For alternative investment funds, tax season can be an onerous and distracting chore. But it doesn't have to be. With a stricter regulatory environment in place than in years past, federal, state, local and foreign tax filings as well as sales use tax, property tax, income tax, 1065 e-filing, 1099s and K-1s must be prepared with precision,.
The importance of the accuracy and promptness of these tax processes cannot be overstated. Nevertheless, rather than seek out an fund administration firm with experience and expertise to assist in these functions, many firms handle their taxes in-house.
Several issues arise with in-house tax accounting.
"Tax season can be a distracting chore, but it doesn't have to be."
The problem with in-house tax accounting
At Phoenix American, we often find that clients are reluctant to outsource their tax document processing. This is due to a misunderstanding of the true costs involved.
A typical approach for many funds is to hire an outside CPA to work in conjunction with in-house employees. This can be far more difficult and expensive than it seems. To manage their own tax document preparation, a fund not only must hire one or more outside CPAs but also dedicate in-house operations personnel tasked with producing, processing and auditing the enormous amount of necessary data using internal systems not specialized for the task. This leaves a lot of room for human error and can take months to complete. After tax form data is produced, it still must be printed and mailed and/or filed online, time-consuming functions in themselves coming at additional expense to the firm.
Phoenix American streamlines the process
The true costs of in-house tax document processing, considering not only the outside CPAs, in-house staff, printing and mailing but also the distraction of fund management’s focus from core operations can be astronomical. In real terms, outsourcing tax document preparation to Phoenix American isfar more affordable, accurate and fast whilefar less disruptive to fund operations. Everyone's happier. As a Phoenix American client,your fund enters tax season with a detailed plan of action designed to ensure accuracy and promptness. No investor should have to submit a tax filing extension because of a late K-1 from the sponsor of one of their investments.
Specialized and integrated systems including STAR-XMS fund administration software and customized fund accounting systems deliver complete and accurate data for the preparation of K-1s and 1099s as well as any filing or reporting requirement. Our advanced investor web portal makes this data available to investors and advisorsin real time with a secure and dynamic interface. High-speed in-house printing produces tax documents in any volume for prompt delivery well ahead of deadlines. Phoenix American systems are fully integrated to maximize data-flow, economy of effort and data security.
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Proven systems, SOC 1 Type II audited procedures, and seasoned professionals at Phoenix American provide clients with peace of mind come tax season allowing them to concentrate on the sales and investments that drive their success.
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