Xpitax News Articles
The Questions to Ask a Tax Return Outsourcing Company
Think of outsourcing as buying tomatoes. In the grocery store there is a range of tomatoes to select ranging from big ones, organic, plum, cherry, hothouse, canned, stewed, generic, etc. The gourmet cooks will buy the best product, regardless of cost. They need the flavor to come through, but most people like to purchase the tomatoes they always buy. Price may alter the purchase decision on occasion, but for the most part people buy a similar tomato type every time.
Now, look at outsourcing. Which service provider is “flavorful”? Big? Secure? Safe to use? “Stacks” versus “sorts” their returns? At least the tomatoes can be visually inspected. In the outsourcing company you may only see a sales rep and literature because their product is a service that cannot be seen. So how do you identify a good outsourcing company?
Here are some questions to when selecting an outsourcing company:
- Is it a company or an alliance of CPA firms in another country? Some outsourcing companies are fronted by a sales arm in the US that sends work to several independent chartered accounting firms. There is no cohesion, standardized training, protection, or security involved. Ask the outsourcing company if their professional staff is dedicated personnel working only for the outsourcing company. Otherwise you might get accountants who get to your returns when their other work is completed.
- Does the outsource provider use a dedicated facility? The people who work in the outsource business in India work at night (corresponding to our day). These businesses need to utilize their infrastructure during the day to maximize profits and operating an outsourcing business for the CPA industry fills this gap.So, the facility may be used for a different purpose during their day. This can create a problem. If the other business uses regular computers with hard drives, printers and other storage devices, information security is compromised. Ask if your outsourcing provider uses a dedicated facility or operates another business from their outsourcing operation such as a call center or processes other transactions. If so, question their security methods.
- Is the data secure? Saying it’s secure and proving it are two different things. The key is the location of the data center. Is it in the US only or in the US and then replicated on a server in a foreign land where control and security is an issue? This is a serious security consideration.
- Are returns “stacked” or “sorted”? Are your firm’s returns put into a giant stack and picked off by the next available person? Or, are they sorted, put in a special stack for individuals trained on your firm’s method of preparation, and processed by an individual intimate with your firm’s style? This is a key factor. If you have an outsourced agent who “sorts” and something is not to your liking, at least it will be consistently done the same way. If fifty different outsourced accountants are working on your returns, you will receive returns done fifty different ways. Inconsistent preparation is a nightmare.
- What training occurs? All companies have US tax law trained personnel. Not all outsourcing firms will have personnel trained on your firm’s methods and style of return preparation. These are training differences to explore.
- Service & Support? How knowledgeable are the people who provide the customer support for not only outsourced application and tax software, but also for implementation and ongoing workflow issues in the CPA firm? Are the people that supply the customer support CPA’s or tax administrators that can help make the implementation seamless and efficient or are they sales people? If your technical support is outside of the US, then walk away.
- How do you communicate with the outsourced company? All providers have a process in the return preparation software to allow the outsource agent to post questions for the CPA firm to answer. However, is there a method outside of the return preparation application to allow non-client communications between the CPA firm and outsource professionals to instruct your team how you want the return prepared? If they use standard email, then security is not as tight as it needs to be. Xpitax has developed a communication process that securely sits behind our firewall and outside of the return application to enable your firm and outsourcing agent to discuss business issues. Yet, this communication process still ensures secure data protection.
- What technology does the outsource company provide and can it be used to process in-house returns as well? To make outsourcing as seamless as possible, the application the outsource provider uses to control returns should be designed to allow a CPA firm to use it to process in-house returns as well. By using the same system for both in house and outsourced returns, outsourcing becomes seamless with no difference between the CPA sitting ten feet away in your office and the chartered accountant 10,000 miles away.
- Is the application used by the outsource provider a tracking and monitoring system, or is it a fully functional workflow solution covering all aspects of the tax preparation process? Most outsource providers have a tracking and monitoring system to track the return while in the outsourcing process. Look to see if the application can also be used to make your tax preparation process more efficient.
Xpitax adds one more step to our process. Basically, we do the returns twice before they get sent to your firm for review. Returns are sent to an Xpitax preparer, then to a junior supervisor and senior supervisor before being sent to your firm. During the process, we create a tax reconciliation book and annotate work to make it easy to follow. The reconciliation book ensures the steps needed to properly prepare a return were taken and enables your firm to quickly review the reconciling steps.
For additional information on selecting an outsourcing provider, please contact Glen Keenan at 781.303.0136 or via email at gkeenan@xpitax.com.