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Outsourcing tax preparation – a growth model for small firms
Joseph P. Manzelli Jr. CPA.CITPCoordinator of Outsourced Workflow
Doubletree Suites Phoenix, AZJuly 17, 2013
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Agenda
• Background– Joe Manzelli– XCM Solutions & Xpitax LLC
• The Tax Process – How can it be Optimized• Workflow what is it?• Outsourcing as a Tool• Demo of XCM software
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History of XCM / Xpitax
• Founded in 2001 as an outsourcing company by accountants for accountants
• Pioneer in the outsourcing model (tax & bookkeeping)
• Unique in Industry– Own Dedicated Facility in India– Only Patent Holder in the Outsourced Space– XCM – Automated Workflow Process
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History (cont’d)
• Growth to 25 US Employees & 125 employees in India
• 500+ accounting firms & 28,000 XCM users• Prepare 15,000 to 18,000 returns for firms
– Over 28,000 in 2007 (Section 7216 came along)
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• Doing More With Less– Economy– Fee Pressures– Increased Regulation– Condensed Tax Season– Rapidly Changing Technology
Our Industry Today
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• Efficiency• Redundancy• Transparency• Accountability• Consistency• Timely Communication
Common Pains
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Tax Process
• Collect source documents• Scan? Copy?• Prepare – data entry• Questions – missing information• Review• Collate & send• E*file
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American Institute of CPAs
Manual Process
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American Institute of CPAs
Scan tax return and source documents
Store in DMS
Refined Process
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American Institute of CPAs
Prepare Return
Electronic List of Missing
Information
Optimized Process
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What is workflow?Process standardization & automationKnowledge managementAccountabilityIndividual work managementResource managementTeam collaborationCompliance & QCEase-of-use/ScalabilityImplementation & trainingSystem, integrationCost
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Process Automation
Pre-defined statuses that can be turned on and offCustom statusesLinear and horizontal processesWorkflow mappingQuality control alertsManage re-occurring activitiesManage bulk processesAutomatic project creation/Roll forward
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Knowledge Management
Robust reporting – standard & customException and bottle neck reportsProject-related files and detailsEasily searchable and actionable dataQuestions, review points, instructionsAutomated archiving and purgingAnnual comparisons
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Accountability
Staff developmentStatus details on a particular projectView all WIP, or specific workloadFirm-defined user rights
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Individual Work Management
Virtual desktopAbility to organize, assign difficulty and prioritySupport scheduling/work assignmentAssign individual or group roles, skills and expertiseTime summary support
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Resource Management
Move responsibility within teamCross-team collaborationSupport question/review cycleReal-time workload balancingIntegrated schedulingBudgeting support
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Compliance and Quality Control
Full tracking capabilitiesFull due date management capabilitiesCustomizable sign-offsQuality control checks and exception alertsExtension trackingE-File process managementCustomizable checklistsSupport for data retention policies
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Ease-of-Use/Scalability
Intuitive interfaceLogical designSmall learning curveAdaptable to current process and anticipated future needsFlexible and scalable – roll out to additional users, processes, departments, officesBalance between built and build
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Implementation & Training
Complexity of infrastructure deployment and administrationCustomary implementation timeIT involvementTraining – basic and intermediaryOngoing training and best use opportunitiesFlexible training optionsDedicated support resourcesFeature upgrades/enhancementsVendor reputation
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System Considerations
Vendor’s reputationEasy maintenanceRemote user support & mobile accessMulti-office supportFirm-wide systemDocument storage integrationPractice management integration
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Cost
Base product pricingLength of contractAvailability and price of optional capabilitiesAdministrative costsTraining costsPotential impact on head count/overtimePotential impact on user productivity and departmental efficiency
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Available Products
• OfficeToolsPro• SharePoint• Thomson FirmFlow• CCH Workstream• XCM Workflow
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Outsourcing - Driving Factors
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Benefits of Outsourcing
• Staffing Resource– Year round access to unlimited resources
• Improve Quality and Consistency• Standardize & Automate the Process• Grow Practice Without Increasing Overhead• Improve Client Service – Increase Turnaround Time• Improve Quality of Life• Increased Profitability
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Xpitax Teams
• Tax & Bookkeeping Compliance Officers (US Based)
• India Dedicated Team- Supervisor: 5-7 years, C.A.- Preparers : 1-2 year graduate
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Outsourced Process Basics
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Benefits – Enhanced Client Service
Outsourcing = Time for New Opportunities
Consulting Niche Building Specialization Higher Value Services
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Benefit – Client Loyalty
Number of Services 10 Year Retention Rate
1 12%
2 24%
3 63%
4 81%
5 98%
Source: Allan Koltin Presentation
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What to Outsource
Data Intensive Tasks Individual returns Corporate Returns, Partnership and Fiduciary Returns Bookkeeping Services Write-Up Services Accounts Payable/Receivable Financial Analysis Reports Workpaper & Financial Statement Conversions and Rollovers
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What to Retain
High-Value, High-Touch Client Service New Business Consulting Strategic Forecasting & Budgeting Business Valuations Tax Planning Corporate Financing Business Succession Estate Planning Wealth Management/Financial Advising
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Issues & Obstacles
• Security• Loss of control over return• Taking away jobs• Quality/Training – India background• Perception / Client Reaction
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Security - Privacy
• Data never leaves U.S.• Secure buildings in India• Printing / scanning not allowed• Utilize access of accounting firm’s software &
network
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Demo of XCM in action
We will utilize a live demo site & see XCM in action.
