A tax practice involves the preparation of tax returns for individuals, businesses, and self- managed super funds. It also involves the provision of accounting services, BAS preparation, and preparation of financial statements. To operate a tax practice in Australia you must be a Registered Tax Agent registered with the Tax Practitioners Board (TPB). Details on the TPB registration requirements are available at www.tpb.gov.au
To operate a BAS (Business Activity Statement) practice in Australia you must be a Registered BAS Agent registered with the Tax Practitioners Board. BAS practices generally provide bookkeeping, payroll and BAS services to their small business client base. There are no formal registration requirements to operate a bookkeeping practice. Bookkeeping practices normally provide bookkeeping, payroll, and other administration services to their small business clients.
At June 2015 there were over 37,000 registered tax agents operating 32,000 tax practices. Almost 76% of registered tax agents operate as sole practitioners with 80% having part-time or full time accounting or support staff. For BAS and bookkeeping practices 78% operate as sole practitioners with only 20% having staff.
Generally tax practices have much higher levels of fee income and owner profits than BAS practices and bookkeeping practices for the following reasons:
- The services provided by a tax practice are of a greater complexity than BAS and bookkeeping practices so the hourly fees charged to clients are much higher to compensate for this. Fees can be up to $500 per hour for complex tax matters versus as low as $20 per hour for simple bookkeeping services.
- A tax practice provides a larger range of services including preparation of tax returns, accounting, BAS preparation, and preparation of financial statements.
- The registration requirements to be a registered tax agent are much higher than for BAS agent registration or to operate a bookkeeping practice.