Accountant, bookkeeper and tax agent – what’s the difference?
Accountant, Bookkeeper and Tax Agent: What's difference?
As a small business owner, you're expected to understand all aspects of your business, even those outside your expertise or interest. One area that often poses a challenge is accounting.
In the world of finance, several roles are essential for managing a small business. The most common roles you will encounter are bookkeepers, accountants, and tax agents.
These three terms are often used interchangeably, but they each provide different services and play unique, valuable roles within your business.
Understanding the differences between an accountant, bookkeeper, and tax agent is crucial so you can enlist the right help when needed.
Accountants
Accountants usually assist in preparing financial statements that reflect your business's performance. They are often responsible for collecting, recording, analysing, and visualising a business's financial operations. Depending on the size and scale of your business, accountants can take on varying levels of responsibility.
An accountant interprets financial information to help with decision-making processes. This can mean providing annual information or actively keeping you updated with real-time data. Accountants are also often able to provide financial advice.
Bookkeepers
A bookkeeper maintains your business's account records. They help small businesses by recording financial transactions in account books or accounting software packages. Bookkeepers can be internal but are more often outsourced to professional services.
A bookkeeper's responsibilities include:
- Verifying recorded transactions and reporting any irregularities
- Keeping financial records
- Maintaining and balancing accounts
- Monitoring cash flow and lines of credit
- Producing financial statements, budgets, and expenditure reports
- Preparing invoices, bank deposits, and purchase orders
- Reconciling accounts against monthly bank statements
Tax agents
Tax agents differ significantly from the above professions. Tax agents are specialised professionals who have studied law and tax and meet the requirements set out in the Tax Agent Services Regulations (TASR). They must also be registered by the Tax Practitioners Board (TPB). With these qualifications, a tax agent can provide tax services to the public and businesses.
Often, accountants are also tax agents, but this is not always the case.
Some roles of a tax agent include:
- Representing your business in dealings with the Commissioner of Taxation in relation to taxation law disputes, audits, or reviews
- Advising on liabilities, obligations, or entitlements your business needs to comply with under taxation law
Accountants, bookkeepers, and tax agents are distinct professions with separate tasks and responsibilities. As a small business owner, while these services aren't always necessary, they can significantly ease your workload. They help avoid costly mistakes and add real value to your business.
Finance management can be a tricky part of small business ownership, so enlisting the help of professionals can be a lifesaver.
Need help with your accounting?
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One of the most powerful decisions you can make with your superannuation is whether to run your own self-managed super fund (SMSF) and whether to invest in property through it. Most people know it's possible to use super to buy property. Far fewer know how to do it well. The following seven tips are designed to help you make the right decisions. 1. You Can Borrow Money to Purchase Property in Superannuation. Don't have enough in your SMSF to buy an investment property outright? Since 2008, superannuation held in a self-managed super fund can be used to borrow money for property purchase. This is done through a 'limited recourse loan' using a Bare Trust as the Custodian entity. You can't borrow the total value of the property—typically it's up to 80% for residential properties and 60% for commercial properties, with the required deposit held in the SMSF as security. The SMSF then makes the loan repayments, with rental income received by the fund and property expenses paid by the fund. Importantly, if there is a default on the loan, your other assets in the SMSF are generally protected from standard debt recovery and bankruptcy proceedings. The lender only has recourse to the property itself. Upon completion of the loan repayment, ownership of the property transfers legally to the SMSF. 2. Follow These 8 Steps to Set Up Your SMSF Setting up an SMSF properly can be a complex process. It’s best to set up an SMSF with the assistance of a qualified superannuation advisor, like us! We can assist with both the initial setup and the ongoing management of your fund. There are eight core steps to SMSF set up: Select the appropriate structure and name Sign the trust deed that covers how your SMSF is set up and run (it can have up to four members) Establish a trust for the SMSF by investing assets into the fund Register your SMSF with the ATO Set up a separate bank account for your fund Submit your tax file number (and those of any other trustees) Obtain an electronic service address to receive employer contributions into your fund (if applicable) Roll over funds from your existing superannuation account into your SMSF 3. Keep a Liquidity Buffer If you're buying property through superannuation, make sure you plan to keep a liquidity buffer of cash and/or shares in your fund. Lenders will check for this before lending to you—it should be at least 10% of the value you intend to borrow. But beyond satisfying the bank, it's simply good risk management. Property is an illiquid asset. Having accessible funds in the SMSF means you're not caught short if repairs are needed, the property sits vacant, or an unexpected expense arises. Because superannuation is central to most Australians' retirement security, the government has carefully regulated what can and can't be done with it. They don't want people gambling their retirement away on poor investments or incorrectly using their superannuation fund. 4. Use the Rental Income to Repay Your Loan You cannot live in the property you purchase through your SMSF until after retirement. Most people purchase an investment property and use the rental income generated to repay the loan—which makes excellent financial sense. The key is selecting a property that rents easily and delivers a strong rental return. Your purchasing criteria may look a little different to buying a home you'd live in yourself. For example, proximity to public transport, local amenities, and average rental rates in the area matter more than personal preference. 5. Get It Right and Enjoy Significant Tax Efficiencies One of the most compelling reasons to invest in property through superannuation is the tax efficiency on offer. These benefits can significantly improve the long-term return of a property investment compared to holding it in your own name. Key tax benefits include: No capital gains tax or tax no yearly investment earnings if under super caps. Salary sacrifice advantages if you're sacrificing salary payments into super, loan repayments are effectively tax deductible. Capped tax on investment income—the maximum rate of tax on income after expenses is 15%. Any capital gains on investments held for 12 months or more, is taxed at 10%. Standard investors outside super can pay up to 47%. 6. Follow the Same Due Diligence Rules as Any Property Purchase Buying through superannuation doesn't mean relaxing your standards. If anything, the rules governing SMSFs mean you need to be more rigorous, not less. Property is likely one of the most significant financial decisions of your life. Research, not emotion, should drive your choices. The same rules apply whether you're buying in or out of super: Visit and compare multiple properties Know the values of similar properties in the same area Get all property checks performed by the right professionals Shop around for the right loan structure and lender Don't abandon good investor habits just because the structure is different. 7. Always Get Quality Professional Advice Nothing comes without risk—but the right advice significantly mitigates it. The key is understanding what you're getting yourself into: making informed decisions based on accurate data; keeping a diversified superannuation portfolio that doesn't place all your eggs in one basket; and not underestimating how complex buying property in superannuation can be. Sound Simple? It’s all in the details. If the above tips have made it sound straightforward, know that the detail is where the complexity lives. Getting professional advice from the start helps ensure you make the best possible decisions for your future. When selected according to rigorous property-purchasing criteria, property can be an excellent way to grow your superannuation and increase your chances of building a retirement fund that supports the lifestyle you want. Ready to Explore Property in Your SMSF? Whether you'd like to discuss whether an SMSF is right for you or need help setting one up, reach out to Ascent Accountants . If you want assistance managing the property within your fund, contact the Ascent Property Co team .
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