Bookkeeping costs set to rise as new laws come into effect

Costs for small businesses are likely to rise as a result of the Government’s new bookkeeping regulations, but SMEs will get higher standards of service thanks to the new system, an industry leader has said.

The comments come as the Government’s new regulations, which will streamline state agencies into one board, establish an industry code of conduct and enable new penalties, come into effect as of today.

John Birse, who sites on the board of the Institute of Certified Bookkeepers and is the divisional franchisor for Jim’s Bookkeeping, says the new changes are welcome.

“The new tax board is serious about improving the standard of services to tax payers, and I think that’s a good thing. I think there is potential for far better quality for tax returns and BAS returns as a result.”

The new regulations dictate that tax agents and BAS agents must register with the new Tax Practitioners Board, which will replace the six individual state boards. Membership fees will apply, and will be set at $500 for tax agents and $100 for BAS agents carrying on a business, with $250 and $50 for agents not carrying on a business.

Professionals registered under the old regimes will be registered for the new scheme automatically, but those not registered must do so now.

Additionally, tax agents will now require tertiary qualifications, a diploma, admission to legal practice or work experience including eight years of full-time work within the industry during the previous decade.

BAS agents will require an accounting qualification, such as a certificate, and work experience within the previous two years. The new code of conduct will also come with civil penalties, which include a written caution, an order to complete some form of education or suspension and termination of registration.

Birse says the new laws are part of the Government’s attempt to federalise and simplify state legislation, and will ensure businesses receive a higher quality of service due to higher standards of regulation.

“This new legislation sets up a new process where there is basically a stream of practitioners looking after income tax and a stream looking at BAS statements, all administered by one statutory authority. This is better than having six state boards, and should be more efficient.”

While Birse says costs for small businesses could rise as a result of the new legislation, he argues the benefit far outweighs higher prices.

“As far as adding to the cost is concerned, I think you have to look at the fact there will be a higher standard of professionalism. You will see that bookkeepers will now have to have a minimum qualification, and will have PI insurance as of next year. One would expect that the cost a small business owner would pay to a professional bookkeeper will rise.”

“But I don’t think that’s a bad thing. Overall, you have six state board combined into one, a higher standard of tax practitioners, I don’t see negatives at all and as for SMEs out there I think it means they are going to have a far better service.”

Birse does say the prospect of higher costs could cause some businesses to attempt their own bookkeeping. However, he says this is a mistake and SMEs should use professionals in order to save money.

“What we need to do is get businesses using the services of professionals. People are worried about that whole issue and may think they are saving money, but I don’t think that’s true. I think most businesses will find using professionals is much better and could save their business a lot of money.”