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Why Should You Consider Outsourcing During Tax Season

Maanoj Shah
Posted by Maanoj Shah on May 1, 2024 2:52:42 PM

Have you been considering outsourcing the tax functions of your CPA firms? You are not alone.

It's a common misconception among firm owners that outsourcing their operations is a sign of inefficiency and an inability to deliver results. However, that is not the case.
The accounting outsourcing business model is not just about getting rid of tedious jobs─it's about empowering CPA firms to become more efficient and productive so they can focus on tasks that truly make a difference.

It can also help cut costs. A 2022 study by Deloitte found, for example, that an investment management firm's tax department can save between 23% and 31% of the department’s total cost through outsourcing.

Tax season is especially overwhelming for businesses. Looming deadlines, long hours, and the pressure to be accurate and at the client's beck and call create a lot of stress. It requires accountants and firm owners to multitask, which increases the chance of errors and penalties, and may even lead to additional chaos.

As firms continue navigating the stressful season, let us delve deeper into how outsourcing during tax season can be a huge relief for the entire team.

Top reasons to consider outsourcing for tax season

1. Saving time

Oftentimes for accountants, time is of the essence—especially during tax season. Many of the tasks involved in the filing process are time-consuming. Accountants and firm owners must invest their time, skills, and dedication to ensure they file all the returns correctly and in due time.

Some firms end up assigning tax work to employees who do not have much experience. Here’s what happens: They take a lot of time to complete the work assigned, or if they are in a hurry to complete it within the deadline, they become vulnerable to making mistakes. This can lead to delays that affect other associated tasks.

Employees who feel they add significant value to the business perform better, which improves your employee retention rate. When you outsource your tax preparation, your team can focus on jobs that add more value to your clients. This also helps ensure that the team is not excessively stressed by tax season, which can lead to burnout for an extended period.

Another benefit of working with an outsourcing partner is that they can handle clients' last-minute requests with precision, which can be difficult to do when you are low on resources.

2. Time zone differences can work in your favor

U.S. accounting firms often use outsourcing partners in India and the Philippines to get the job done. However, there are significant time differences between these U.S.-based firms and their outsourcing partners.

This can actually work in your favor through the “follow the Sun” approach, in which the outsourcing team continues to work during the client’s off hours and can get important tasks done before the client’s team clocks in the next day.

Task assignments and completion continue to be at par. Most tax outsourcing companies offer support 'round the clock, so you can help resolve your client queries anytime.

3. Address the global talent shortage

The talent shortage in the accounting industry is no secret. According to a 2022 Bloomberg report, 70% of respondents said they “somewhat or strongly agree” that corporate tax departments are under-resourced, indicating a high demand for tax talent.

By outsourcing during tax season, you gain access to a global talent pool. A team of outsourcing professionals often includes experts equipped to handle complex tax-related matters, ensuring compliance matters are on point.

4. Tax-saving opportunities

As an accounting firm, your primary focus should be helping your clients maximize tax deductions and credits, and reduce their tax liability as much as possible. Accountants within small accounting firms usually have to manage multiple tasks and hence, have no time to stay updated with tax laws, their amendments, and their implications on the clients. They can even miss new opportunities for tax deductions. When you outsource for the tax season, it gives you access to experts who are updated and have complete knowledge of the latest laws and regulations.

A competent tax outsourcing partner will not only use their knowledge to ease your lives but also share their knowledge of changing or applicable laws. When they help leverage tax-saving opportunities, it makes your clients happy, strengthening your relationship with them.

5. Meet the deadline

Unlike small accounting firms, an outsourcing partner has a team of experts equipped to handle your organization’s taxes. This means they have the knowledge and training to complete your tax filings quickly and accurately, ensuring all deadlines are met. In fact, most firms that outsource their work benefit from filing the returns on time and before the IRS extension. If the outsourcing partner fails to file on time, they are often liable for penalties instead of you.

If your firm is constantly struggling to meet deadlines and that is, in turn, tarnishing its relationship with its clients, it might be time for you to consider outsourcing.

6. Benefit from the use of technology

Most outsourcing firms are adept at using technology to help file returns faster. Even if the team doesn’t know how to use certain tools, you can easily train them to adapt.

Your partnership with a reliable firm can also help leverage their technological expertise. If your team needs support and training to learn about the latest technology, your outsourcing partner can help. They also typically have the infrastructure in place, so you do not need to make additional investments in things like new hardware.

Outsourcing during tax season

Hiring a reliable tax outsourcing firm comes with many benefits. Cost savings, time savings, and access to global talent are just the tip of the iceberg. In 2024, your goal should be achieving the maximum potential of your resources.

Outsourcing your taxation operations ensures that taxes are seasonal affairs and that you do not need an internal team to increase overhead costs. With an outsourcing partner, you can have a team at your disposal during the busy season.

Want to make your life as an accounting firm owner easy? Consider outsourcing today.

Sponsored Content: This article is generously brought to you by one of our valued sponsors. Their support enables us to continue delivering expert insights and the latest industry trends to our dedicated community of accounting professionals.

Topics: Financial Advisory, Business Technology, Tax Preparation


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