The Pros & Cons of Outsourcing Your Statutory & Tax Compliance
It’s undeniable that tax and compliance management is growing more difficult. Tax compliance teams today need more skills, expertise, and knowledge than ever before, especially with the increasing regulatory complexity that they must grasp. This intricacy raises the need of having skilled professionals to manage a company’s taxation issues, putting even more pressure on the recruitment and retention of these highly sought-after talents.
As a result, an increasing number of businesses are trying to outsource certain portions of their statutory compliance work, relying on third-party vendors for assistance. It also helps that the tax outsourcing market has evolved to provide new services and technologies to solve problems in the 21st century.
So what about your organisation and situation? Would outsourcing tax compliance be beneficial to your business? Today, we’ll look at both sides of the argument to provide insights on tax outsourcing.
The Pros of Hiring an Outsourced Partner for Tax Compliance
Outsourcing tax compliance can be cost-efficient for your business if and when the cost of hiring and training in-house is greater than the cost of outsourcing to a third-party partner.
Getting the right outsourced partner for your statutory compliance can be helpful because they have the right expertise to cover the necessary issues pertaining to tax and compliance. Most of these tax professionals are well-trained in their field and have relevant certifications. With outsourcing, you will receive the expertise of a professional with years or even decades of experience at your service. Compared to hiring a full-time in-house of the same calibre, outsourcing can be seen as more viable and cost-effective.
Complying Accurately to Local Regulations
Corporate tax compliance can be hard to maintain as an ongoing process. Poor tax management can be costly to your business if it does not comply with numerous local regulations. This can lead to a variety of legal charges and consequences.
However, an outsourced partner can assist you in staying current and meeting your tax compliances. They will also ensure accurate reporting and filing to keep your business looking clean and professional for your stakeholders. Thus, outsourcing your tax can work for businesses of all types and sizes to ensure compliance and legitimacy.
Extra Help During Peak Tax Filing Season
Instead of hiring a set of long-term employees, it can perhaps be better to get temporary help to file and submit tax returns every fiscal year. This can make sense particularly if your business is not directly involved in tax planning and submissions all-year long.
Every year, taxpayers scramble to submit their tax return in time to avoid penalties. For many businesses, tax submission means filing accurate and complete tax returns to their local tax authority. This activity can be daunting and confusing to many.
This is why hiring an outsourced tax compliance partner will ease up your work during peak tax filing seasons because they have the experience and knowledge to know what is needed to meet the compliance requirements.
Free Up Your Hands
For many managers and business owners, doing taxes can be lengthy and time-consuming. The time they should have spent to maximise business goals. If you can relate to the issue of time when it comes to submitting and reporting tax queries, then outsourcing could be helpful for you.
Moreover, certain periods of high rate of employee turnover can cause uncertainty and inconsistency in your business. But outsourcing compliance can help stabilise your internal workload. You are then able to focus on work and pertinent business matters while your outsourced service provider deals with the fine print.
The Cons of Hiring an Outsourced Partner for Tax Compliance
Communication, Distance and Openness
One of the possible setbacks some companies face when outsourcing is the difficulty in maintaining good communication between the outsourced team and their team. When outsourcing, you cannot simply walk over to their desk and ask about the company’s taxes. In addition, some of your employees may not feel at ease speaking with an external party over sensitive data, compared to a familiar face in their team.
To counter this issue, you should seek out an outsourced agency which can maintain good communication and rapport. The ideal partner will also have procedures in place on how to report and communicate effectively. Trust and rapport-building are thus important to establish a good working relationship between partners.
Transparency can be an issue when working with an outsourced tax partner. A good tax outsourcing service provider will make all fees transparent; no hidden charges. If a client chooses to terminate the contract, there should be a fair termination clause stated in the agreement. Companies should also look for a dependable outsourcing solution with clear cost structures and customizable packages that allow them to scale up or down as needed.
In an age where all tax compliance data are digitised and automated, data security has been a rising concern. Improper storage or management of company data could jeopardise the privacy and security of your company.
Therefore, when choosing the right tax compliance provider, ask about how the firm handles private and confidential data. A good provider would have a strong IT procedure to ensure the security of your business data.
Limited Range of Services
The last con of tax outsourcing is when the outsourcing agency only offers limited services and a small scope of work. Worse if the service packages could not be customised. This can lead to more time as you would need to find someone else who can work on the areas not covered.
This issue can be solved when you find the right outsourced partner who can match what you need while offering a wider range of services other than taxes. Outsourcing providers such as Ledgen Group do not stop at tax compliance services but also offer Accounting, HR & Payroll and Company Incorporation. With a bigger job scope at your disposal, you will save time and effort whenever you need something done and have a centralised dependable figure to rely on.
Choosing the Right Tax Compliance Partner for You
In short, to mitigate and reduce the setbacks mentioned, you should opt to find a tax partner who is willing to be transparent, have a clear process, can communicate effectively, has a high security standard, and can scale with you with an extensive range of services. One way to be sure of your option is by doing a thorough check on the agency’s background. What were the feedback and reviews from past clients, for example? Apart from that, you can also look at their track record, size of their operations and reputation.
There are great advantages and benefits to be reaped when you work with the right tax compliance partner. The cons of outsourcing can be mitigated by choosing the right partner who has a good understanding of the field.
Ledgen is an efficient and experienced outsourcing service provider with a presence in Singapore, Hong Kong and Malaysia. We have dealt with multiple clientele from different industries by ensuring that their tax and statutory compliance is well-managed.
Our team can assist you with corporate tax, personal tax, and Goods & Services Tax where applicable. One of our unique differentiation from other firms is our ability to work in a short notice period so that you can receive a quick turnaround time. Our tax professionals are ready to advise you on tax regulations matters to ensure compliance is met. Get in touch with our experts today.