An article this week in the Wall Street Journal noted General Electric (GE) had executed a strategy for outsourcing tax and some accounting services that other corporations are sure to follow. GE has decided to implement a “tax outsourcing” plan that will move internal employees to an external tax and accounting firm. The reason for the decision is one to note:
GE is concerned about the tax hurdles corporations will face under the new administration as “complex tax issues mushroom for big companies and the pace of global change pushes them to seek outside expert help.”
Allen Barron provides integrated tax, accounting, legal and business advisory services to our business and corporate clients. San Diego business and corporate clients can follow GE’s example and take advantage of outsourcing tax and accounting services to a single source vendor who is able to provide a broader scope of valuable services. The present model many businesses follow is disjointed, and fails to leverage genuine insight into your own business practices, internal data and decision making processes. Presently, many companies must turn to several separate professionals for input on high-level corporate decisions. It is not unusual for a company to have a business attorney, a tax attorney, separate CPA and accounting staff and perhaps a different tax preparation group – either internally, through external vendors or a combination of the two.
Allen Barron integrates these services in a single-source vendor leveraging economies of scale while providing expert insight from a much broader point of view. Instead of having to seek the advice of four or five separate professionals with a perspective limited to their own disciplines, our clients can discuss complex issues with Allen Barron experts who integrate these disciplines to provide a broader and more informed perspective. The quality of insight into complex corporate decisions is much greater, while the coordination of internal information, tax and some accounting services helps to reduce overall costs.
GE is expecting to reduce costs in a significant manner saving more than $100 million each year by outsourcing tax and some accounting functions. More than a dozen of the Fortune 100 companies in America are already taking steps to evaluate following in GE’s footsteps according to the article.
How does this affect businesses and corporations here in San Diego? Microsoft and Apple have deployed a strategy that attempts to move income to subsidiaries or affiliated companies in Ireland due to the perception of a reduced corporate income tax. You might not be the size of GE, Microsoft or Apple, but the nature of corporate business in a global economy is rapidly changing. US and California tax laws are quite complex as they stand. What does the future hold? One thing is certain: substantial and rapid change.
San Diego businesses require insight, analysis and sound advice on the structure of their companies as well the positioning of intellectual property and the realization of profit in order to minimize taxation and maximize profit. Transfer pricing and international tax issues continue to present some of the greatest challenges to San Diego corporations with business outside of US borders. We wrote an article January 27th discussing the new administration’s plans to overhaul corporate tax and proposals for a “border adjustment” based upon a “destination-based cash flow tax.” This new idea proposes to tax imports and perhaps remove the standard business deductions for foreign parts and services integrated into an American product. The same proposal would exempt tax on many exports encouraging a long term development of US-based suppliers. In any case it will substantially change the nature of business itself for many San Diego corporations and companies.
Following the Argentinian example of 2016, the administration is also considering a tax break that would provide incentive to repatriate corporate profits currently held overseas.
How will your San Diego business or corporation survive and thrive in these times? The fact that GE and many of the Fortune 100 corporations are outsourcing tax and some accounting services is a sign of where we stand and things yet to come for US corporations and those who have international business connections. We invite you to contact Allen Barron for a free consultation at 866-631-3470 to discuss the unique aspects of your own business operations, tax and accounting and how our experienced and expert team can help you to reduce costs and increase profitability in 2017 and beyond.
Source: “General Electric’s Novel Tax Deal Could Lead the Way” – Wall Street Journal