The Difference Between A Tax Agent And An Accountant

Hands up who loves doing taxes?

Chances are, not many of you raised so much as a finger. Fair enough. Taxes, figures, and accounting aren't for everyone.

But they are definitely something that you need to get right.

New Zealand tax regulations are becoming increasingly complicated. It can be hard for individuals or businesses to understand their responsibilities with limited experience.

That's where the experts come in.

But between accountants, tax agents and bookkeepers, it can be hard to understand exactly who does what, and which is the best fit for you.

Let's take a few minutes to figure out the difference between a tax agent and an accountant so that you can make the smart choice for your business.


What Is A Tax Agent?

In New Zealand, a tax agent is an individual or organisation who has registered with the Inland Revenue Department (IRD) to prepare tax returns for clients. No qualifications or prior experience is needed to register. The only requirement is that an applicant has permission from at least ten taxpayers to file tax returns on their behalf.

Of course, there is some screening of applicants to ensure they have a clean record and no conflicts of interest.

If you want some peace of mind that you are hiring a reliable, experienced tax agent, you can find someone who is a member of the Accountants and Tax Agents Institute of NZ (ATAINZ). Tax agents who belong to this organisation are bound by the code of ethics and have to meet the requirements for membership.


What Do Tax Agents Do?

The name gives it away a little, doesn't it? There are no surprises - tax agents deal with tax! They can advise you on your obligations and entitlements according to the law, and deal with the IRD when it comes to tax returns and the like.

Most tax agents will take the financial transactions you have created throughout the year and then prepare your end of year tax return. They tend not to go through and check your coding and transactions, trusting that what you have produced is a true and accurate record.

This is fine if you have straightforward accounts or are experienced in your bookkeeping. However, if things are a little more complex or you aren't really sure what you are doing with your finances, then a Tax Agent may not be able to do what you need.


What Is An Accountant?

In New Zealand, anyone can call themselves an accountant, even if they have no experience. So how do you know you are not hiring someone armed purely with a calculator and not much else?

A sure fire way is to find yourself a Chartered Accountant (CA) who is registered with the CAANZ (Chartered Accountants Australia & New Zealand).

To be a member, you must have a university accounting qualification and at least three years of practical accounting experience. CA's must actively continue their education each year, so you know they are truly the experts in their field.


What Do Accountants Do?

The shorter answer would be what DON'T accountants do!

In a nutshell, accountants analyse and audit figures as well as giving financial and business advice to individuals and companies. Whew, that was a mouthful!

It is an accountant's job to make sure you are meeting the laws, following the correct procedures, and doing everything by the books, so to speak.

With regards to tax, an accountant can help ensure your business is operating according to tax laws in the most effective way. They can handle all your tax requirements, including tax returns. They will also be able to help you pay the right amount of tax, advising on what you can claim for and what you can't.

While many people think an accountant's main function is to do the end of year tax return, that is actually a very small portion of their job! Their real focus and where much of their passion lies, is in helping you grow a sustainable and successful business.

This means developing streamlined systems to save you time and money, discovering the most profitable parts of your business, and helping you work on the parts that are not working well. In the long term, a good accountant will help save you money by implementing easy to follow systems that you can maintain.


Which Is Right For Me?

So, do you need a Tax Agent or an Accountant?

If you already have your books and finances in order but need a little extra help with the technical tax stuff, you might be fine with a good tax agent. Because their work is less involved, their fees tend to be cheaper. 

However, if you feel like your business would benefit from some wise financial advice and all-around support, an accountant can handle a lot more than just your taxes.

Here at Strive Accounting, love to help our clients improve their overall business systems so that you need us less! We are qualified Chartered Accountants who can certainly handle your taxes. But our main passion is helping you to grow a business you love. Get in touch with us today for more info.