Search This Blog

Friday 27 June 2014

Discussion - An Accountant or a Bookkeeper?

An Accountant or a Bookkeeper?
Answer:  Both

There is a fairly big blurred line overlapping the roles of the Bookkeeping world and the Accounting world. Noting that neither term ("Bookkeeper" or "Accountant") are protected words, in Australia. What this "non protected" means is that anybody can call themselves either title without any qualification or certification.

It is also fairly widely accepted and acknowledged that the roles of a Bookkeeper and an Accountant can and do overlap. Many accountants include the role of some, if not all, bookkeeping services in the list of services they offer and many bookkeepers provide services that would overlap into the areas that many consider "accounting work".

A further factor in the blurring of the lines is the broad range of services that either could provide and that while one bookkeeper or accountant may provide services A, B, C, D & E another person who calls themselves exactly the same thing may provide services D, E and F. Accordingly a business looking for either should understand what role or services they are seeking and then ensure that whomever they are talking to can and does provide those services.

The real question for a business is "What part of my business do I need assistance with?"
Typically a business requires assistance with;
  1. business processes (sales, purchases, banking, payroll, inventory management maybe, time billing/costing maybe)
  2. Business transaction recording
  3. Reporting and reviewing performance
  4. GST and BAS compliance
  5. Employment requirements
  6. Planning and Budgeting
  7. The use of software to achieve some or all of the above
  8. Income Tax law
Bookkeepers, in general, can assist business with all aspects of all of the above, with the exception of H: Income tax law.

Accountants, in general, can assist with all aspects of the above, but tend not to get specifically involved with the intricacies of A: Business Processes nor B: Business transaction recording. Also they can't do Income tax law unless they are also a registered Agent.

Larger businesses are subject to far more rigorous reporting requirements and typically the statutory reporting requirements of such businesses are provided by appropriately educated and experienced accountants. Smaller business does not typically require Statutory reporting.

The legal restrictions
Then comes the impact of the Tax Agent Services Act 2009 which restricts the services that some people can provide:
  1. a Registered BAS Agent can provide Advice, Certainty and represent a business to the Tax office on any matters that are a defined "BAS Provision", which includes GST, PAYG Withholding, payment of PAYG Instalments, payment of FBT, WET, FTX, LCT
  2. a Registered Tax Agent can provide Advice, Certainty and represent a business to the Tax Office on any matters of Tax Law which includes the "BAS Provisions". (Note the overlap)
Typically an Accountant is also a registered Tax Agent, but not always and typically a Bookkeeper may be a registered BAS Agent, but not always.

With the implementation of the TASA 2009 the terms Tax Agent & BAS Agent have in some places become aligned with Accountant and Bookkeeper respectively, however this is a mistaken position and incorrect. Neither an Accountant nor a Bookkeeper can provide Tax Services nor BAS Services unless they are registered to do so.

If you are not registered you may still provide accounting services and bookkeeping services! Where is the line? It is about the "Advice" or "provision of certainty (Ascertain)" or "represent to the commissioner" that means a person crosses the line into needing to be registered. There is much bookkeeping work and much accounting work that is NOT BAS or Tax related.

Now about doing bookkeeping - what is it?
Typically a business should look for a person providing bookkeeping services when they are looking to establish their business processes. Bookkeepers are typically experienced in the intricacies of how to use business process software to "do the business" and have the bookkeeping/accounting records created at the same time.

Typically bookkeeping services include the verification that the records are correct and complete. Typically also providing reports for management and operational purposes. These reports tend to also be the final reports for BAS purposes and the provision of information heading for income tax purposes.

Somewhere in this verification and reporting process the term "accounting services" kicks in and overlaps. Accounting typically referring to the verification and reporting on the records and moving into then applying the income tax law.

When do you choose a bookkeeper and when do you choose an accountant?
It depends on the person/the firm and not the title that hangs on the door. It depends on the services the business is needing and whether the person is suitably experienced and skilled to provide those services.
Is an accountant or bookkeeper better suited for first time business owners? 

 Both. A first time business requires assistance in understanding and setting up their business processes so that the business process makes sense from a bookkeeping point of view, let alone a business point of view.
They also require assistance to ensure they have understood how the world of GST impacts their business, how employment obligations impact the business and how Income Tax Law impacts their business.

As I have described that Income Tax typically is outside of the scope of those normally termed "Bookkeepers" then the "Accountants" are typically involved.

Why is it worth using a registered bookkeeper?
There is no real thing as a "Registered Bookkeeper". A "Registered BAS Agent" is registered with the Tax Practitioners Board and then is able to provide certainty, advice and represent a business to the Commissioner about BAS Provisions.

A "Certified Bookkeeper" is a member of the Institute of Certified Bookkeepers who has met certain education and experience or competency requirements. For a business to use a "Certified Bookkeeper" provides that business with a level of security and knowledge that their bookkeeper has been reviewed by others, that they are required to maintain levels of education, currency, competency and that they have access to support and resources that would not be available to an unconnected bookkeeper.

Friday 20 June 2014

Superannuation Guarantee (SGC)

Superannuation Guarantee Contribution (SGC) is made on the Ordinary Time Earnings (OTE) of an eligible employee. OTE are part of the normal definition of “Salary & Wages” (S&W) but not entirely.

