Friday 19 June 2020

The Way Tax Season Should Be - Phoenix American




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 fundadministration 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.



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