Companies are facing an ever-increasing burden of corporate tax compliance and the pace of complexities shows no sign of slowing. Helping companies ensure compliance by outsourcing for business processes represents a growth opportunity for today’s tax and accounting firms.
“We’re seeing that trend accelerating in the present day really because of all the headwinds that corporations are currently facing, whether that be staffing related or inflationary challenges. It’s certainly no surprise that we’ve seen an acceleration of corporations outsourcing things like tax and accounting functions,” said Corey Greene, Senior Outbound Product Marketing Manager, Tax and Accounting Professionals for Thomson Reuters.
By outsourcing business processes to experienced accounting professionals, companies are able focus on growing their business rather than on time-consuming, non-core administrative functions. Companies also have peace of mind knowing that their corporate tax filing requirements are met accurately and on time.
Consider this: the global business process outsourcing market size accounted for $241.7 billion in 2021, according to a report published by Acumen Research and Consulting, and is estimated to achieve a market size of $512.4 billion by 2030, growing at a compound annual growth rate (CAGR) of 8.9 percent from 2022 to 2030. In 2021, North America accounted for 36 percent of the business process outsourcing market share.
Increased complexity in tax codes and compliance requirements, staffing shortages, and the need for greater automation and efficiencies are among the factors at play behind the growth of corporate tax outsourcing and related advisory services.
Today, more and more companies are turning to their tax and accounting partners for compliance needs, income tax returns, and advisory services like exploring new tax limitation opportunities, or evaluating multi-state or multi-national factors in the decision-making process.
Are corporate tax outsourcing services right for your firm?
There are several factors to consider when thinking about corporate tax outsourcing services for your firm:
- Capacity: These represent sizable projects that can be daunting for some firms given staffing constraints they may be facing, as well as increased regulatory pressure. Therefore, it is important that firms have strategic plans in place for expanding bandwidth that extends beyond increasing headcount.
- In-house expertise: These projects have grown in complexity due in part to today’s borderless business environment, whether it is domestically across state lines or internationally. Firms must ensure they have the tools and expertise to address a range of international, state, and local tax needs.
Firms can help ensure they have the necessary bandwidth and resources in place to meet clients’ corporate tax needs by partnering with the right solutions provider and implementing a robust end-to-end corporate tax platform.
Find the right corporate tax solution
To be able to better serve business clients and address their corporate tax outsourcing needs, it is essential that firms have the right technology solutions in place. Several features to keep in mind include:
Data automation. The ideal state is to leverage technology that automatically ingests data from external sources and requires no additional steps to manually manipulate that data ahead of time.
Data sharing: Once data is ingested, ensure that the data is shared across the entire platform. This saves significant time and reduces the risk of errors by eliminating the need to manually enter data when there’s a change that needs to be made.
Eases multi-state complexities. With the rise of borderless business operations, firms should have the ability to gather, calculate, and review state tax apportionment in one centralized system.
Modeling capabilities: Consider software that enables the firm to map out different scenarios for clients. These models can be used to compare tax liabilities to aid in internal decision making and advising clients.
With the Thomson Reuters ONESOURCE Corporate Income Tax platform, for instance, complicated tax forms are simplified, calculations are accurately computed, and filing requirements are met with ease. The platform includes such programs as Direct Tax Essential and Direct Tax Enterprise. Firms using ONESOURCE can leverage the following features:
- Simplify calculation and reporting of federal, state, and international foreign tax credits, earnings, profits, and deemed-paid credits.
- Conduct research with a built-in, customizable tax law database.
- File IRS tax returns and schedules online and check their status from any mobile device.
- Seamless integration so that any changes are automatically reflected in all applications and returns.
How to get started with corporate tax outsourcing
Firms looking to unlock corporate tax opportunities should begin by establishing their short- and long-term goals to determine their outsourcing needs. Firms should also ensure their solutions platform and technology vendor align with firm goals.
“If you’re looking to implement a new end-to-end tax platform, you’ll need to partner with a vendor that is willing to partner with you and has a long, trusted history of doing so successfully,” Greene said.
The corporate tax landscape continues to grow in complexity, presenting significant growth opportunities for firms with the right tools and resources in place. Is your firm among them?