Traditionally, small- to medium-size businesses would get accountants and bookkeepers who will work on their accounting concerns. This includes payroll, accounts receivables, sales, and cashiering. Businesses usually set up a division for one particular concern. Most of the time the work is done on a daily basis since it is associated with the business operation as a whole. When it comes to tax preparation, however, some businesses would hire a particular person for this task. However, the person who is assigned to this is very busy only almost once a year. For this reason, some companies find it more practical getting into outsourcing tax preparation.
Outsourcing tax preparation is actually the latest trend in most businesses today. The reason for this is simple: cost efficiency. Instead of hiring additional persons who specialize on tax preparation, businesses simply pay a certain fee to other companies who specialize on this task. There is a big difference when you hire an employee for taxes than simply outsourcing tax return; and most of the time it is the cost that is affected. Here are the reasons why it is more cost efficient if the business considers outsourcing tax returns:
- When you hire an employee, you are obliged to provide him benefits and incentives. It does not mean that the staff that works on tax prep is not worthy to receive benefits. It simply means that sales and other support groups who focus on generating revenue should be more prioritized. Outsourcing tax only focuses on costs based on the task. The outsourced company is not part of the business, therefore it is not part of any incentives and benefits to keep them working. Besides, outsourcing tax returns works two ways. You get the services of the outsourced company and they promise quality service to you.
- When you have a staff that works on tax returns, you need to train him for the method or system that you employ in your business. The training would cost considerably. Even though the person is an experienced accountant or CPA, he still needs orientation to the kind of business you have and the system that you practice for tax preparation. When outsourcing tax preparation, you eliminate this concern. This is because you get the service of an outsourcing company who is expected to know the task and knows the different system with regards to tax preparation. Otherwise, such company would not successfully exist if it proposes tax outsourcing but does not actually know all about tax preparation systems at all.
- Your business covers the variable expenses of the person who is tasked for preparing tax returns. Most often than not, you have to work on little expenses for the work they render. This is true in overtime pays. But outsourcing tax preparation does not give you this concern. You pay for a certain fee one time. Your expenses for the outsourced services are then predictable and consistent. This makes budgeting easier for you at the end.
Overall, you get high percent of savings for outsourcing tax preparation than employing a staff for this task.