Brought to you by
outbooks

Outbooks outsources accounting and bookkeeping. 

Save content
Have you found this content useful? Use the button above to save it to your profile.

What Does It Cost to Outsource Your Tax Preparation Tasks? 

27th Mar 2019
Brought to you by
outbooks

Outbooks outsources accounting and bookkeeping. 

Save content
Have you found this content useful? Use the button above to save it to your profile.

about_accountex

Companies in the UK are actively looking to outsource their tax preparation tasks in the hope of streamlining their business and reducing costs. Outsourcing tax preparation tasks is one of the most sought after accounting and bookkeeping services. CPA firms and businesses are seeking offshore bookkeeping in UK to concentrate and focus more on their core revenue-generating activities due to benefits such as lower workforce costs and efficient work performance. Let’s take a quick glance into the various nitty-gritties of outsourcing accounting and bookkeeping services and tax preparation tasks, and the various advantages and challenges associated with it.  

Outsourcing is a simple, uncomplicated process 

As opposed to what most people think, outsourcing is in fact a very simple process that doesn’t include a lot of hassles or complications. A CPA firm-based places tax documents (in the form of pdf files) in a shared network folder. These scanned documents are then uploaded by an outsourced bookkeeping service provider through a data centre. Finally, offshore workers prepare the corporation tax return outsourcing and send the documents back electronically to the CPA firm, which then reviews them for accuracy.   

Cost savings and quick turnaround time are driving outsourcing  

Cost management is the primary reason most companies opt to outsource their accounting and bookkeeping services and tax preparation tasks. Countries to which these task are outsourced usually have cheaper labour available, which makes it profitable for companies outsourcing the tasks, despite the outsourcing costs involved. According to the June 2015 edition of CPA Journal, in the US, a staff accountant gets paid around $39 per billable hour. However, if the same work were to be outsourced to a bookkeeping service provider, it would cost $20 per billable hour. 

Another primary reason driving the trend of outsourcing accounting and bookkeeping services is the quick turnaround time. Companies outsourcing their tax preparation tasks and bookkeeping service providers to whom these tasks are being outsourced usually follow a time difference because they are situated in separate countries. This time difference becomes a factor of profit. For example: A tax return assigned in the evening by a firm based in the UK to an outsourced Indian company can be delivered back to the UK client the very next morning because of the time difference factor between the two companies. Moreover, this can be extremely beneficial during the peak accounting season when workload increases by manifolds.  High workload can be reduced by outsourcing tax preparation to a specialised bookkeeping service provider, as a quick turnaround can assist in managing processes efficiently during peak periods.  

Data privacy concerns related to outsourcing  

That said, there are also some pretty concerning challenges related to outsourcing accounting and bookkeeping services. The very same quick turnaround speed that makes outsourcing attractive also makes it liable to security concerns. When confidential financial data is outsourced and handed over to a specialised bookkeeping service provider, the privacy of the documents is put at stake. Moreover, not all clients are confident about using third-party services even after data encryption and other security features are employed. They are always fearful that private and confidential financial data may fall into the wrong hands, and miscreants could exploit the information. And this fear is not simply limited to the clients, even CPAs are equally worried about data exploitation. As per a study conducted by Accenture in 2003, 52% firms outsourcing their processes were concerned about proprietary data being illegitimately accessed and misused by competitors. This concern is because it is the responsibility of not just clients but also CPAs to ensure clients' confidential personal and financial information is duly protected. These terms are in fact outlined in a written contract, and CPAs even have to monitor the work of all third parties involved in tax preparation. CPAs are also required to disclose to their clients that they are using the services of third-party vendors. Whether accounting is outsourced or handled in-house, CPA firms are still liable for data confidentiality and protection.  

Outsourcing also reduces in-house training opportunities for young employees within the firm. It makes companies completely dependent on outsourcing, leaving zero opportunity for training the in-house accounting staff.     

 

Offshore bookkeeping in the UK has gained widespread acceptance. Outsourcing accounting and bookkeeping services has its own share of profits and concerns, but it is completely up to companies to decide whether they find the practice safe enough to adopt or not. With technology advancements and even government mandates, most outsourcing companies, these days, are following strict regulations to ensure data protection and confidentiality. However, it cannot be denied that many companies have found their success in outsourcing.  

Tags: