear the phrases: tax agent, BAS agent and accountant used interchangeably but the perception that they all do the same thing is wrong. There are important differences between the roles and it’s important to understand them so that you get the right support. So what is a BAS agent and what is the role of a tax agent and accountant and how do they differ?
What Is A BAS Agent?
So let’s start with a BAS agent. As we highlighted in a recent blog, BAS Requirements For Small Business, it stands for Business Activity Statement and it is used to report on and pay several different types of taxes including Goods and Services Tax (GST) and Pay As You Go (PAYG) instalments. A BAS agent is therefore authorised to prepare and lodge a BAS return on a business’ behalf and provide advice on your day to day business taxes, primarily limited to your GST and PAYG obligations.
Regulation for BAS agents was introduced in 2010 to ensure that contract bookkeepers, who had traditionally assisted small business owners with their GST and PAYG, were appropriately qualified to offer this support. Following the amendment of the Tax Agent Services Act, to become a Registered BAS Agent you need to have 1000 hours of experience in providing these services, have professional indemnity insurance and pass the ‘fit and proper person’ test. This set in place a distinction between the role of a bookkeeper who may be doing data entry and bank reconciliations for example and someone qualified to prepare your BAS statement. Many bookkeepers had to complete or update their knowledge, primarily around GST legislation, to continue offering this service.
While this isn’t quite as detailed as the requirements for a Registered Tax Agent, it means that those completing your BAS have a level of experience specific to these needs and are legally accountable to the Tax Practitioners Board. A good BAS agent can prove invaluable to your business as they can make it so much easier for your accountant to offer sound advice based on an accurate picture of your business financials.
What Is A Tax Agent?
The role of a tax agent is a little different to this. Tax agents are more specialised and qualified in tax law. Providing they are registered with the Tax Practitioners Board they are licensed to prepare and advise on a broader range of tax issues including but not limited to an income tax return and they are suited to working with growing businesses. When it comes to doing your business taxes, they will review all your annual income and expenses and ensure that you get all the relevant tax deductions available to you. Keeping your business tax liability at a reasonable level is critical when you’re running a small business. A good tax agent is therefore essential as they take away the pressure of needing to understand the ins and outs of your tax liability, what you can claim as expenses and deductions and what you can’t.
So how do these roles differ from that of an accountant?
What Is The Role Of An Accountant?
An accountant is the heavyweight when it comes to managing and growing your business. A good accountant will perform a number of critical roles for a business including (but not limited to) ensuring that you are operating under the right business structure, helping you with strategic planning, financial management, tax planning, wealth and risk management. A good accountant will be your trusted business advisor, keeping you on track and explaining the implications of your key business decisions to maximise for business and financial success.
So whereas a BAS agent and a tax agent are both involved in dealing with lodgment and compliance, the role of the accountant is to help you take a longer-term view of your business and to help set you up to achieve your business goals. While an accountant should effectively be able to perform both of the above roles, their level of expertise to advise on a much broader range of issues means that their hourly rate is typically higher. This means you are better off engaging the right professional for the right job. Each professional performs a unique but important role, depending on the needs of your business and working with all of them at the right time ensures you are covered in terms of both compliance and business growth.
And what if you can find a bookkeeper who is also a BAS agent and Tax agent and who works directly with professional accountants and business advisors? This is the ideal scenario for a business owner as you can essentially get it all done in one place! And that’s exactly how we’re set up at Numera! Having your bookkeepers and accountants working hand in hand is the best solution for a business owner as you can be sure everyone is working on the same page, seamlessly.