SGC rate is 9.25% for the year 1 July 2013 until 30 June 2014.

It is proposed that the rate will increase annually to a proposed 12% as of 1st July 2019.
Schedule of proposed super guarantee increases:

1 July 20149.50%
1 July 201510.00%
1 July 201610.50%
1 July 201711.00%
1 July 201811.50%
1 July 2019 12.00%

The new rate applies to the first pay and the entire amount of that pay, paid on or after the respective 1st July.
Employers must provide a SuperChoice form to employees within 28 days.

Superannuation payments are tax deductible to an employer if received by the Superfunds by the 28th of the month following each quarter.

Super Guarantee Charge is paid by employers who miss the payment date; it is not deductible and also attracts interest and penalties.

Employees Who Are Not Eligible for SGC:
  • Employees paid less than $450 in a month (Hospitality award reduces this to $350
  • Employees under 18 years working 30 hours or less per week
  • Non-resident employees for work done outside of Australia
  • Foreign executives who hold certain visas or entry permits
  • Employees paid for domestic or private work 30 hours or less per week
  • Employees who receive payments under Remote Jobs and Communities Program (formerly CDEP)
  • Members of the Army, Navy or Airforce reserves
  • Employees temporarily working in Australia, covered by bilateral super agreement.
Self Employed - sole traders or partners in a partnership are not part of the SGC system.

Super for temporary residents departing Australia
Employees with a temporary visa and working in Australia, employers must make super guarantee contributions to a fund chosen by the employee or default fund of the employers.
On departing Australia the employee can generally claim their super through DASP (Departing Australia superannuation payment). This can be claimed online or by paper before you leave Australia.

If the employee has not claimed their super after a minimum of six months after leaving Australia the super will be transferred to the ATO and held until claimed.

Not all temporary visa employees can claim DASP, these include Australian and New Zealand Citizens, Permanent Australian residents, and Retirement visa holders and Investor Retirement visa holders.

SuperChoice form
  • An employer must provide a SuperChoice form to each employee within 28 days of commencement.
  • The information required may be obtained from within other forms
  • If an employee has not returned the form within 28 days the employer must pay into the default fund.
  • An employer must adhere to the choice made within two months of receiving the form
  • The penalty for failing to provide a Choice Form to employees can be up to $500 per quarter.
Remember that you should always consult the award, enterprise agreement or other industrial instrument that governs the worker’s pay and conditions. The relevant instrument may provide for super to be paid on categories not usually considered for super.

Friday 13 June 2014

Ownership of Data - Cloud Based Accounting

Bookkeepers operate in different modes in terms of using software for their clients. With cloud based software the issues are around who has the contract with the software provider and who has legal/professional rights to the access to the software:

The different scenarios
  • The business has initiated, purchased and paid for the subscription to the software in their own right and provided access to the bookkeeper.
  • The bookkeeper/adviser has initiated, purchased and also pays the software company for the subscription.  The bookkeeper/adviser then provides access to the software to the business and also is including a fee for that software in their total invoicing.
  • The bookkeeper/adviser has initiated, purchased and is accredited with being the adviser, for purposes of software partner program accreditation, but the business pays the software company directly for the subscription.
Once a bookkeeper has been paid for the processing of data then the detailed data and the results of that data must be provided to the client.

It is ICB's view that any professional who no longer acts for the business should provide the business with the ability to take over the subscription immediately. 

If there is a fee dispute we believe this is a separate issue from the access to the business records and any subscription to cloud based / browser based software.

If the client did not have the ownership of the subscription to the software, it should be provided to the business.  It should be made clear as to what date the subscription has been paid up until and from what date the business will have to arrange with the software supplier to take-over the payment arrangement. 

Even in the most conservative view any adviser who did "own" the subscription has an obligation to provide the detailed data and the results of that data to the business is some generally usable form. PDF versions of all reports would appear appropriate.
What is our recommendation in each of the above situations:
  • A business should be the primary account owner / administrator of the software subscription that is being used for their business.
    Recommend: The adviser should always have copies of the out-put of their work and evidence of the status of the "file" when they conclude an item of service.
  • A business should always have their own password access.
    Recommend: The adviser should have a separate user ID and password.
The commercial agreement between adviser and the client should be established and understood at the commencement of the relationship, ensuring no surprises should the relationship deteriorate.

For the entire ICB Members resource library in relation to Software

Friday 6 June 2014

Software Feature Comparison - Inventory

A tool created by ICB to allow the Bookkeeper to capture all the business processes of their client and then compare against the various software providers.

In the April 2014 newsletter we release the Inventory functions comparison.

Thank you to the people who have responded with feedback on the previous features comparison we started with in January. The list has been updated accordingly.

This month we have had input directly from MYOB, Intuit, Reckon and Saasu for information on Inventory.
There is a lot of difference between the software offerings in the inventory features. Some software companies offer products specifically geared towards inventory management that are not included in our product comparison, and other companies offer add-on solutions for greater detail and control that will integrate with the accounting software.

Please visit the website for the full introduction to the comparison list and to download a copy of the spreadsheet.

We have extracted a small sample of the comparison chart Please visit the website for the full introduction to the comparison list and to download a copy of the complete spreadsheet.

Software Feature Comparison