For CPAs and accounting firms, tax preparation makes up a significant chunk of their workload, and it’s important that they get it right.

Failing to prepare taxes accurately for clients can result in fines, penalties and a huge reputational hit for the company. In fact, any mistakes made related to taxation spells bad news for CPAs and their clients, including late filing.

Now, while outsourcing tax preparation is a fantastically effective way for CPA firms to meet demand during tax season, and produce quality results for their clients, it is often a practice that’s misunderstood.

To help you decide if outsourced tax preparation could be a savior for your accounting firm when workloads intensify and demand increases, here’s a short breakdown of the practice and some important debunked myths:

Outsourced tax preparation defined

This practice is simply when third-party providers are used to help prepare tax returns – corporate or individual – for CPAs and accounting firms.

By outsourcing all aspects of the taxation process, businesses can save themselves time and money, since they can then focus their attention on higher value services that they already, or wish to provide, and aren’t forced to hire new in-house employees to help them cope with demand.

The truth about outsourced tax preparation

Below are some statements believed to be true by many, followed by the actual truth:

• Data isn’t secure when you outsource

While data should rightfully be a major concern for all accounting firms and their clients, it’s important to understand that legitimate outsourcing partners take rigorous action to protect sensitive data, and deploy a series of measures in order to do so.

If you have any doubts or concerns surrounding data security, your chosen provider should be able to allay them for you.

• You’ll lose control of all your taxation functions

You can ask your chosen outsourcing partner to take responsibility for as much, or as little of your essential taxation functions as you wish. And, even if they carry out most of it on your behalf, you can maintain as much control over it as you feel necessary.

• Gaps in communication are inevitable

Even if you outsource your tax functions to a country like India, English will always be spoken by members of the team, and communication is prioritised. Regular meetings are typically scheduled between provider and CPA firm, and these will take place at your convenience, irrespective of time zone differences.

• There are always hidden charges

Reputable third-party taxation service providers don’t hide any charges from their clients, but if the terms and conditions of the contract aren’t fully understood before it’s signed, some extra charges may appear that CPAs hadn’t been expecting. The best way to avoid this is to read through the contract thoroughly before signing, and discuss any concerns with the provider.

• Outsourcing partners don’t produce quality work

With entire teams of experts on their payroll, third-party tax service providers have access to skilled professionals, who all keep themselves up-to-date with tax laws, and are capable of producing high quality work to demanding deadlines.

Who knows, by taking advantage of corporate tax outsourcing, your clients might even be more satisfied with the quality and timeliness of work you’re able to produce!

Outsourced tax preparation services remain something of a lifeline for busy accounting firms and CPAs, and while you may have your doubts if you haven’t yet tried it, most can easily be allayed by researching providers thoroughly, discussing contracts in detail, and encouraging honest and regular communication.