For companies that use both an outsourced accounting firm and a CPA to prepare their taxes, April 15 is really just another day. There’s no scrambling to get things filed. There’s no worrying that something was left off the tax return.
“The client has to sign the dotted line and that’s it,” says John Bellenfant, managing partner of Brentwood, Tennessee-based Bellenfant Certified Public Accountants & Advisors. “They trust that everything is being done correctly. It’s really an efficient process.”
Bellenfant would know. He serves as the CPA, tax professional and auditor for many companies that also use XMI’s services. We sat down with him recently (after April 15, of course) to talk about the role an outsourced accounting firm plays in making tax season—or any season, for that matter—easier. Here’s what he had to say:
An outsourced accounting firm helps you avoid surprises
If you’re using an outsourced accounting firm, your financials are being looked at regularly and are organized throughout the year. “Come January, it’s not panic mode, and come April, there are no surprises,” he says. “Everything has been consistently reconciled. And we can feel good about those numbers, because we know they came from a reputable accounting firm.”
The best outcome on a tax return is zero balance due—no underpayment penalties but also no refund.
“If you operate with a large refund every year, that is an actual time value of money (TVM) cost to the owners and an opportunity cost of reinvesting money into the business,” he says. “If they didn’t pay nearly enough, there might be some underpayment penalties and interest owed. When you have a professional looking at your financials throughout the year, those situations will be mitigated, if not completely avoided.”
An outsourced accounting firm helps make tax time more efficient
Bellenfant says the working relationship between his firm and XMI is so strong that “if the client isn’t involved, that’s by their choice.” Of course, the business owner will need to sign the tax return before it’s filed, but any questions or back-and-forth usually can be handled through XMI. That’s even more the case when a company also uses XMI’s PEO services or human resources outsourcing, providing easy access to W-2s, 1099s and payroll information.
When performing an audit, and not a tax return, the benefit is the same. Not only does an outsourced accounting firm help make tax season less painful, it can also make an audit less of a headache by ensuring all supporting documents are organized and sufficient for the audited financial statements.
Outsourced accounting makes tax preparation more cost effective
It’s not a best practice, but Bellenfant says some business owners turn over 12 months of bank statements—and that’s about it. It’s no surprise, then, that the tax preparation fees on that account are high. Even when a business provides its own accounting, Bellenfant’s firm spends some extra time verifying the information.
Outsourced accounting firms, on the other hand, prepare a complete reporting package each month that helps the tax firm jump in at year end with a clear picture of what happened throughout the year. The monthly reconciliations also help the tax preparer operate efficiently.
“A lot of times when people do their own accounting, they’re the first to say, ‘Hey, I did this accounting myself, but I’m no expert,’” he says. “But when we’re getting accounting records from XMI, we know their team of professionals is sending us a quality product. We can rely on the data because we know that XMI is a trusted business partner who does top-notch work.”