Can Bookkeepers Lodge Tax Returns?

To many people, bookkeeper and accountant basically mean the same thing. They get mixed up on who should do what. But the two terms differ significantly in many areas, despite some overlaps here and there. 

To answer the above vital question, we have to look at the different roles each handles, their educational qualifications, and who to hire based on your business needs. 

And did you know that accountants and bookkeepers can be BAS agents? We’ll also dive into the roles of a BAS agent.

Fundamental Differences Between a Bookkeeper and Accountant

Bookkeepers

A bookkeeper ensures your books are up-to-date and complete. That way, you (the business owner), investors, accountants, or bankers won’t have difficulty gleaning valid and current financial details. 

Make no mistake. Tax preparation isn’t the only aspect of financial tasks. Maintaining current, accurate, and complete books can help you in many ways: 

• Run your business operations seamlessly
• Avoid bank overdraft charges
• Secure funding
• Boost your business growth 
• Save money

According to a recent Xero survey, 54% of accountants revealed that their clients don’t keep current books. The result? The accountants have to charge them for extra hours to prepare tax returns. 

What are the Functions of a Bookkeeper?

Every company or organisation generates receipts, purchase invoices, and expense claims. The primary task of bookkeeping is to transform these items into an accurate and orderly record. The bookkeepers can employ a software system to process your business financial transactions. Some (not all) bookkeepers can also prepare tax returns, and run payroll. 

Here are some of a bookkeeper’s duties:

• Process expense claims
• Process purchase invoices
• Issue sales invoices
• Manage filing and documentation
• Chase payments from clients
• Reconcile bank accounts in Xero and other software
• Post and report journal entries
• Run payroll
• Prepare sole trade accounts and self-assessment returns
• Offer basic tax returns

Bookkeepers’ frequency of working

Your bookkeeper can take care of your books monthly, weekly, or fortnightly. It all depends on your business complexity and size and the level of comprehensiveness you desire. 

Bookkeepers’ education qualifications

Bookkeeping doesn’t have defined qualification requirements that are regulated such as financial planners. However, serious bookkeepers take up studies and join recognised bodies such as the International Association of Bookkeepers (IAB). Vast financial experience in banking and larger firms can often help indicate the expertise and ability of a bookkeeper.

Tax skills of bookkeepers

Some have basic tax skills while others don’t have any, so be sure to ask. Sole traders can hire qualified bookkeepers to prepare accounts, handle tax returns, and perform basic self-assessment returns and tax-related tasks.

Accountants

Accountants’ advice can go beyond preparing taxes. They may advise you on future tax plans and continuous business performance evaluations. For instance, they may give you ideas on boosting operation results and remaining compliant with financial regulations. Therefore, meeting with them at least once per year or quarter (to review your books) is recommended.

What are The Roles of an Accountant?

An accountant’s primary role is to take care of advanced compliance requirements like lodging tax returns and accounts and advise you on strategic business management. They also regularly plan tax strategies to prevent tax liabilities and advise you on managing cash flow. 

Here is a breakdown of their duties:

• Prepare sole trade accounts and self-assessment returns
• Prepare limited company accounts
• Corporation tax returns
• Calculate capital gains tax
• Prepare complex self-assessment tax returns
• Prepare management accounts
• Prepare business plans and cash flow forecasts
• Advice on business structure
• Provide basic tax advice
• Provide specialist tax advice

Accountants’ frequency of working

An accountant doesn’t work as frequently as a bookkeeper. For instance, they may work on annual accounts or quarterly statements. Your business may occasionally involve them in more specialist tasks such as working on cash flow forecasts and business plans. 

Accountant’s educational qualifications

In Australia, a person aspiring to be an accountant needs higher education qualifications such as:

• Bachelor of Accounting, Commerce or Business
• Masters of Professional Accounting
• Certified Practicing Accountant (CPA) program
• Chartered Accountant (CA ANZ)

To qualify as an accountant, one must sit for higher-level exams. 

Accountants’ Tax Knowledge

They need to have a vast knowledge of corporation tax, capital gains tax as well as state, federal, and international taxes. You must be sure they’re experienced and knowledgeable enough to handle a particularly complex tax issue. 

A BAS Agent

A Business Activity Statement (BAS) agent manages BAS on your behalf. The agent may be an accountant or bookkeeper with BAS Agent registration. 

The roles of a BAS Agent

BAS agents can offer advice on BAS, lodge your business BAS with the Australian Taxation Office (ATO), or represent you to ATO concerning:

• All Goods and Service Tax (GST)
• Payment of Fringe Benefits Tax (FBT)
• Payroll aspects related to tax amount withholding
• Income tax payment via PAYGI and more. 
• Wine Equalisation Tax (WET)
• Fuel tax

Additionally, they may:

• Design and implement compliance systems that adhere to BAS and business requirements
• Advise you on the legal implications of the BAS provisions and laws
• Review your company operations and reports to ensure they adhere to the BAS provisions
• Offer you the certainty that you’re on the right path 

Conclusion

A bookkeeper can offer some good fundamental tax guidance if you run a business that doesn’t require more complex tax preparation and strategies. They’re also not as costly as accountants. 

If your business is registered as a company, have an accountant work on your annual accounts and corporation tax returns. 

We hope each professional’s role is now clear, and you now know who to call for your specific needs. For professional bookkeeping services, consider Visory.

No single bookkeeper fits every company. So once you partner with Visory, we will assign you an expert bookkeeping team that understands your industry inside-out. Our team will dedicate their efforts to ensuring your books are up-to-date. 

Want more information about our services? Let our Success Manager analyse your specific business needs. Get a Callback!