I can provide screen shots to anyone who desires them. I will have this presentation up on Slideshare. All Information on how to get screen shots or this presentation will be provided at our conclusion.
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© 2014 Xpitax Effective November 1, 2013
2014 Xpitax PricingOutsourced Tax Returns – Xpitax has a multi-tiered pricing schedule based upon complexity of returns.
Service Tier 1 Tier 2 Tier 3 Tier 4
Individual $63.001 – 12 pages
$142.0013 – 60 pages
$194.0061 – 125 pages
Add $53.00Each add. 50 pages
Corporate, S-Corp & Partnership $100.001 – 25 accounts
$142.0026 – 50 accounts
$194.0051 – 100 accounts
Add $53.00Each add. 50 accounts
Fiduciary $63.001 – 12 pages
$142.0013 – 60 pages
$194.0061 – 125 pages
Add $53.00Each add. 50 pages
Bookmarking $13.001 – 50 pages
$23.0051 – 100 pages
$32.00101 - 150 pages
Add. $5.00Each add. 50 pages
990 Tax Exempt $184 all returns
1) Prices for individual and fiduciary returns are based upon the total number # of scanned pages submitted with the tax data file (i.e. organizer and original documents). Scanned documents must be actual size of original document.2) Xpitax has a minimum annual service fee of $7,500.4) Xpitax will quote the price of returns which do not fall within any of the pricing categories noted above.5) Schedule D - as a default policy – Xpitax does not input transaction details (input the Summary Data). There is a surcharge for inputting detail as follows: first 10 transactions – no additional cost, 11 to 100 Transactions – surcharge assessed equal to next task tier, each additional 100 Transactions – surcharge assessed equal to next task tier. 6) Business tax returns - we require that firms provide us with an adjusted trial balance. If the M-1 adjustments are not easily identifiable on the Adjusted Trial balance, we also require a schedule detailing specific items that impact taxable income. 7) This Xpitax Pricing schedule is based upon firms providing us with a rolled over tax data file. For those clients that need to be keyed from scratch (i.e. new client to firm, data isn’t currently in your tax software) there will he a surcharge assessed to the next task tier. However we will key the prior year return, so that it can be rolled over, at no charge within the months of May – January.
Domestic Pricing: Pricing for domestic tax returns during the period from January to April 15 th is equal to two time (2x) the offshore pricing noted above.
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© 2014 Xpitax Effective November 1, 2013
2014 Xpitax PricingOutsourced Tax Returns – Xpitax has a multi-tiered pricing schedule based upon complexity of returns.
Service Tier 1 Tier 2 Tier 3 Tier 4
Individual $63.001 – 12 pages
$142.0013 – 60 pages
$194.0061 – 125 pages
Add $53.00Each add. 50 pages
Corporate, S-Corp & Partnership $100.001 – 25 accounts
$142.0026 – 50 accounts
$194.0051 – 100 accounts
Add $53.00Each add. 50 accounts
Fiduciary $63.001 – 12 pages
$142.0013 – 60 pages
$194.0061 – 125 pages
Add $53.00Each add. 50 pages
Bookmarking $13.001 – 50 pages
$23.0051 – 100 pages
$32.00101 - 150 pages
Add. $5.00Each add. 50 pages
990 Tax Exempt $184 all returns
XCM and XCM Outsource License Fee•There is no cost for firms submitting returns or other engagements/projects for processing through “XCM Outsource.”•There is a $375.00 per user fee for use of “XCM.” XCM provides custom home pages for each person in your firm and allows use of product for tasks/returns processed internally.
Training and Consulting Services•On-line Tutorial – Free•Web-based Training - $800/annually for up to 5 sessions•Web-based Firm Specific Training - $750/per session•Live On-Site Training - $2,500 per day plus out-of pocket expenses
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Questions?
Twitter - @joemanzwww.slideshare.net/joemanz13
781-519-9317639 Granite Street
Braintree, MA 02184