As we all deal electronically with the tax authorities there’s going to be more – not less – need for accountants. And it could mean new revenue streams for accountants and bookkeepers, if the digitisation of the Australian Tax Office (ATO) matches experiences in the UK.

Tony O’Reilly, tax director at KPMG, told Acuity magazine that when HM Revenue and Customs moved to a digital platform in the UK it actually created new revenue streams. The Big Four firm now helps companies transmit information directly to HMRC. KPMG’s UK practice has created a new business based on tagging financial statements.

The need for accountants is only growing in Australia. Australian tax law is not getting any simpler, and small businesses who lodge returns and activity statements directly with the ATO are facing an increasing compliance burden. Some of this, according to suggestions from the ATO, could see greater compliance responsibilities shifted to the accountancy and bookkeeping sector.

This will mean accountants who meet certain requirements and qualifications will be entrusted by the ATO to review clients’ records vigorously and ensure they’ve claimed deductions appropriately. Accountants already play an important role with the ATO today as something of a compliance gatekeeper. Along with a responsibility to ensure their clients don’t pay a dollar more than they need to in tax, accountants have a legal obligation to comply with the appropriate tax legislation.

Under Tax Practitioners Board requirements, accountants should not lodge a tax return where (for want of a better term) they should have known better. What used to be an ‘all care, no responsibility’ position is now one where accountants can face prosecution if they don’t take reasonable steps to prepare the return in accordance with the legislation, and ensure to some degree that the claims made are supported.

The ATO has also pushed for data transfer mechanisms that would require accountants to cross-check client data entry before it is submitted. In a digital world, then, it becomes even more vital for accountants to be involved at the beginning of the tax process, and not the end, to ensure clean and accurate tax returns.

It may seem that digital systems, which appear simple to use and reduce manual data processing work, automatically create perfect business data. In reality, capital versus income, GST versus non-GST, deductible versus non-deductible aren’t coded perfectly by a system, no matter how beautiful it is.

 

An Evolving Role

In a digital tax economy, the accuracy and efficiency of data the ATO is receiving from small businesses might be worse than ever if it’s not entered into systems correctly. Human errors are easy to make – it could be as simple as inputting a figure in the wrong box with the wrong code, for example – and could trigger unwanted attention from the ATO as a result.

Under other tax regimes (like in the UK), accountants traditionally get involved in the tax return process a lot earlier. They make sure systems are set up right and they are engaged to review their clients’ accounts more frequently.

If that happens in Australia, an increasingly digital tax landscape will softly shift accountants from form-filling and lodging services into the role of advisors, joining small businesses at the outset of the process, rather than at the end.

Technology makes it increasingly easy for small businesses to deal directly with the ATO, and accountants of the future will be called upon for compliance advice. Their expertise will simply be applied at a different point along the timeline.

Then there is the expansion of digital tax tools such as myTax. ATO Second Commissioner Andrew Mills assured accountants in a 2015 speech that: ‘All this does not mean we are shutting out tax agents and intermediaries. That’s not our intention at all. You are very much a part of the picture.”

Interestingly, when the ATO released e-Tax, the number of returns lodged through tax agents in Australia increased from 71% to 74% – debunking the theory that technology will replace accountants. Rather, the trend shows that technology enhances the relationship between accountants and tax payers.

 

Benefits for all

Clients frequently tell surveys they want their accountants to be more involved. Unfortunately, many clients aren’t willing to pay extra for it. In fact many small businesses wonder why, when technology allows them to deal with the ATO directly, they even pay as much as they do for tax services today.

The ATO has an opportunity here to help. If they do change how businesses’ tax submissions are lodged, it would help to ensure small businesses see their accountants in a different light. Accountants should welcome (or at least not be scared of) more direct client-ATO relations. The ATO’s role of playing the bad cop shouldn’t be underrated, and neither should steps that improve the efficiency of accounting firms by removing manual and non-chargeable ATO liaison tasks.

Accountants might actually begin to be able to charge more, not less, as they are in more frequent contact with their clients throughout the course of the year. Their clients will begin to understand and see how their accountant is adding more value on a regular basis, not only for tax advice but with the business advice they provide.

It’s up to the ATO to facilitate these changes and if they do it right, everybody can win.

Whether you’re an advisor or a small business, there are ways you can use Xero to get more done. These are the best productivity hacks that my team use daily in my accounting firm.

 

Find & Recode

Find and Recode has transformed how accountants and bookkeepers use Xero. This feature makes it easy to clean up a client’s file. Instead of updating transactions one at a time, you can use Find and Recode to update up to 2,000 lines at once. Accounts, tax rates, tracking and contacts can be easily updated on both paid and unpaid transactions.

Jobs that could take hours now take minutes to get done. You can clean up accounts in Xero at lightspeed. If you’re an advisor and you’re not using Find and Recode, you may be spending hours on tasks you don’t have to. Find out more by watching the video or refer to the documentation.

 

Bank Rules

If you deal with cash transactions or don’t enter all transactions in Xero before you import bank statements, set up bank rules. Bank rules are a quicker and easier way to reconcile imported bank statements.

You set up the rules to match your imported statement lines. After you import a bank statement and go to reconcile your account, your rules run. For each bank transaction that matches a rule, Xero creates a transaction based on the rules you’ve set. If the transaction Xero creates based on the rule is wrong, you can edit it, create a new one or find a transaction you’ve already entered into Xero to match with your statement line. It’s powerful, and saves hours.

This video will help you get started.

 

Cash coding

Another productivity winner, cash coding allows the rapid coding of a large number of transactions. Accountants and bookkeepers usually download a new client’s old bank statements when they start working when them, quickly re-coding all transactions back to cash. Cash coding makes it quick and easy to process a bank statement (or a whole year’s worth of bank statements) in a single operation.

What’s more, cash coding is more accurate. You can select accounts and tax rates for multiple statement lines at the same time so items can be coded consistently. When you save and reconcile, Xero creates a matching spend or receive money transaction. Fast and accurate processing – in bulk. You can get an overview of cash coding by watching this video.

 

CSV upload for bulk inventory changes

Don’t enter your inventory items one-by-one. If you have multiple inventory items to enter in Xero, you can import the new items in one go using our CSV template. You can import both tracked and untracked inventory items.

Check out the help documentation for more.

 

Untracked inventory for regular services

When most people think about inventory, they think about the products they sell. Tracked inventory in Xero does just this; it helps small businesses manage their inventory items.

If you’re a services company, you can use untracked inventory to record the types of services you provide. Next time you create a quote or invoice you can easily add these service lines from your inventory. It not only saves time, it ensures you’re consistent when presenting your services to your customers. You can find out more about Untracked Inventory here.

 

Online payment feature for invoices

When you send an invoice you want it to be paid. Online invoices make the process of sending an invoice easy, but why not ask them to pay online at the same time?

Once you’ve signed up with one of the supported payment services your customers can pay you immediately when they receive an online invoice. They simply click the Pay Now button, enter their credit card details and voila – you’re paid!

Not only will the money shoot its way into your bank account but Xero will automatically create the payment for you to reconcile once the transaction appears in your bank feed. Better cashflow and reducing the time and effort involved in processing payments. This video shows you how to set up Payment Services.

 

Automatic invoice reminders

This feature saves time and helps your cashflow too. Businesses get paid faster, but it’s difficult to find time to chase overdue invoices, or have those sensitive “money” discussions.

Invoice reminders does that for you: turn it on, work out how often you want to send emails, tailor your standard email message, and you’re off. Simply set and forget and invoice reminders will send your customers an email reminder when an invoice is overdue or is approaching its due date. See how invoice reminders can work for you by watching this video.

 

Xero Search

Whether you’re new to Xero or an established user with thousands of transactions, you’ll benefit from Xero Search.

Xero Search lets you find what you want, and get to where you want, from anywhere in Xero. It saves time when it comes to finding information and moving around the app. Use Xero Search to search across almost any type of transaction, with results instantly appearing in front of you. Xero Search also allows you to move around Xero using keystrokes, letting you get more done in less time. You can easily add new records, saving even further time.

Have you got any productivity hacks to share? What’s your favorite Xero time saver? Let us know in the comments.