Benefits of Outsourcing Your Firm's Tax Practice
Tax preparation outsourcing allows you to continue taking on new work without interruption and without making additional hires.
At the peak of tax season, the demand on accounting offices can reach unmanageable levels – and in some ways, this is a good thing. After all, demand means profits and since accountants make the bulk of their income during tax season, it’s common to rely on this busy period to carry your firm through the year. The only problem is that you can’t rush taxes, especially the complicated cases, so even large firms can only take on a limited number of clients. But what do you do with the rest of the accounts that come your way?
At Taxfyle, we provide the tools you need to outsource some of your accounts, ensuring that your clients receive top quality services and prompt tax completion, even at the peak of tax season. It’s smart, secure, and specialized, but most importantly, Taxfyle emphasizes maximizing engagement at every level. From the moment an account comes through your front door until its completion, we create vital connections between tax professionals while keeping costs down.
Typically when businesses talk about growing their margins, they’re talking about their operation margins, which is defined as the ratio of earnings to revenue, and this calculation is key to any business’s success. For accounting firms, operating margins are quite manageable – equipment costs are generally fairly low, while factors like accountants’ wages are stable compared to many other industries. Operating margins aren’t the only sort of margins that matter to businesses, though.
In addition to operating margins, businesses also need to consider what might be described as “engagement margins.” Engagement margins are about connections, both between clients and accounting firms and between accounts and service providers. During the height of tax season, it can be hard for firms to provide sufficient engagement in response to clients. This can drive potential clients away, taking their business with them.
One of our primary goals at Taxfyle is to help close this gap by allowing accountants to accept client engagements and submit them to our pool of professionals through our secure platform. You choose the tax professional and can preview the time to completion, costs, and more, before you accept the connection, ensuring the match is right for your business and your clients.
If engagement is about creating connection between your company and its individual accountants and your clients, does it really make sense to outsource the process? Does that still constitute engagement? It’s important to understand that most people aren’t looking to create deep relationships with their tax accountant.
Yes, they want to know and trust you, but at its core, they simply want to know that their financial needs are being handled by a skilled professional. And, most importantly, they’ve chosen your accounting firm.
Since these individuals have already chosen your firm, the only way to grow your engagement margins is to accept their accounts – and this is where questions arise. As you review these accounts, you have to consider whether you have the skills necessary to handle the filing. Just as many tax accountants wouldn’t take on bookkeeping because it’s outside their niche, tax accountants who typically only handle household taxes might now want to tackle business or extensive freelance filings. Sometimes the only way to increase engagement is to outsource those accounts outside your niche.
What makes outsourcing accounts through Taxfyle a viable option, and one that maintains meaningful engagement, is that we emphasize transparency in all of our operations. That means you can see what’s happening with your outsourced accounts and communicate quickly and easily with our pool of freelance accountants.
It’s important for tax accounts to realize that, although you may not be the one doing the work, Taxfyle enables you to report back to your clients and help them understand what’s going on with their financial documents. Considering the complexity of taxes, the role of the individual tax professional is much larger than just completing the paperwork. The human connection is even more important when it comes to this stressful process. Thought about in this way, it becomes clear that you’re not actually outsourcing engagement – you’re outsourcing the behind the scenes efforts.
One major reason that we at Taxfyle encourage accounting firms to use our services to increase engagement is that we’re looking towards an emerging trend – one that is going to impact all industries in the course of the next few years. As noted in our Outsourcing Fact Sheet, 34% of Americans did at least some freelance work in 2017, with as many of 43% expected to be freelancing by 2020. In other words, accounting firms are likely to start shrinking and more accounts are going to be outsourced.
Does that mean those firms will see declining engagement? Of course not. That engagement will just look different from how we think about it today.
In order to effectively talk about engagement margins going forward, we need to recognize that engagement happens at multiple levels, including between business owners and freelancers. Indeed, a growing number of accounting businesses in the near future may not even employ very many accountants at all. Despite that fact, accountants can still make their clients happy and support their financial success. In fact, with less actual accounting work on your docket, you can actually increase engagement on the client side. You have more meaningful opportunities to connect and communicate.
Finally, accountants in today’s changing market should consider that, in part because more people are freelancing, their accounting needs are becoming more complex and that means it’s harder for the average firm to complete their requests. In order to do so, they’d likely need to transform their staffing practices, spend more on the necessary staff, and even with higher fees would still likely face shrinking profit margins compared to more traditional accounting firms.
In the age of CRM, when businesses are trying to extract the maximum amount of data to drive profits and build connections with their clients, outsourcing is a way of meeting client needs and strengthening relationships. This may not be what you got into the business to do, but accounting is a service industry and we now have the tools to understand client needs at a deeper level. And you will, of course, still be offering financial insights, even if you’re not directly handling accounts. As you move engagements through the pipeline from first contact to completed filing, you’re the one who will choose freelancers from among Taxfyle’s pool of professionals and your knowledge of the industry must serve as a guide. This is why customers come to you – because they trust you and you can provide the guidance and support that they need.
If your accounting firm is trying to stretch its margins because you’re turning too many customers away or don’t have time to build meaningful connections with clients, it’s time to consider outsourcing some of your work – and Taxfyle can help. We want to ensure that our firm has the necessary tools to connect clients with the perfect tax professional for their needs, that you can track engagements from start to finish, and that every interaction is secure. Our goal is to bridge the gap between what small firms can accomplish and the demands on their skills.
To learn more about our software, contact Taxfyle today to request a demo. We’re excited to share our product with you and help you grow your business by better engaging clients. Narrow margins shouldn’t hold you back. Keep up with a changing tax ecosystem by embracing the Taxfyle difference.
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