The trend of outsourcing tax preparations has been on the rise in the past few years. It is a good move for both individual and company taxes. Many tax practitioners, such as Taxfyle.com, have grown to embrace the rising demand for tax preparation services.
There are many benefits of outsourcing tax preparation services. The first major advantage is the economic aspect. A firm can save money and manpower if it outsources its tax preparations to tax preparation experts. Through outsourcing, companies are not required to hire staff responsible for tasks that are not directly beneficial to an organization. This reduces the wage bill that would have been used to train and pay such workers. An organization also gets to focus on its key business and leave tax compilation to the experts.
Another reason why outsourcing tax preparation service is a wise move is the efficiency associated with tax preparation specialists. The improvement in technology has made the transfer of information across websites easy and secure. Due to differences in time zones, people in different locations like the US can outsource their tax compilations to overseas accountants before leaving for work at night and find it ready when they resume in the morning. This helps in creating a 24-hour working operation.
How is outsourcing done?
Outsourcing tax preparation can be done in various ways. Some firms hire overseas staff while others retain the services of unrelated third parties. After choosing the model of outsourcing, the concerned firm should define the scope of the delegated responsibilities. The scope helps the third-party to determine the extent to which it should offer its services.
Besides deciding on the scope, the outsourcing company should decide how to transmit information to the third-party (tax preparer). When choosing a communication channel, it is advisable to select a reliable communication media. Information transmission is crucial and has to be done in the most convenient way. Many accounting firms scan taxpayers’ vital information into a Portable Document Format (PDF) file and then send it to the staff of the outsourcing company. Since this process is handled electronically, it saves both time and cost. This is convenient even for people in different time zones. When the outsourced staff completes their part, they email back the output.
After getting the output, your firm should conduct a keen review to establish that their requirements are met, and there are no errors in the document. Failure to review the document can land your company to trouble if errors are detected later. Miscalculations can cost your firm thousands of dollars.
IRS has severally given guidance on the implications of outsourcing tax preparations. After the outsourcing company receives the final output from the third party, it should ensure thorough checking to establish and correct any mistakes in the document. Remember, your tax preparer is not liable for any mistakes in the filed tax returns.