Engagement Margin Management Through Outsourcing: Key Insights
At the peak of tax season, the demand on accounting offices can reach unmanageable levels – and in some ways, this is a good thing.
Accounting firms often have a love-hate relationship with tax season. As the deadline for filing taxes gets nearer, you’ll have more business—and therefore more revenue—than at any other time of the year. Yet this can also be problematic; if you’re overwhelmed with tax returns to prepare, you might end up being unable to provide the quality service you’d prefer, or you might end up stressed to the point of absolute frustration.
There are a few strategies that could help you here, but only one that allows you to continue taking on new work without interruption and without making additional hires: tax preparation outsourcing. Essentially, the idea is to keep taking on new work, allowing outside tax professionals to handle it while you can focus on your already-full workload.
So why is this strategy so valuable, and how can you utilize it while maintaining your firm’s reputation?
These are some of the most important benefits your accounting firm will see by outsourcing at least some of your tax returns:
Access to licensed professionals. First, you’ll have access to fully licensed professionals, and oftentimes professionals with years, if not decades of experience. While you might have plenty of education and experience in your own career, outsourcing some of your tax preparation to another person (or group of people) with as much or even more experience can help you ensure the quality of your work. If you’re already overwhelmed, adding more to the pile can leave you exhausted or overly stressed, thereby reducing the quality of your work. This way, you won’t have to gamble with the experience of a new hire or spend time training someone new or incur the added cost of a recruiter; and you can absolutely trust the quality of the work that you’re outsourcing.
Time savings. Your time is valuable. As much as you love the idea of taking on new clients and doing as many tax returns as possible this season, there are only so many hours in a day. And no matter which way you look at it, having someone else take care of those returns will take less time than doing the work yourself. In many cases, the accountants to whom you’re outsourcing will have lots of experience and less overloaded plates, so they may even be able to finish tax returns faster than you and your team can.
Cost savings and profitability. Inevitably, you’ll have to pay money for the privilege of outsourcing your tax preparation. However, depending on how you utilize the service, you could end up saving money and making your operation more profitable. For starters, the cost of a full-time hire is almost always much higher than the cost of outsourcing your tax prep work. The cost of an independent contractor or part-time worker may also be higher. Assuming you’re delegating the work to someone, outsourcing to another business or professional organization is in your best interest, cost-wise. Also keep in mind that you’ll be taking on more returns, charging your clients more than you’re paying in preparation costs; in other words, you’ll be making more profits than you would simply maxing out your workload.
Flexibility. Most tax outsourcing services are known for their flexibility. Depending on your needs, you can use them to handle a handful of tax returns, dozens, hundreds, or even thousands. They can adjust their offerings to suit your specific circumstances, and you may even be able to negotiate different terms of service. For example, you may be able to persuade them to adopt a slightly different workflow for your clients, or meet a specific deadline for a high-priority client.
Client satisfaction. Your clients are eager to know how much money they’re getting back this year, and they want to have absolute faith that their tax return was handled accurately and efficiently. If you weren’t overloaded with work, you might have complete confidence in your ability to meet these expectations. However, outsourcing your tax returns to the right firm can give you even more confidence in your ability to address their needs. Clients will get their tax returns done faster, with near-perfect attention to detail. What more could you ask for?
Scalability. Finally, tax preparation outsourcing services are completely scalable. If you’re interested in attracting more clients and growing the reach of your business, there are a few major hurdles you’ll need to overcome; perhaps most notably, you’ll need to have some kind of assurance that you can keep taking on new clients without exhausting your resources. A tax preparation provider lends you this ability; you can count on them for as few or as many tax preparation services as you’d like.
There are several tax preparation outsourcing services available to you, but they aren’t all equal. If you want to be successful, you’ll need to consider the following:
Costs. If you aren’t careful, tax preparation outsourcing can get expensive. If you want to work with a high-quality, experienced provider, you’ll need to pay significant fees—after all, you get what you pay for—but you’ll also need to find a provider with rates reasonable enough to fit your existing business. In short, you should be making a small profit or at least breaking even on every tax return you send their way.
Licensure. No tax preparation service is worth it unless you’re sure there are qualified, experienced professionals on standby to help you. Ask to see what qualifications your tax preparers have, and verify that those are the people who will be working on your returns.
Transparency. You’ll want to find a tax preparation firm that operates with complete transparency. The more you know about how they work and who they hire, the more confident you can feel in their abilities. If you find a firm that dodges your questions or if you aren’t 100 percent certain you can trust their people, it’s in your best interest to move onto other opportunities.
Communication. Communication is important for many different reasons. First, you’ll want an easy way to exchange details about upcoming tax returns. The better you communicate, the faster these exchanges will go. Second, this is an indication of how much the tax preparation outsourcing service cares about their clients; the better and more frequently they communicate, the more likely you’ll be to get quality service from them. Finally, you’ll have assurance that you can communicate when it really counts—like if you ever have to resolve a dispute with them.
Security. Tax returns contain many personal details, including social security numbers, so you’ll need to be assured that your client’s returns are handled with security and privacy in mind. Evaluate your provider’s commitment to client security before proceeding.
Experience. How long has this provider been in business? While past experience isn’t a guarantee of success and new operations can be successful, this can help give you peace of mind if you’re on the fence about a specific provider.
Workflow. You might also want to ask about the workflow for accepting new tax returns, or how to handle special circumstances. For example, how will they handle a situation where a client has missed the tax deadline? There aren’t necessarily “right” or “wrong” ways to handle this, but the more you understand about the process, the better you’ll be able to adapt to it.
Other perks. Ask to see if there are other perks available by working with this specific service. Is there a digital platform that makes things easier? Is there a discount if you’re a reliable repeat customer?
Tax preparation outsourcing can help you complete more tax returns during the busy season without spending more or adding more stress to your life. If you’re interested in learning more about how tax preparation outsourcing can improve your firm’s bottom line, schedule a live demo of Taxfyle today!
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