How Accounting Outsourcing Benefits CPAs in the Tax Season?

 

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The above image highlights the challenges accounting and finance firms expect to face in the next few years. The need for new skills is paramount. It naturally occupies the #1 position. Some other learnings are ‘downward price pressure on services,’ ‘marketplace unpredictability,’ and ‘a shortage of top talent.’

As an accounting firm or CPA, you will find these challenges relatable. But the question is, do you have the plan to address these? It’s all very well to say we know what the challenges are, but if you do, you should also have an idea of how you can plan to navigate these.

We have an answer that can help you address all these issues, and the answer is outsourced accounting services.

But, we will lead up to this answer, qualifying it with reasons we think this is the right solution.

Your Operational Approach Has to Evolve

If you do the same things and expect different results, you are not doing it correctly. The traditional approach to growing your firm needs to change. Don’t think radical, but think smart. The question, in a domain wherein margins for compliance and commoditized services like bookkeeping and tax preparation, are decreasing, is how does your firm grow? Yes, doing more is the answer here, and you need to acquire more clients, but have you thought about client retention?

This is where you go innovative.

Retention is much simpler and way less expensive than client acquisition. So think about how you can satisfy your clients so much so that they stick with your services over the long term. More importantly, check how you can build more synergies with clients, especially your marquee clients. Also, figure out how you can manage client expectations better. The key here is to apply the economies of the scale model to your commoditized services and move towards assuming an advisory role with your clients.

This can only happen if you free up time by working with outsourced accounting firms and sending compliance work their way. Yes, we are talking about tax preparation services and the like so that even in the busy tax season, you still have time to explore new growth avenues for your firm.

Tax Season and Outsourced Accounting Services

Tax season is usually the most lucrative season for CPA firms, especially if their core services focus is on commoditized services. The last few years, especially the 2020 and 2021 filing seasons, have been a rollercoaster for CPAs, with COVID-19 and the ensuing continuously evolving Federal and State guidelines throwing many hurdles their way.

But the tax season is never a bed of roses, and while CPA firms earn substantial revenue in the season, there is always a feeling they could have done more. Also, many firms cannot scale or build capacity quickly and affordably, resulting in less productivity. Stress, work-life imbalance, being overwhelmed, and a nagging feeling that you are not on top of things are par for the course in tax season.

What you want are affordable resources that can help your firm make the most of the tax season. You also need the option of scaling these resources up or down post-tax season. You also want to easily access the best resources without investing in a long, drawn-out recruitment cycle, and you don’t want to put these resources on your payroll. You want expert tax accountants/preparers and yet, want to save money while adding them to your team.

Your needs are answered by tax return preparation outsourcing. Why? Read on to know more:

Get the Benefit of Labor Cost Arbitrage

You can extend your team of tax preparers with affordable resources because they work from locations where skilled labor like accounting talent is not expensive. Or, to put it simply, it is much cheaper than the geography wherein your firm is located. If you do a savings analysis, you will find tax preparation outsourcing and your team of offshore tax preparers help you save up to 50% on operational costs alone.

Don’t Worry About Attrition

There is a very high rate of turnover in the accounting industry, and one of the reasons could be the talent shortage and the fact that good accounting professionals are in huge demand. Come the tax season, or before that, firms start prepping themselves and adding to their team.

Small and mid-size firms might find themselves at the receiving end of the high turnover rate, but that shouldn’t worry them.

Outsource tax preparation not to face the attrition problem anymore. What’s more (and this is important), you have more time to better engage with your internal employees. Tax preparation outsourcing allows your team to focus their attention on business advisory services. Several firms have the expertise to offer high-value advisory services to clients but do not.

This allows your team to do high-margin work, which in turn also builds their skill sets. This can drive retention, as most accounting professionals want to do work that challenges them.

Drive Strategic Growth

Irrespective of your firm size, whether you are a single-person operation or a firm with a 50+ team size or more, you want to grow, keeping your overheads in check. Of course, one impediment to growth is the talent shortage, and outsourced accounting services providers take care of this problem for you. But another critical limitation is the lack of expertise in a particular area. E.g., some firms are experts in bookkeeping but might not have expertise in cash flow analysis. Or, they haven’t been able to hire an excellent forensic accounting professional. Or you want to offer payroll services but don’t have the required expertise. The reason could be many, and lack of budget is one of them.

Now here is a scenario for your firm. You start outsourcing tax preparation. That leaves some time in your hands. Also, it frees up some budget. You can hire the in-house expertise you need. Or you can even outsource payroll to an accounting outsourcing company that offers a payroll support service.

In this case, you are not using outsourcing in an ad hoc manner but more strategically, tying in its usage with your firm’s end goals.

Conclusion

Accounting outsourcing boosts a firm’s productivity during the tax season. This drives revenue generation and increases profitability. At the same time, you get to focus on things that matter for your firm – grow your firm with non-commoditized services.

Talk to us to know how QX can help boost your firm’s profitability and achieve significant cost savings. Contact us at: [email protected] or call +1 862 946 6565