For US CPA and accounting firms, tax season is undoubtedly one of the most critical and demanding periods of the year. Yet, time and again, many firms find themselves caught off guard, facing an uphill battle with a chaotic workload and tight deadlines.
Tax season 2023 has come and gone, leaving behind valuable lessons for firms to learn from and apply moving forward. If CPA and accounting firms fail to plan now for the upcoming tax season, they may be doomed to repeat the same mistakes and face the dire consequences.
In this article, Finsmart Accounting – trusted by hundreds of CPAs for finance and accounting outsourcing – serves as a wake-up call to all CPA and accounting firms, urging them to begin planning ahead. It lays out compelling reasons to consider outsourcing non-core activities, such as tax preparation and bookkeeping. Moreover, it stresses the importance of finding the right outsourcing partner and the timeframe required for testing, with the ideal goal being completion before the holiday season begins.
Let’s start with the challenges of tax planning in 2023:
Tax Season 2023: A Hefty Burden of Challenges
Tax season 2023 brought forth a multitude of challenges that tested the resilience and capabilities of US CPA and accounting firms. Global events, regulatory changes, and an influx of clients seeking assistance compounded the already complex tax landscape. Firms faced an overwhelming workload, leading to missed deadlines, increased stress levels, and a strain on resources.
Many were ill-prepared to handle the volume of work and struggled to provide quality service amidst the chaos. The mistakes made during Tax Season 2023 served as a harsh reminder of the consequences of poor planning and inadequate preparation.
Read on to discover how firms can learn from past mistakes and achieve benefits of tax planning in advance.
Learning from Past Mistakes: The Imperative to Plan Ahead
The mistakes and challenges of Tax Season 2023 present a unique opportunity for firms to learn and grow. It is essential to reflect on these experiences to develop strategies that will ensure a smoother and more successful tax season ahead. Early planning is the key to avoiding the doom that may await those who fail to act in time. By planning ahead, firms can achieve the following advantages:
- Resource Allocation: Early planning enables firms to allocate resources effectively, ensuring that each task is assigned to the appropriate team member. This ensures optimal efficiency and minimizes the risk of burnout among staff.
- Regulatory Adaptation: The tax landscape is continuously evolving, with new laws and regulations being introduced regularly. Early planning allows firms to stay updated and adapt their practices accordingly, minimizing the risk of non-compliance and penalties.
- Client Engagement: Effective planning affords more time for client communication and interaction. This fosters stronger client relationships, as clients feel heard and valued, and helps firms understand their needs better.
- Workflow Optimization: With ample time for preparation, firms can streamline their internal processes, identify bottlenecks, and implement improvements. This ensures a smoother workflow during tax season, improving productivity and accuracy.
- Time for Training: Investing in staff training is crucial to ensure that they are well-equipped to handle the complexities of tax season. Early planning allows ample time for workshops, webinars, and other learning opportunities.
Learning from financial goof ups of previous years can help in tax planning and filing but if you are still overwhelmed, accounting outsourcing companies like Finsmart can lend a helping hand.
The Power of Outsourcing: A Strategic Approach to Overcome Challenges
Outsourcing non-core activities like tax preparation and bookkeeping can be a game-changer for CPA and accounting firms during tax season. Partnering with a reputable outsourcing provider offers a range of benefits that enhance a firm’s capabilities and efficiency. However, finding the right outsourcing partner is a process that requires time, research, and thorough testing.
- Expertise and Efficiency: Outsourcing firms specialize in tax preparation and bookkeeping, ensuring that these tasks are handled by seasoned professionals with the required expertise. This allows the CPA firm to focus on their core competencies and deliver outstanding service.
- Cost-Effectiveness: Hiring additional staff to manage the increased workload during tax season can be costly. Outsourcing provides a more cost-effective solution, as firms pay for the services they need, avoiding the overhead expenses of hiring and training new employees.
- Scalability and Flexibility: Tax season can bring unpredictable fluctuations in workload. Outsourcing offers the flexibility to scale up or down based on demand, without the need to hire or lay off employees.
- Access to Latest Technology: Reputable outsourcing partners use advanced tools and technology to streamline processes and improve efficiency. This ensures that tax preparation and bookkeeping tasks are completed accurately and on time.
- Time-Saving: By outsourcing non-core activities, CPA firms can focus on strategic planning, client interaction, and delivering high-value services. This time-saving advantage is invaluable during the hectic tax season.
Accounting outsourcing indeed brings a lot of benefits for organizations planning to maximize tax savings. Even CPAs and accounting firms outsource some of their work to companies like Finsmart to control expansion costs and onboard more clients.
The Importance of Early Testing and Decision-Making
While outsourcing presents numerous benefits, it is essential to exercise due diligence in selecting the right outsourcing partner. CPA firms must conduct thorough research, request proposals, and engage in discussions with potential partners to assess their capabilities and compatibility. The process of finding the right outsourcing partner takes time, and rushing through it may lead to undesirable consequences during tax season.
Ideally, the testing of outsourcing partners should be completed by the end of November. This allows ample time for finalizing agreements, making necessary adjustments, and ensuring a seamless transition before the holiday season begins. Completing this process before Thanksgiving and December vacations provides CPA firms with the peace of mind to enjoy their time off, knowing that their tax season preparations are in place.
Finsmart Accounting with its 15 years of outsourced accounting space uses its own proprietary framework called DPPT – Definition, Process, Precision & TAT that has been the success mantra for supporting the firms in the US so that they don’t have to scramble to hire accountants.
Share your thoughts
Would you like to know more about the DPPT framework or have you or your company worked with offshore accountants during the accounting talent crunch? What was the experience like? Join the conversation below or check out our recent blogs on business growth and offshore hiring:
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Maanoj is Co-founder & Director of Growth Strategy & Alliance at Finsmart Accounting. He is an Outsourcing Expert, a People Champion, and a Dynamic Leader with strong Business Strategy and Scaling-up experience. He has incubated businesses, sold & exited ventures; helped build strong enterprises in very diversified verticals like Fintech, HR & Consulting spaces in various CXO capacities over the last 20 years.
