Many business owners wonder whether they need a tax advisor for their bookkeeping or whether a bookkeeping firm is enough. The answer is in the German Tax Advisory Act (StBerG), and it is clearer than many people think. Here, we explain who may do what and how you can sensibly combine the two.
Why there is a distinction in the first place
Help in tax matters is a protected field in Germany. Under the German Tax Advisory Act, only certain professions may provide it on a commercial basis: tax advisors, tax agents, attorneys, public auditors, sworn auditors, and the corresponding firms. Everyone else is prohibited from providing commercial help in tax matters under § 5 StBerG.
The reason is to protect taxpayers. Anyone who prepares a tax return or assesses tax questions is responsible for amounts that quickly run into thousands of euros. Tax advisors have passed a demanding examination for this, are supervised by their professional chamber, and must carry professional liability insurance.
In principle, bookkeeping counts as help in tax matters, because it is the basis of taxation. So that businesses do not have to pay a tax advisor for every single entry, § 6 StBerG makes exceptions. These exceptions are exactly what a bookkeeping firm may do.
What a bookkeeping firm may do
Under § 6(1) no. 1 StBerG, qualified bookkeepers may take on four tasks. The requirement is that the person responsible has passed the final examination in a commercial apprenticeship or has equivalent prior training, and has then worked in bookkeeping for at least three years, at least 16 hours a week.
- Setting up charts of accounts: setting up the books with a suitable standard chart of accounts
- Posting ongoing business transactions: incoming and outgoing invoices, bank transactions, cash, and payment services
- Ongoing payroll: calculating salaries and wages, submitting notifications to social security
- Preparing wage tax returns: the monthly, quarterly, or annual wage tax return
Anyone may do purely mechanical work in any case, such as entering receipts that someone else has already coded. There are also tasks that do not count as help in tax matters at all: collecting and organizing receipts, reconciling accounts, tracking open items, preparing monthly reports, preparing payments, or digitizing workflows.
For you as a business owner, this means a bookkeeping firm can handle most of the ongoing work. This includes everything that recurs every month and takes a lot of time.
What is reserved for the tax advisor
Anything that goes beyond ongoing posting and payroll stays with the tax advisor. This mainly includes:
- Advance VAT returns: these are tax filings, not ongoing postings
- Annual financial statements: balance sheet or cash-basis income statement with depreciation, provisions, and accruals
- Tax returns: for the business and for the owners
- Tax advice: structuring, legal form, investments, succession
- Assessment of specific tax issues: such as whether the reverse charge mechanism applies or whether a special provision may be applied
- Representation before the tax office: objections, applications, tax audits
Key point: The bookkeeping firm makes sure that the figures are recorded completely and correctly. The tax advisor decides what follows from them for tax purposes and represents you before the tax office.
Where the line is drawn in practice
In everyday practice, the line is usually easy to draw. Here’s an example: a supplier from another EU country sends an invoice without German VAT. The bookkeeping firm posts the invoice according to the rules agreed with the tax advisor and checks that the required details are on the invoice. The tax advisor assesses whether the transaction is correctly classified for VAT purposes.
It is similar in the car trade. We post each vehicle exactly as the invoice shows it. Whether a sale could be invoiced under the margin scheme is a matter of tax assessment. If we notice something while posting, we raise it with you and the tax advisor. More in the article on the margin scheme in the car trade.
A good bookkeeping firm spots such issues but does not decide them. It passes them on in one batch so that the tax advisor does not come across them for the first time while preparing the annual financial statements.
Four common misconceptions
- The tax advisor has to make every entry personally: No. You can hand the ongoing bookkeeping to a bookkeeping firm; the tax advisor then works with the figures provided.
- A bookkeeping firm just types up receipts: Qualified bookkeepers code and post entries independently, reconcile accounts, run payroll, and prepare the wage tax return. That is much more than data entry.
- With a bookkeeping firm, I no longer need a tax advisor: You still need one for advance VAT returns, financial statements, and tax returns, unless you do them yourself.
- Whoever posts the entries bears the tax obligations: The tax obligations remain with you as the business owner. The bookkeeping firm and the tax advisor are each answerable to you for their own part of the work, as set out in the contract.
This last point is particularly important: You remain responsible for ensuring that receipts are complete and submitted on time. The better the collaboration is organized, the less you have to worry about it.
Why the combination often makes sense
Tax advisors bill under the German fee regulation for tax advisors or agree on their own fees. Bookkeeping firms are free to set their prices and specialize in the ongoing work. For many small and medium-sized businesses, it therefore makes financial sense to give ongoing posting and payroll to a bookkeeping firm and to engage a tax advisor for advance VAT returns, annual financial statements, and advice.
The tax advisor also benefits: they receive reconciled figures and have fewer questions to ask. You, in turn, have one dedicated contact person for the receipts and another for taxes. It is important that both work closely together and exchange data in the same format, in practice usually via DATEV.
Legally, you sign two contracts for this: one with the bookkeeping firm for the bookkeeping and one with the tax advisor for taxes. You give the tax advisor power of attorney for the tax office. How this works with us is explained on the page Taxes with a tax advisor.
What to look for when choosing
Whether you hire a bookkeeping firm, a tax advisor, or both: these points will help you decide.
- Clear division of tasks: the contract states who does what and who meets which deadline
- Qualifications: the bookkeeping firm can tell you who is responsible for posting and what training that person has
- Data format: the books can be handed over to the tax advisor directly
- Availability: questions are collected and asked in batches, not receipt by receipt
- Protection: ask about professional liability insurance
- Data protection: a data processing agreement is in place if payroll data is processed
Reputable bookkeeping firms are open about what they may and may not do. If a provider who is not a tax advisor promises to handle tax returns or advance VAT returns, be careful.
How GKM works with tax advisors
GKM handles your ongoing bookkeeping preferably in DATEV, or in Lexware Office if you wish, and runs your payroll in DATEV. For advance VAT returns, annual financial statements, and tax returns, we work with tax advisors: our partner tax advisor or your own, if you already have one.
Every month, we post and reconcile; on this basis, the tax advisor submits the advance VAT return. After the year ends, they prepare the financial statements and tax returns from the reconciled figures. You upload receipts once to the client portal and get any questions in one batch. If you don’t have a tax advisor yet, we put you in touch, free and with no obligation: Find a tax advisor.
Sources
Laws and bodies named in the article. The legal texts link to gesetze-im-internet.de, in German.
- § 5 StBerG: prohibition of unauthorized help in tax matters, misuse of professional titles
- § 6 StBerG: exceptions to the prohibition of unauthorized help in tax matters
- German fee regulation for tax advisors, StBVV
This article is for general informational purposes only and does not constitute tax or legal advice in specific cases. A tax advisor is responsible for tax-related questions.