Outsourced tax return preparation is not bleeding edge. It may sound like a strange concept, but it is evolving past the early adopters stage and moving into a mainstream, common practice in many CPA firms. Outsourcing can be compared to the technology revolution of the 80’s Twenty years ago firms were beginning to convert from manual files to computers. This was a significant break in the way business was conducted. It required a change in well-established work habits and an investment in training and equipment.
The change to computers was not instantly accepted. Soon though it became obvious that without embracing the technology a firm would not be competitive. They would not be able to produce the nicely printed, whiteout free, financial statements and GL reports clients wanted. In addition, the time to manually re-type or edit a typewritten report eventually became cost and time prohibitive.
Outsourcing is the technology of today. Instead of changing the “how” portion of gathering, presenting and communicating data, outsourcing focuses on changes occurring in the “who” part of the process. CPAs are comfortable conducting 100% of their return preparation and accounting in-house. Many firms regularly use per diems, but these people need to come to their office or have a few years of experience with the firm before letting them work remotely. So, it’s okay for a temporary worker to see intimate client details that can be copied onto their laptop, but to send files to an outsourced agent who cannot copy those records seems to make many firms uncomfortable. Somehow it is the concept of using a service that is not in the CPAs office that makes outsourcing seem risky. It is the change of working with people you do not communicate with verbally that seems to be the biggest hurdle to overcome.
Get past the change component and look at the concept. As a profession we managed to grasp the concept of storing massive amounts of client data onto a floppy disk and then into a tiny chip. There was a leap of faith involved in embracing this concept. What if the tiny chip didn’t work? In order to make workflow smoother, balance personnel through the year, and better utilize full-time, in-house employees, the industry needs to embrace outsourcing. It is the only practical method of increasing a workforce to handle the overflow of tax return work in such a condensed period. Otherwise, you drive full-time staff insane or operate the practice with too many people for the entire year.
Self-assess the potential benefits of outsourcing:
Check the box if your answer is yes to any of these statements. If you check more than one or two boxes you should explore outsourcing.
Your firm cannot handle or does not seek additional 1040 work.
Hiring qualified professionals is a difficult and expensive task.
Entry-level accountants cost $35,000 or more per year.
Employees work more than 50 hours per week in tax season.
Clients perceive the firm’s services as a method of achieving compliance needs more than as serving as a business advisor.
You spend more time than you want locating financial records during tax season.
Employees do not look forward to months of March and April.
Advisory service opportunities exist in the firm, but are not sold with any regularity or to the degree you think it should be.
The truth is outsourcing is not for every firm. Like anything else that is new, it requires a time investment to make it work. For some firms, it may never work for them because they just cannot get comfortable changing with the marketplace. This isn’t a reverse psychology sell, it is an honest assessment of the practical application of outsourcing.
All firms need to evaluate the option of outsourcing. It enables a practice to grow, better utilize full-time staff, and provides the time to focus on the type of service and advice clients want from their CPA. Compliance is a commodity. Clients pay premiums for advice that makes them more successful. Outsourcing is a method of enabling a firm to get their time back to increase advisory service sales and “re-focus” the use of their permanent, full-time, higher paid workforce.