The whole mantra of outsourcing seems to be the desired effect of retaining staff, improving client satisfaction and service and efficiency of the organisation. When it comes to outsourcing tax, it has the same desired effect. Be it a local company or an international company, tax outsourcing can reap the same benefits for all. Just saying that this management tool improves efficiency is not enough; it has to be proved too. By way of practice it can be said that there are three fold benefits of this practice. Firstly, with this practice the billable hours of each tax professional can be increased annually as firms are in a position to staff for off-season workload rather than peak-season.
The second advantage or means of increasing efficiency is, the preparation process and the review process can be streamlined and standardized tax workflow can be initiated which is paperless. Thirdly, when businesses resort to this practice, these businesses can reduce their costs and save up a lot due to the wage differences between the parent country and the outsourcers. The main aim of any kind of outsourcing is client satisfaction. To derive this client satisfaction, businesses have resorted to firstly, the turn-around time provided by the outsourcers is one to three days, and with this in hand the tax returns can be delivered to the clients by these businesses days in advance. Secondly, since the unimportant tasks like data entry can be eliminated, the professional can concentrate on client services to give them satisfaction.
During the peak season of taxes, the staff of such businesses can be retained as the pressure is taken off of them and they can concentrate on other value added services. The intense pressure of performing during the tax season can discourage people from joining such businesses and they can lose out on people who are assets. Tax outsourcing reduces this possibility and relieves the pressure during tax season. Any CPA firm can be connected with the outsourcing company by virtue of workflow technology that is paperless.
There is a stepwise process in place to attain this. When the documents of the taxpayer are received, those are scanned by the CPA firm and then they are uploaded on the outsourced company’s website. A copy of the proforma tax software file is also attached. The outsourced company is now engaged in preparing the tax returns. To make review easier, these digital papers are organised and indexed. In case of corrections, the outsourcer can be asked by the CPA firm to do it or the firm can also do it itself, if the work is small.
The most important aspect of outsourcing tax is to maintain confidentiality and privacy of the tax payer. Maintenance of data security is a top priority in this case. The location of the service provider is of utmost importance here as it determines the security of the job performed or to be performed. Secondly, the security of the data centre, i.e. the hardware which is used to store the data is also of significance here. The software that has been used by the outsourcer and the security of the data while it is in transit is also important.
Sales tax laws if violated can lead to high fines being levied or the government conducting audits on the concerned company. Sales tax outsourcing is one way to make sure that such an unfortunate event does not happen with a company which operates from multiple locations. Outsourced companies can do the job in a more systematic and better fashion because not only do they possess the required know-how, but also they have the technology which can be used to calculate such taxes accurately and faster.