What to Look for When Selecting a Tax Service Provider
As tax leaders navigate an increasingly complex environment defined by tax policy shifts, heightened stakeholder expectations, and chronic talent shortages, many are turning to outsourced providers of tax services.
The challenge lies in identifying an advisor that best fits your organization’s business needs, culture, and goals. The right managed services provider can help you meet compliance requirements, mitigate tax risk, access new technologies, and capitalize on tax planning opportunities.
An effective services provider has an ownership mindset toward your organization, approaching every engagement from the perspective of a business owner or chief executive rather than a vendor. Driven by this ownership perspective, a strategic advisor synthesizes tax data across all areas of the business and works seamlessly across tax and other business functions — enabling a total tax mindset.
A total tax approach requires a deep understanding of your organization's business operations and holistic tax profile — from tax accounting through planning, compliance, and controversy. This is critical to uncovering tax risks, identifying planning opportunities, and informing broader business decision-making.
In this piece, we outline essential qualities to consider when selecting a tax managed services provider and discuss why a total tax mindset drives successful relationships. We also explore the methodologies that inform that mindset.
Ownership Mindset
Effective advisors approach every client with an ownership mindset. They understand your organization’s broader goals beyond its immediate compliance needs and proactively identify the tax implications of those business decisions across all jurisdictions and types of taxes. This requires proficiency and experience not only in tax, but in business strategy.
For example, if you are evaluating an acquisition, your provider should be able to analyze how the deal would affect the total tax liability of the new entity, while uncovering opportunities for tax efficiency. This would involve going beyond the typical tax work of conducting tax due diligence and planning the transaction’s structure. A provider with an ownership mindset anticipates downstream tax implications and potential business developments.
Similarly, for organizations assessing the impact of tariffs, the right provider can help you understand tariff costs, associated compliance requirements, and overall tax liability impacts, while simultaneously examining broader consequences. For example, an advisor with a total tax mindset recognizes the interplay between customs valuations and transfer pricing and can develop integrated strategies based on your organization’s unique facts and circumstances.
Equally important, a strategic advisor must understand the priorities and concerns of your organization’s various stakeholders. Whether engaging with the CFO, the controller, the head of tax, the board of directors, or the head of supply chain, the managed services team should tailor their communications to each stakeholder and demonstrate how tax impacts strategic objectives across the enterprise.
Cross-functional, but Centralized Approach
A total tax approach requires access to enterprise-wide data and insights to comprehend the complex interplay between tax strategy and operations. The ability to glean insights from data is essential for understanding how tax considerations influence organizational decisions and how these decisions influence tax. Effective providers achieve this understanding by collaborating seamlessly with various client functions to understand the full tax picture.
While internal tax teams may struggle to break down the silos that separate legal, human resources, financial planning and analysis, and other functions, a skilled external counselor can orchestrate collaboration across your organization. With a view into holistic organizational data, an experienced provider can draw a line from function to function to illustrate how decisions compound to slow or accelerate cash flow and to grow or shrink tax liability.
Technology can amplify cross-functional collaboration to enable a total tax mindset. This starts with a tax data strategy that streamlines the process of acquiring, transforming, and centrally storing data, including both inputs from other parts of the organization and data that is a result of tax processes. Technology tools, including traditional tax engines as well as emerging technologies like AI agents, layer on to the data strategy to help streamline required processes, drive actionable insights, reduce risk, and create value for the organization overall. With a data strategy in place, the managed services team can more easily transfer information and extract insights across tax filings, jurisdictions, and project engagements.
Risk-Informed Insight
Effective tax risk management requires comprehensive data collection and analysis capabilities, as well as the knowledge and foresight to spot emerging risks. When evaluating providers, look for an advisor that can analyze data across the tax lifecycle and the strategic mindset to proactively identify and flag areas of tax risk. A sage advisor proactively spots sources of risk, even beyond the scope of the current engagement.
A skilled advisory team assesses tax risks throughout the tax lifecycle, from provision through to compliance and controversy. You should also communicate with your provider about the risks you consider critical, so that the team understands your priorities. This enables the advisor to identify risks while collaborating with you to mitigate factors that exceed your tax risk management guidelines.
BDO’s Approach to Tax Managed Services
At BDO, we combine cross-functional collaboration, an ownership mindset, and risk-focused analysis to deliver our total tax methodology in every client engagement. We understand how each step in the tax lifecycle influences the next, which equips us to identify potential tax risks, improve processes, and develop strategies to help lower total tax liability. We leverage comprehensive data analysis capabilities and insights gained from advising hundreds of clients across multiple industries and geographies to generate both tax and business insights that help drive decision-making.
The illustration below outlines our philosophy on the tax lifecycle, demonstrating the interconnected nature of each stage and how BDO can help at any combination of stages, based on client needs:
Total Tax Managed Services
BDO helps synthesize data, documentation, and processes across all phases of the tax lifecycle.
