If your only goal to outsourcing tax preparation to India is to save on overhead costs, it might be time to reassess your strategy. A low price starting at 6$ per hour doesn’t guarantee quality work and save costs. Chances are your onshore team ends up reworking their work.
So it is important to understand what you want to achieve with offshoring tax preparation and what would be the right process to make it happen.
You are already running your tax firm and felt the need to outsource your work. Why? You might be overworking or planning to put your onshore team to work on higher value work such as tax advisory.
So first step should be to get a clarity on the objecting of outsourcing tax preparation to India and an idea of amount of work you need to send offshore.
Not all tax returns are created equal, and their complexity directly impacts the time required to prepare them. Break them down into these categories:
Complexity can be influenced by factors like:
→ Credits
→ Dependents
→ Investments
→ Multi-state filings
Pro Tip: I’ve designed a detailed template that considers all these factors to help you assess complexity accurately. The infographic you see here? It’s just a teaser.
DM me or send an email for access to the full template.
Having a rough idea based on past data is good, but precision is better. Here’s how to get more accurate estimates:
Send a Pre-Season Announcement to clients. Include:
→ Document Submission Process: Make it crystal clear.
→ Available Time Slots: Encourage clients to book early.
→ Deadlines for Booking Slots: Set firm cut-offs to avoid last-minute chaos.
This approach not only helps you anticipate the workload but also spreads it more evenly across the season.
Now that you know your return volume and complexity, it’s time to calculate the total hours required. Here’s a breakdown:
Estimate Time Per Return: Assign an average time for simple, moderate, and complex returns.\
Project Total Hours (A): Multiply return volumes by their estimated preparation times.
Account for Non-Billable Time (B): This includes client communication, admin work, and other tasks. Assume that non-billable time is 20% of your total hours.
Formula:
Total Hours Needed = A + B
Once you know the total hours required, calculate how many staff members you’ll need to handle the workload. Use this formula:
Staffing Requirement = Total Hours Needed ÷ Available Hours Per Employee (C)
Assume each staff member contributes 880 hours during tax season (40-hour workweek). This gives you a reliable estimate of how many team members you’ll need.
Your workload numbers are ready. Now ask yourself:
Clarity on your goals will help you determine what tasks to outsource and set realistic expectations for your offshore team.
Related Read – How Tax Season Looks Like When Tax Firms Offshore Tax Prep
There is not one or two models for outsourcing tax return preparation to India. There are multiple options. Depending on your firm’s requirement, you need to pick one.
This is a flexible, short-term arrangement where you outsource specific tasks or returns during tax season. The engagement ends once the project is completed.
Best For:
→ Firms new to outsourcing and testing the waters.
→ Handling seasonal workload spikes without long-term commitments.
Why Choose It:
Perfect for firms looking for quick support during the busy season without committing to a year-round arrangement.
In this model, the offshore provider assigns a dedicated team to work exclusively for your firm. The team integrates into your processes, offering consistency and reliability year-round.
Best For:
→ Firms seeking long-term partnerships.
→ Tax firms that want year-round support and trust in their offshore team’s availability during peak seasons.
Why Choose It:
Unlike project-based models, the dedicated staff model builds a sense of continuity and ensures your offshore team is always aligned with your workflows.
This approach combines the best of both worlds. You have a dedicated offshore team for regular tasks but can scale up by adding more resources during busy seasons.
Best For:
→ Firms with fluctuating workloads.
→ Practices with varying needs throughout the year.
Why Choose It:
The hybrid model offers both flexibility and stability, allowing you to adapt to changing demands without overcommitting.
How to Decide?
Evaluate your firm’s goals, workload patterns, and long-term plans.
Ask yourself:
Once you’ve identified your ideal model, communicate your requirements clearly to potential providers. Setting expectations upfront ensures a smoother outsourcing experience and sets your firm up for success.
Once you gain clarity on the objective, workload, and preferred engagement model, you can start looking for an offshore tax preparation staffing provider.
And this demands careful due diligence. Things to look for-
Outsourcing tax preparation to India isn’t just about saving costs and solving the talent shortage. It’s about making your firm scalable.
Look for providers with significant experience handling U.S. tax returns.
The provider’s expertise should align with the complexity of your clients’ needs.
Talk to other accounting firms that have worked with the provider.
What’s the quality of their experience?
How reliable is the team?
Do they meet deadlines consistently?
Client references provide invaluable insights that can save you from costly mistakes.
Your clients’ financial information is non-negotiable.
A trustworthy provider will have tight security at place:
Related Read – 7 Mistakes to Avoid When Tax Firms Offshore Tax Preparation First Time
Finding the right offshore team isn’t just about choosing a provider—it’s about finding the right fit for your firm.
At Credfino, we’ve learned this firsthand.
With over 30 highly trained accounting and tax professionals, we recognize that while all team members are cross-trained and capable, each brings their own unique strengths to the table.
That’s why we take staff fitment seriously. Only after an in-depth discovery call do we match you with the most suitable team member, ensuring alignment with your specific needs.
Here’s how to ensure your offshore team is the perfect match:
Speak directly with the individuals who will handle your tax preparation. This is your chance to assess their:
Use this time to get a sense of their professionalism, cultural fit, and approach to problem-solving.
During the interview process, clearly outline:
Defining these expectations upfront prevents misunderstandings later on.
Start small. Assign a test project to evaluate their capabilities.
This will help you:
The pilot project acts as a low-risk way to validate their suitability for your firm’s unique needs.
A smooth onboarding process ensures your offshore team integrates seamlessly into your existing workflows and aligns with your firm’s goals.
Here’s how to set them—and yourself—up for offshore tax preparation success:
Your offshore tax team can only deliver consistent results if they fully understand how your firm operates.
Provide:
At Credfino, our team helps accounting and tax firms with building SOPs and setting tax workflow software such as TaxDome too. Schedule a call to learn how can we help.
Communication can make or break an offshoring partnership. Assign a dedicated person from your in-house team as the primary point of contact for your offshore tax staff.
Why this works: It ensures clear communication, reduces delays, and streamlines issue resolution.
Their role: This person should oversee task delegation, provide real-time updates, and address questions from the offshore team.
A strong communication channel builds trust and fosters accountability.
The first few weeks are critical for setting expectations and building rapport.
Proactive feedback ensures continuous improvement and strengthens the partnership.
I hope this guide clarified the process for you.
One more important step: you’ll need to inform your clients about your decision to offshore tax preparation and secure their consent through a 7216 form.
Still have questions or want to explore how outsourcing tax return preparation to India can work for your firm? Let’s discuss your unique needs 1:1.
Tax firms planning 1040 outsourcing to India often come across myths like quality of work, legality concerns etc. This blog is all about facts!
Tax firms planning 1040 outsourcing to India often come across myths like quality of work, legality concerns etc. This blog is all about facts!
When offshore tax preparation doesn’t work, it’s rarely one-sided. The challenges often stem from both the tax firm and the staffing partner.