After this tax season, there is probably more than one of us seriously considering whether social media fashion blogger might have been a better life choice than a tax accountant. The changing regulations and deadlines were enough to keep our heads spinning all 2020!
Aside from all the challenges that this year brought that may have you second-guessing your career choice, there are many great reasons to outsource certain services within your business. Tax preparation could be one of them!
Let’s start with WHO is a good candidate to consider outsourcing tax preparation within your business:
- Bookkeepers who would like to offer tax preparation services to their clients
- CFOs who provide outsourced CFO services and consulting and would like to offer tax preparation services to their clients
- Financial and wealth advisors who know that roping in tax preparation would be an added benefit to their clients
- Law offices offering estate and wealth management planning where a side by side tax service would offer convenience for your clients
- CPA firms who are in growth mode and may not be able to scale their tax services easily when hiring new preparers and managers are cost-prohibitive
The average internal cost to prepare a return after you consider software, insurance, advertising, licensing, training, staff wages and benefits, office expenses, postage, etc. is about $1,000 for a smaller accounting office. That makes economies of scale hard to achieve when you’re starting to offer this particular service within your organization. Here are five reasons why outsourcing might be a good fit for you:
- It frees up time to focus on other areas of your business. Any business owners and executive-level manager knows that spreading yourself too thin across various areas of your business can result in the whole organization suffering. The administrative time of prospecting new clients, dealing with invoices, addressing HR issues, and dealing with other administrative decisions are both time-consuming and necessary for growth. If you are also finding yourself stuck in constantly doing the client work, you are not building a scalable growth model. Outsourcing can take preparation time off top management to focus on the foundations of growth within your organization
- Outsourcing can reduce your costs. Your average cost to outsource tax preparation could fall well below the average internal cost to prepare returns. Because an outsourcing team can take advantage of economies of scale that you may not have achieved yet, their cost to prepare can come in a lot lower than what it would cost for your team to do the same work. That means that not only can you increase your profit margin on this particular service, but if you find the right outsource team, you can grow the customer base at the same time.
- Working with an outsourced team that are experts in tax preparation can help mitigate your risks. Tax is just one area of accounting, and as we saw for most of 2020, it was a full-time job to stay abreast of the tax law changes. Trying to be an expert in multiple accounting and finance areas for your clients can be a struggle and opens up the opportunity for mistakes to be made. Not only can outsourcing help you tap into another layer of expertise and experience, but it can help your own team avoid burnout and overwhelm, which can also lead to unintended errors during stressful times of the year.
- Maximize the value your clients receive! If you are providing excellent accounting, finance, or consulting service right now but then sending your referrals for tax services out to those around you, not only are you missing the boat on an entire revenue stream, but you are missing an opportunity to maximize your client service. One-stop shopping is undoubtedly easier and more convenient for clients. Choosing an outsource provider that works with your team and within your branding allows you to provide a seamless front to back service to your clients. If you are a growing CPA firm who might be at capacity currently, using an outsourced service can help you offer your clients a quicker turnaround and a new knowledge base to ensure they are getting the best value available to them.
- Maximize your most valuable staff members! When I built my first practice, there were a lot of times I remember thinking, “this is not the highest and best use of my time.” Outsourcing tax preparation offers the opportunity to free up the time of your top team members. That could mean more sales conversations, higher-level consulting services, more development, training, and innovation going on. All that is required to help your organization to continue to grow and strengthen your relationships with clients.