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Simplifying Outsourcing Tax Preparation for Accountants & CPA

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Simplifying Outsourcing Tax Preparation for Accountants & CPA

Tax season is a nightmarish time for every business. It’s no different, even for professional accounting firms. And somehow, with every passing season, it just keeps getting worse. From last-minute amendments to the tax information from the clients to the untimely tax software updates to the shortage of knowledgeable tax professionals, the hurdles keep piling up one after another. And as a business, you are expected to meet all the deadlines while maintaining higher productivity and low burnout for the existing staff. If all of it seems highly improbable, it probably is because it is.

Yet somehow, some Certified Public Accounting (CPA) and Accounting Firms have shown steady growth and increased work-life balance. And no, these firms do not have any magic wand to waive off their tax filing issues with a swing.

So, how are they doing it? That’s the question we will be answering here.

Simply put, the answer is – increased tax filing outsourcing and automation.

In every possible way, it’s easier said than done but fret not. Let us simplify outsourcing tax filing for you, whether you are a normal business planning to embark upon your tax filing season or a professional CPA & accounting firm looking to manage high volumes at the peak of the tax season.

Table of Contents

Why Outsource Accounting and Tax Preparation Services?

Despite being run by CPAs, several accounting firms opt to outsource accounting and tax preparation. With the arrival of tax season, preparing tax returns, maintaining accounts, and calculating the payable taxes become crucial for companies.

Needless to say, CPA firms experience an exponential rise in the work resulting in increased workload and overwhelmed staff.

This results in inaccuracy, thus hampering the output quality and necessitating the need for outsourcing tax preparation services. Delegating the time-consuming tax preparation responsibilities benefits the accounting firm, enabling them to focus on high-priority work in the tax season.

Questions to Ask When Planning for Outsourcing Tax Preparation?

The first step towards a fruitful tax preparation outsourcing journey begins with diligent planning and introspection. Depending on the business you own/run/manage, you need to answer the below questions to plan your tax return outsourcing properly.

  • What are the most profitable tax returns for your business?
  • Which tax returns are too complex or require too much of manual intervention, preventing you from focusing on higher-value services?
  • Do you have the necessary automation tools and expertise readily available in-house?
  • Do you have enough resources available in-house to manage the volumes without burning them out?

When you are running the race against time, everything counts. Thus, you must identify which services and returns will give you maximum returns when considering outsourcing tax prep work.

What Tax Prep & Financial Tasks Can Be Outsourced?

If you have successfully answered the questions above, you should now look at a clear list of tax prep and accounting tasks you can assuredly outsource. However, if there still is a lingering doubt stopping you, here is a brief list of accounting and tax preparation tasks that a professional corporate finance & accounting service provider can provide you with:

  • Preparation of tax returns
  • Back-office support
  • Payroll processing
  • Bookkeeping and reconciliation
  • Financial planning
  • Customer billing and invoicing
  • Running financial reports

These are just some tax and accounting tasks that you can outsource and be rest assured of neat and tidy tax prep services, irrespective of your business size.

Keys to Success for Outsourcing Tax Preparation

Key #1: Use A Tax Preparation Pilot When Building Your Business Case

Outsourcing, tax preparation or not, can be complicated, especially if you have yet to gain prior experience using an outsourced service. This is why it is highly recommended to use a pilot – a measured maneuver with the service offering of the outsourcing partner. Since the tax season has annual cycles, you will be able to get a good understanding of the service within a single season with the pilot project. Elsewhere, it can take years to get full adoption from the pilot. It also allows you to get the maximum return on investment as you can push a significant amount of tax returns through your pilot project.

Key #2: Outline the Type of Tax Returns You Will Be Outsourcing

While straightforward tax returns can always be outsourced, your 1040s & entity returns need the expertise to file, and thus, they must be considered. This is why it is always beneficial to outline the types of returns that you will be outsourcing. We understand that depending upon the organization or the nature of the business, the rubric by which a company decides to send its returns for outsourcing may vary, especially where there is no visibility into previous years’ data. But as a rule of thumb, we recommend outsourcing the most considerable tax returns in terms of capacity.

If you’ve run a pilot with your outsourcing partner, it will make your job easy. If you have not, while interviewing potential outsourcing partners, ask them about the expertise of their staff with the type of tax returns you are planning to outsource. Also, while outlining your tax returns, and looking for an outsourcing partner, always go with the one whose staff is skilled enough to complement your in-house accounting team.

Key #3: Look for Flexible Scalability

For any CPA firm, flexibility and scalability go hand in hand. Thanks to the diverse nature of returns, they process in any given tax season. For this simple reason, when looking for an outsourcing partner for your business tax preparation, you must prefer the one ready to offer you the flexibility that will help you manage volumes with absolute ease during the peak tax season.

If all you need is seasonal staff or staff with expertise in a particular tax filing software, your outsourcing partner should be able to help you with it. And once the season is over, you can remove them from your plan. This is why having a partner providing flexible scalability is of so much importance.

What are the Advantages of Tax Preparation Outsourcing Services?

Benefits of Tax Preparation Outsourcing
Benefits of Tax Preparation Outsourcing

1. Enhanced Efficiency via Agile Technology:

Outsourcing tax preparation is the smart thing to do since offshore tax preparers leverage advanced tax software and its most updated versions. These tools aid in automating tedious tasks such as tax declarations and data accumulation. Tax outsourcing partners utilize the best tax preparation software besides being on top of the law and data collection.

2. Top-Notch Compliance & Reduced Risks: 

Offshore tax preparers ensure adherence to existing state, federal, and local tax policies and regulations. Along with improved compliance, they can further assist you in mitigating risks and avoiding costly penalties. Eliminating delays and errors caused by incorrectly estimated taxes leaves no room for error when opting for tax preparation outsourcing services.

3. Time & Cost-Effectiveness: 

Tax preparation outsourcing results in considerable time and resource savings. By paying only for the services you avail, you can save on training, recruitment, and infrastructure costs. Additionally, by outsourcing your tax preparation needs, you can utilize your time strategically to focus on growth and innovation.

4. Personalized Approach: 

Tax prep outsourcing companies typically provide a tailored approach for each client. This helps you to select the ideal solution you are looking for and choose the preferred pricing and engagement model to suit your firm’s tax preparation requirements.

To Sum It Up

Whether you are a professional CPA Firm or a business looking to breeze through the peak tax season with the help of an outsourcing partner, you must take care of – Data Security, Tax & Accounting Expertise, Flexible & Scalable Models, advanced IT Infrastructure, and Pricing. The goal is to work with a tax outsourcing partner with a proven history of managing business taxes of diverse nature. These are just a few things you need to take care of for a successful tax season.

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