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KNOW IN ADVANCE HOW MUCH CPAs CAN SAVE WHEN THEY OUTSOURCE

As homeland tax service cost increases, more & more CPA firms are opting to outsource tax preparation services to help minimize operating cost, maximize efficiency & increase profits. However, a very few would do some or complete analysis in advance of how much they could actually save by outsourcing their tax returns in this season. To an extent, it becomes impossible to practically gauge how much a CPA firm could save due to traditional hourly or schedule wise variable pricing model offered by outsourcers for tax preparation services.

This article aims to underscore that by outsourcing tax returns with a unique fixed price model with SandMartin (Outsourcing Experts in India), CPA Firms already know-how much they could save, which means CPAs can plan better and lay a good foundation for future of what to do with more savings, either use it for a marketing campaign to acquire new clients or invest in office technology.

The uniqueness of the pricing system of SandMartin is that the charges are fixed, no matter how much work is involved in the tax returns, it helps CPA Firms in ascertaining the profit margin/saving with every return outsourced without worrying too much about the ad-hoc and unplanned charges in traditional formats of outsourcing. SandMartin has designed three categories of tax returns i.e., simple, moderate and high, whereby all returns outsourced fall in and have a fixed price, it gives CPAs peace of mind and an opportunity to be in control as well when they outsource. Please see the pricing at the bottom of the page.

 

SAVINGS IN SIMPLE TAX RETURNS

The fees for tax return varies by region is US, the average tax preparation fees charged by CPAs for an itemized form 1040 with Schedule A & a State tax return in each US census district is enumerated below in the table (as per accountancyweb.com), we have assumed that a CPA firm in any of the respective states is outsourcing 200 tax returns to SandMartin in the tax season, the savings could be enormous.

District in US
Average price per tax return including Schedule A & State Tax return (in USD) charged by CPAs
Volume of tax return Outsourced
Per return charged by SandMartin (in USD)
Saving by CPA firms (in USD)
Saving%
Cost %
New England (CT, ME, MA, NH, RI, VT)
205
200
25
36,000
88%
12%
Middle Atlantic (NJ, NY, PA)
252
200
25
45,400
90%
10%
South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV
243
200
25
43,600
90%
10%
East South Central (AL, KY, MS, TN)
137
200
25
22,400
82%
18%
West South Central (AR, LA, OK, TX)
220
200
25
39,000
89%
11%
East North Central (IL, IN, MI, OH, WI)
193
200
25
33,600
87%
13%
West North Central (IA, KS, MN, MO, NE, ND, SD)
192
200
25
33,400
87%
13%
Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)
207
200
25
36,400
88%
12%
Pacific (AK, CA, HI, OR, WA)
292
200
25
53,400
91%
9%

If a CPA firm in the state of New York is charging $252 for a simple return including Schedule A, W-2, and a State Return, by outsourcing the same to SandMartin, it would only cost the CPA, $25 for a return including all. In a season, if 200 such tax returns are outsourced then $45,400 can be saved. In percentage terms, savings for CPAs are as high as 91% of their total charge out (fees) for a state in Pacific, followed by a saving of 90% for Middle Atlantic & South Atlantic, which means total cost of getting the tax return done through SandMartin is only 9%-10% for these states.

Just to add here, a CPA Firm fees may go up if there are more W-2's or more items in 1098 or 1099 but SandMartin charges stay fixed and hence more savings can be made.

Also, stating the obvious, these savings do not consider the cost on:

training,
office space,
workstations
other payroll cost,
benefits including bonuses and other overheads; etc which CPA firm would still have if they continue to get work done from new seasoned staff. If a mere 20% is added to the savings due to these factors, then saving for a CPA firm in New York could land up in the region of   USD 55,000 approx.
 
SAVINGS IN COMPLICATED TAX RETURNS
We understand that no CPA firm would have only simple tax returns to outsource, but complicated tax return like Schedule-C (Profit & loss from business) comes to play. The average fees for preparing IRS tax forms like Schedule C is $212 in US (accountingweb.com) in addition to the normal tax preparation fees as enumerated below.
District in US
Average price per tax return including Schedule A & State Tax return (in USD) charged by CPAs
Additional price for Schedule-C (in USD)
Average price per tax return including Schedule C (in USD) charged by CPAs
Volume of tax return Outsourced
Per return charged by SandMartin (in USD)
Saving by CPA firms
Saving%
Cost %

New England (CT, ME, MA, NH, RI, VT)

205

212

417

200

85

       66,400

80%

20%

Middle Atlantic (NJ, NY, PA)

