The tax season is very stressful for CPA firms because there is a surge in the number of tax returns that need to be filed, client inquiries, documentation gathering, and compliance issues as the deadline approaches. Relying on the in-house staff alone to accomplish these tasks results in overtime, delays, and possible exhaustion among the employees.
By choosing to outsourced tax preparation services, CPA firms get the added bandwidth during their busiest months. Outsourced tax preparers take care of the preparation tasks and the paperwork, and leave the decision-making tasks to the firm’s CPAs.
Why Peak Tax Season Creates Challenges for CPA Firms
Tax season is unique compared to other times of the year due to the sudden spike in workload during a certain period.
Increased Number of Tax Returns
Hundreds or thousands of individual and corporate tax returns are filed by CPA firms in a short period of time.
This involves the collection of documents, entry of data, calculation, review, and quality check. When there is an increased workload in excess of internal capacity, even routine activities become challenging.
Increased Client Contact
More email, calls, and queries from the client also come into picture during tax season.
CPAs find themselves occupied with administrative duties and not with complicated tax returns.
How Outsourced Tax Preparation Helps Manage Workload
A tax preparation outsourcing service allows CPA firms to delegate appropriate tax preparation activities to qualified external professionals.
Add Capacity Without Permanent Hiring
It would be financially unwise for a company to hire more full-time workers when the additional work being done by the company is mainly during the seasonal times.
Outsourcing will help a company to add more people when the demand is higher, and reduce the number when the high-demand period elapses.
Delegation of Time-Consuming Preparations Activities
In some cases, the outsourced tax preparers can help with the preparations of source documents, data entry, preparation of workpapers, return preparation and also identification of CPA reviews.
How Outsourcing Helps CPA Firms Serve More Clients
The additional capacity for preparation will have an effect on the number of clients that the firm can handle during tax season.
Reduce Internal Workload
Since the preparation of the tax forms can be assigned internally and externally, the CPAs can have ample time to work on more difficult returns.
Improving Turnaround Time
The additional capacity in preparation will assist in processing tax forms faster.
This will also improve the client experience since some of them provide their paperwork early and expect communications at the same time.
Benefits of Outsourcing Tax Preparation for CPA Firms
There are several benefits in engaging external tax preparation help during the busy season.
Proper Utilization of Resources
Internal CPAs can concentrate on technical reviews, tax planning, and communications while outsourced personnel perform tax preparation work.
Increased Adaptability During the Busy Season
Businesses can adjust the level of help they receive based on their needs, rather than having a large team throughout the entire year.
Relief for Employees
The peak-season overtime hours can lead to fatigue and stress on the employees’ side. External help will alleviate their workloads and make difficult times easier.
Opportunity to Work With More Clients
If a firm does not have sufficient internal resources, they may be forced to reject some clients or postpone work. Outsourcing will increase the resource base and enable the firm to serve more clients.
When Should a CPA Firm Consider Outsourcing Tax Preparation?
Outsourced services are not required by all firms. There are, however, some factors that might be a sign that outsourcing could be needed.
In Cases of Backlog in Tax Returns
Where the number of returns keeps rising faster than they can be processed by the in-house team, additional capacity might be required.
When Employees Are Overworked
Overtime work for tax return periods might impact the productivity and performance of the employees. Outsourced preparation might be considered.
When the Firm Aims at Growth
An organization that wants to get more clients might require extra preparation capacity before being able to take on more returns.
What Tasks Can CPA Firms Outsource?
The extent of outsourcing shall be contingent upon the processes and standards of the firm as well as its internal control environment.
Entering Tax Information and Preparing Returns
Outside professionals can contribute to the entry of data obtained from the documents submitted by clients as well as the preparation of their returns.
The CPA firm can then proceed to review the prepared work before completing the task.
Preparation of Workpapers and Supporting Schedules
Outsourcing professionals can also contribute to the preparation of workpapers, schedules, reconciliations, and other related documentation.
This will minimize the volume of preparatory work performed by CPAs.
Organizing Documents
Organization of client documents requires considerable time especially during the peak period for tax processing. Outside assistance can assist in organizing the information.
Hire a Tax Preparer vs. Hire a Full-Time Employee
CPA firms have various alternatives when they need more capacity to perform tax preparation.
When to Hire a Tax Preparer
A firm may hire a tax preparer when it needs additional preparation capacity but does not necessarily need another senior-level tax professional.
The preparer can help with routine returns and other specific tasks as per the review process of the firm.
Where Outsourcing Makes More Sense
It could make more sense to outsource when the extra workload is temporary or uncertain.
Instead of having to employ, train, and supervise an additional full-time member of staff, the firm gets access to external professionals based on its own workload.
How to Hire a Tax Expert Online for a CPA Firm
Modern technology has facilitated the access of tax professionals outside the CPA firms' market by these firms.
Broader Access to Tax Preparation Professionals
Firms that hire a tax expert online get broader access to tax professionals of varying expertise in tax preparation without confining themselves to their local market.
This is especially helpful when hiring in local areas becomes difficult during the peak season.
Define Roles and Responsibilities
It is essential to define what tasks an online tax professional would do, what information he/she would have access to, whom the work of the professional would be reviewed by, and how questions would be escalated.
How to Maintain Quality When Outsourcing Tax Preparation
Outsourcing should never lead to loss of control over the standards followed while preparing taxes by the firm.
Develop Standardized Procedures
The firm should develop standard procedures for preparing documentation, naming protocols, work papers, review process, and escalation procedures.
Such procedures will help external professionals in doing the work in a consistent manner.
Maintain CPA Review
It should be the responsibility of the CPA firm to decide about what returns and tax issues require review internally.
This is important to maintain control over the outsourced process.
Monitor Deadlines and Progress
Firms must have a centralized way to track document collection, preparation, review, client issues, and filing deadlines.
How Outsourcing Can Support CPA Firm Growth After Tax Season
Outsourcing is not just beneficial during the tax seasons.
Build a More Flexible Staff Structure
It will be possible to keep a smaller core staff and use external professionals when some loads are increasing.
Thus, there will be more flexibility in staff structure.
Free CPAs to Focus on Advising
Now that most of the regular work is taken care of, the CPAs will be able to devote more time to advising about taxes, finance and business in general, as well as to developing relationships with clients.
These activities may offer additional opportunities for developing the firm.
When tax season comes, a CPA firm does not have to permanently expand its internal team. It is possible to outsource tax preparation and thus have enough capacity to manage more returns without burdening the core team with tax preparation work.
A properly arranged tax preparation outsourcing service with The Fino Partners will help to distribute loads, speed up processes and relieve internal employees from additional pressure. Either hiring a tax preparer for specific tasks or hiring tax expert online as an additional seasonal resource, it is essential to have proper work flow and quality control systems in place.
