Tax Preparation Outsourcing: What CPA Firms Need to Know

29 September 2022

Accounting firms are increasingly outsourcing to help lighten the workload and scale quickly. Be it preparing for impending deadlines, last-minute amendments to the tax information from clients, the heaps of work, or untimely tax software updates, tax season is a nightmarish phase for all businesses, including professional accounting firms. Somehow, with every passing season, it only worsens. And yet, CPAs and accounting firms have been showing steady growth alongside outstanding work-life balance. Tax preparation outsourcing can help them waive off such difficulties and sail smoothly through the tax season!

WHAT IS TAX PREPARATION OUTSOURCING?

CPAs and accounting firms that compete tightly are constantly looking for efficient tax preparation solutions within their budgets. Outsourcing such essential functions can give them more time to focus on key business functions, given how tedious tax preparation can be, especially during the busy tax season.

Tax preparation is the preparation of individual or a business’ tax returns. It is a cumbersome and elaborate one that involves careful perusal of the financial activities for a given period. Tax preparation outsourcing is when you hire a third-party service provider to handle tax preparation for your clients.

WHY IS TAX PREPARATION OUTSOURCING SUCH A HOT TOPIC RIGHT NOW?

Maybe you are tired, you don’t have the capacity, or you just can’t or don’t want to do it yourself anymore. Or perhaps you have tried and liked doing it, but your software wasn’t quite right, or you simply didn’t have the time. Maybe you don’t have the money to hire, train, and retain a team but seriously need help with tax preparation with accounting expertise. And you are not willing to compromise on data security. There are several reasons why tax preparation outsourcing is such a popular topic in the accounting world today.

• Cost-reduction: For accounting firms that are looking to reduce operational costs, outsourced tax preparation services allow your existing staff to pursue more profitable, rewarding, and revenue-generating projects and endeavors
• Staffing problems: Capacity issues such as lack of talent are a primary concern, and outsourcing is the best solution used by CPA firms to address the skills shortage.
• Increased scalability: outsourcing tax preparation helps accounting firms continue to be productive and scale quickly without being affected by staffing problems.

Your reasons may be anything, but outsourced tax preparation services have impressive benefits. Outsourcing is viable for accounting firms, especially ones striving to address talent shortages.

WHAT TYPES OF TAX PREPARATION OUTSOURCING ARE FIRMS LEVERAGING?

Based on the location and requirements, several tax prep outsourcing scenarios are currently available to CPAs and accounting firms.

• Onshoring: This outsourcing scenario is about keeping the work within your country. This type of outsourcing model is preferred by CPA firms who prefer that work never crosses international borders; it is either assigned to lower-cost locations or regions within the country where talent is more readily available.
• Offshoring: This is the most common kind of outsourcing, where work is assigned to offshore tax preparers in a foreign country. Accounting firms leverage offshore service providers whose staff will work as an extension of your team.
• Nearshoring: Nearshore outsourcing bridges the gap between onshoring and offshoring. It involves outsourcing to neighboring or nearby countries, usually sharing a border or being in the same time zone. This model is gaining popularity for its balance of cost-effectiveness and ease of collaboration. It offers the benefits of cultural similarities, closer geographic proximity, and, often, fewer time zone differences, which facilitates smoother communication and workflow between the accounting firm and the outsourced team.

MUST READ: Tax Preparation Outsourcing 101: The Ultimate Guide for CPA firms

HOW CAN TAX PREPARATION OUTSOURCING BENEFIT YOUR CPA FIRM?

Apart from being cost-effective and helping you save time, outsourced tax preparation services can benefit your accounting firm enormously. Not only will you be saving the time and money required to recruit, train, and retain employees, but you will also save the infrastructure costs as you will be paying only for the services you avail.

• Deal with experts & top talent: With outsourced tax preparation services, you will gain access to accounting professionals trained, experienced & knowledgeable in U.S. tax preparation. They will be trained to handle complex situations and tasks and reduce risks significantly.
• Top-notch data security: You need not worry about data breaches when you hand over tax preparation to a third-party service provider. Most good outsourcing companies ensure comprehensive data security.
• Better control & reduced risk: Moving your tax preparation to third-party providers minimizes fraud risk and allows for greater internal controls. Moreover, your offshore staff can identify whenever there are problems and will notify you of inconsistencies if any.
• Stress-free Process: Outsourcing tax preparation will relieve you of the complicated tax topic and the tedium. Knowing that experts will take care of your tax preparation requirements, you can also gain peace of mind.
• Additional services: By outsourcing tax prep to a third-party service provider, you can tie other services to your repertoire.

WRAPPING UP

Whether you are a CPA or an accounting firm looking to breeze through the busy tax season with the help of a third-party service provider, you need to take care of data security, tax preparation, accounting expertise, flexible engagement models, pricing, and advanced infrastructure.

The main goal of outsourced tax preparation services is to get the work done efficiently without missing deadlines. Outsourcing provides you with the advantage of high-quality work delivered by trained and certified professionals while ensuring data security and compliance. With experts taking care of your accounting firm’s tax preparation requirements, you can save time and money. But all you need to do is partner with the right tax preparation outsourcing services provider to enjoy all the benefits mentioned above.

In recent years, CPA firms have increasingly outsourced to India, benefiting greatly from working with some of the best outsourced tax preparation services providers. Cost arbitrage and the time zone difference make outsourcing to India advantageous to accounting firms looking to scale.

OUTSOURCE TAX PREPARATION TO QXAS

QXAS’ tax preparation outsourcing services have helped this accounting firm achieve $99,000 in cost savings. Most top accounting firms in the USA outsource tax preparation to QXAS to achieve affordable scalability and tremendous cost savings, saving more than 50%.

We have been handling the tax prep needs of several CPAs, accountants, and E.A.s for almost a decade. Our experienced talent pool has solid U.S. tax legislation expertise and keeps up to speed with all the changes. With our outsourced tax preparation services, you can stay on top of the tax season. Your accounting firm’s tax preparation requirements will be taken care of by highly talented & certified accounting professionals and tax preparers who will use the right tools that meet the highest data security standards.

WHY QXAS?

Sign up for our pioneer tax preparation services to resolve talent shortages, reduce costs, and improve your margins. QXAS has been in the tax preparation outsourcing business for several years and has kept in step with changing tax legislation. We have airtight data security measures and adhere to stringent SLAs and high-quality standards. 

WITH QXAS’ TAX OUTSOURCING SERVICES, CPA FIRMS BENEFIT FROM:

• Manager FTE solution to review outsourced work
• Multiple engagement models
• Quicker turnaround times
• Substantial cost savings
• Greater profitability
• Comprehensive data security measures
• More time to innovate and scale
• Creative space to improve service portfolio

Bhagyashree Patankar

With over 14 years of global experience in finance and accounting, Bhagyashree is a Chartered Accountant and US CPA with a master’s in Accounting and Finance. She leads an 80+ member team across accounting, audit, and tax, driving operational excellence, talent development, and high-quality delivery. Known for her precision and strategic insight, she transforms financial data into actionable business strategies that enhance decision-making, efficiency, and sustainable growth.

Don't forget to share this post!