252

212

464

200

85

       75,800

82%

18%

South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV

243

212

455

200

85

       74,000

81%

19%

East South Central (AL, KY, MS, TN)

137

212

349

200

85

       52,800

76%

24%

West South Central (AR, LA, OK, TX)

220

212

432

200

85

       69,400

80%

20%

East North Central (IL, IN, MI, OH, WI)

193

212

405

200

85

       64,000

79%

21%

West North Central (IA, KS, MN, MO, NE, ND, SD)

192

212

404

200

85

       63,800

79%

21%

Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)

207

212

419

200

85

       66,800

80%

20%

Pacific (AK, CA, HI, OR, WA)

292

212

504

200

85

       83,800

83%

17%

A CPA Firm in California can save USD 83,800 approx when they outsource some 200 tax returns to SandMartin at a cost of only $85 per return for difficult tax returns.

Please note, for comparison purposes we have assumed that in a tax return, only Schedule C is coming to play (in addition to a simple return), but in a pragmatic scenario, other schedules like E, H, K-1's Passthroughs, etc would also be there in a tax return. A CPA firm would of course charge for it but you need not to worry about the cost when you outsource, as it comes within $85 per return charged by SandMartin.

 
FREE SAVINGS CALCULATOR

We appreciate that every CPA Firm has a different charge out rate, different mix of tax returns to be outsourced, and it may becomes difficult for CPA firm to ascertain the savings they could achieve. To address that, we have developed a savings calculator where CPAs can fill in the number of tax returns they have to outsource along with their categories to make out actual savings that CPA firm may get. Email us on info@sandmartin.com mentioning “Savings Calculator- CPAs” in the subject line and we shall be happy to have you have it.

Don't just take our word, see it yourself how much you could SAVE

 
CONTACT SANDMARTIN

So, if you are a CPA Firm who wants to outsource tax compliance work and wants to increase the profitability, operational efficiency and want to ensure in advance that you know how much you are saving, contact SandMartin today at info@sandmartin.com or contact us through our website, we are also open for registration for free trial cases at the moment.

To know more how you could have stress free tax season and how outsource relationship can be established with you current set up, please click on hyperlinks to see our past article -SandMartin-Outsourcing Experts India / cpa2biz website.

For more information, visit www.sandmartin.com or email us at info@sandmartin.com , SandMartin is an ISO 27001 certified company.ISO 27001 is the international standard developed exclusively for Information Security Management Systems (ISMS), almost similar to SAS70 in US, requiring companies to employ a methodical approach to managing sensitive information and ensuring data security giving you peace of mind.

 
PERSONAL TAX RETURNS- PRICES*
Personal/Individual Tax Return (1040) – Parameters
Simple Return: $25
Moderate Return: $55
High Return: $85

Salary/Wages Income W-2 and Gambling Income W2G

All simple tax return items, plus

All simple and moderate return items, plus

Interest Income 1099-INT

Schedule-D (Sale of Shares & Security 1099-B (Transaction 16-30)

Schedule-D (Sale of Shares & Security 1099-B (Transaction 31 & More entered in to the software)

Dividend Income 1099-DIV

Schedule-E (Rental & Royalty Income)

Schedule-C (Business Income)

State Income Tax Refund/Unemployment Compensation 1099-G

Schedule-H (Household Employment)

Schedule-F(Farm Income)

IRA Distribution 1099-R

K-1's Passthroughs

Depreciation part, Additional and deletion of Asset - Form 4562

IRA Contribution 5498

Business Use of Home form 8829

Casualty & Theft Losses (Form 4684)

Social Security Benefit 1099-SSA

Un-reimbursed Employee Exp(Form 2106)

Sale of property (Form 4797)

Misc Income 1099-MISC

Moving Expenses (Form 3903)

Installment Sale (Form 6252)

Schedule-D (Sale of Shares & Security 1099-B (Transaction 1-15)

Non-cash contribution (Form 8283)

Like Kind Exchange (Form 8824)

Schedule-A (Itemized Deduction)

Adjustment to gross income like Educator Expenses, Student Loan Interest (1098-E) & Tuition and Fees Deduction (1098-T)

Foreign Earned Income Exclusion (Form 2555)

Estimated Tax Payment

Items resulting in credit and those item to be entered manually like-Education Credit, Energy Credit, Foreign tax credit

State adjustment for Non//Part Year Resident State tax return.

Single state tax return

Single state tax return

More than one state tax return.

* Prices are volume based
 

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