Oct 24 Important Factors To Consider When Outsourcing Corporate Tax Management Functions
Corporate tax departments are some of the most critical and hectic business management organs in any organization. In order to ensure that everything runs smoothly in this vital department, businesses should implement an effective and favorable corporate tax policy backed by a competent and dedicated staff. To ensure best tax management practices at the corporate level, the firm’s top decision-makers should furnish the tax department with adequate resources and operational guidelines. A fully fledged tax management division is characterized by various functional components including an internal accounting team, some outsourced functions, visible and defined departmental roles and responsibilities, a reliable communication network and excellent data management tools, adequate funding, process controls touching on budget forecasting, and tax reserves & accruals, and many other critical operational features.
There are several reasons why an internal tax department might need to outsource some of its corporate roles. A tax department leader in a company in New Jersey might consider hiring an independent accounting firm in Clifton to help ease the workload in order to ensure timeliness and competence in task execution. Cost considerations aside, some external tax consultants might be more suited to handle certain tax assignments than the in-house team due to specialized expertise and competence in a specific field or specialty. Others offer a cost-effective alternative for handling low risk, high volume tax workloads. It mostly depends on the company’s management culture and business preferences. Whichever the case, you should always bear the following tips in mind when contracting an independent consultant for your tax projects.
One of the most important issues when outsourcing any part of your tax project regards the hired tax auditor. You should conduct a rigorous vetting process to ensure that you contract the best tax firm for your work. Like every other project, you begin by defining the scope and then hiring the most suitable professional for the task. Start by defining your tax needs and then scour the industry for the most competent accountant. It is advisable to use a request for proposal (RFP) contracting process to ensure that you land the very best.
What To Outsource
There are some tax projects that should be outsourced and others that should be done in-house if possible. Some tasks are too sensitive for external auditors and others are too resource-intensive for the in-house team. According to recent industry surveys, most organizations outsource tax compliance audits covering income, property, and transaction taxes. On the other hand, most firms prefer to handle all their tax planning and audit defense issues within their internal tax department. Knowing your specific tax needs and the pros and cons of contracting another firm will help you choose the perfect tax accountant and/or auditor during the vetting process.
Regardless of the size or nature of the outsourced tax project, the owner must always maintain regular communication with the contractor. The first thing after hiring should be the establishment of an effective and reliable communication policy between the two parties.
After defining your tax project needs, you need to put up enough resources to cover all the contracting requirements. You need to invest enough funds to cater for all project expenses and enough time to follow up and monitor project progress. And also to enact any changes that might be necessary during the project execution phase. Deployment of adequate resources will ensure that all your project goals and objectives are met in a timely and cost-effective manner.