Why Should You Outsource Tax And Accounting Work In Time Of Crisis?
The Covid-19 pandemic has put unprecedented stress on accounting and taxation processes. It is not just the standard operations and processes that have affected this area of business management. Well-established organizations, that were considered to be highly stable against recession, have been adversely affected. Millions have lost their jobs or are working with pay cuts. The announcement of stimulus packages, including tax cuts from governments, even when helpful for businesses and individuals, has created new challenges for taxation and accounting professionals.
Outsourcing accounting functions can help simplify and speed up one key aspect of your business processes. Find out how the pandemic is making an impact on your business, the new tax ramifications related to it, and the benefits of outsourcing accounting.
Impact of Pandemic on Businesses
Currently, most businesses can be categorized into the following 3 categories in terms of the impact of the Covid-19 pandemic.
1. Crisis Management Mode
Companies in crisis management mode form the largest group of those impacted by the pandemic. They are taking some of the following steps to ensure business survival:
2. Keeping Up with Surge in Demand
There are companies that have experienced a surge in demand for their services or products. They are finding it to be a challenge to keep up. This includes the following sectors:
3. Protected from Impact
Businesses in this group have not yet been impacted by the pandemic. They may have a backlog of business that maintains them. These businesses will still have to track their cash flow.
All countries experienced unprecedented business disruption during the lockdown caused by the pandemic. The financial repercussions from the lockdown have forced the governments to announce relief or stimulus legislation that has had a bearing on tax requirements. Handling these changes in accounting and taxation processes further emphasizes the benefits of outsourcing accounting services. Some of these tax ramifications are as follows:
Tax Ramifications from the CARES Act
The US government enacted the CARES Act in late March 2020 which brought in many tax code changes affecting the federal income tax. The impact is not just on federal and state taxes, but also on international taxes. For example, allowing added business deductions operating losses can have implications of calculation of the following taxes:
Outsourcing accounting functions to specialized firms can help make your task much simpler.
Tax Cuts & Jobs Act
The IRS Large Business & International division recently initiated a new compliance campaign about the Tax Cut and Jobs Act, a tax reform law, and the changes in the CARES Act. The goal is to identify restructuring, transactions, and other issues related to the changes in tax law. The process can involve:
Benefits of Outsourcing Accounting Functions
A combination of right services and technologies from a reliable accounting and taxation firm can help your business address the challenges that have arisen during these times. Some of the key benefits of outsourcing accounting are discussed here:
Ensure Financial Efficiency
The pandemic has caused many governments, at federal, state, or local levels, to impose lockdowns and various restrictions. Most businesses that have been considered nonessential have had to close their offices. Even when revenues are affected, business processes must be taken care of. Your business will still have to:
Surprisingly financial analysis becomes even more important during this time. When you choose outsourcing accounting functions, you will put your business in a better position to keep your financial processes running smoothly.
The coronavirus pandemic has wreaked havoc on the economy and put businesses in a tight spot. The business landscape is certainly going to be much different in a post-Covid-19 era. Adapting to these changes will require your business to be more adaptive and position yourself for taking faster action. One of the benefits of outsourcing accounting services will be that they will help you become agile to meet the new challenges and demands. They can also help you take advantage of the new economic opportunities.
Thus, outsourcing tax and accounting processes can be a useful step you can take during this pandemic. QXAS has been offshoring accounting partner to over 200+ accounting firms. If you decide to take that plunge, drop an eamil to firstname.lastname@example.org and we'll get in touch with you!