From Accounting to Tax Services: Key Ways a Boutique Advisor Can Help

While hedge funds have historically turned to traditional accounting providers to deliver audited financial statements, in addition to tax and accounting work, many are realizing that hiring one firm for everything might not be the best strategy for meeting the full spectrum of an organization’s needs, or even be appropriate under independence standards.

This is where a boutique firm comes in. By leveraging deep industry knowledge, providing senior level advice, and crafting personalized solutions to meet an organization’s individual objectives, this type of firm is a cost-effective alternative to traditional providers.

Whether it’s accounting, tax or consulting services, we help organizations demonstrate a strong and transparent financial infrastructure, which has become increasingly important to institutional investors since the financial crisis. As your trusted advisors, our financial services team will always be aware of the necessary controls, reporting requirements, and industry best practices to ensure ongoing compliance, and even to utilize this information to help your organization meet its fundraising goals.

Accounting and Consulting Services

Preparation of Financial Statements. Between disclosure requirements under the generally accepted accounting principles (GAAP), and the increasingly stringent Public Company Accounting Oversight Board (PCAOB), preparing financial statements that cover all complex areas of compliance is of critical importance to investors today. With a thorough understanding of these rules, born of deep industry experience, our financial services team appreciates the nuances of every individual requirement, as well as how each evolves over time, in a way that many generalized accounting firms may not.

Researching Complex Accounting and Financial Reporting Issues. Hedge funds are dynamic entities, which means a specialized approach is often needed to meet reporting requirements related to various complicated investment transactions. If a reporting issue occurs, it can cause a dispute with investors and, in the worst cases, lead to costly litigation. Not only will our  team of specialists utilize their industry experience to avoid such an issue, they will carefully research each matter to ensure that your transactions are evaluated properly, and that potential risks have been mitigated to the full extent of our capabilities.

Back Office Accounting Services. In addition to providing more advanced financial infrastructure and support than can reasonably be developed in-house, we can free up your organization’s valuable time by assisting in back-office administration for funds, family offices, and other investment vehicles.

Analytical Reporting. While your traditional financial service provider can issue any number of analytical reports, from asset allocation to market segment analysis, do they have time to communicate these insights in the form of customized visualizations and infographics? In addition to providing these resources, our senior advisors will go the extra mile to help you organize the relevant data into presentations to be pitched to your investors.

Tax and Consulting Services

Dedicated, Individualized Support. Your advisor should be focused on maximizing tax savings.  Hedge funds engage in complex transactions, each of which comes with tax consequences. To structure these transactions in a tax-efficient manner, it is beneficial to review all potential impacts before the transactions have occurred. Larger accounting firms might not take the time to evaluate transactions until they have already occurred, potentially leading to additional, unanticipated tax obligations. Moreover, small to mid-sized hedge funds rarely receive personalized treatment from their financial advisors, and in the absence of an established relationship based on familiarity and trust, it can be difficult to gain confidence in your compliance efforts.

As a smaller, nimbler service provider, we connect you directly with senior advisors who dedicate their time and expertise to ensuring all processes are up to date, all estimations are made in the context of your unique operations, and that our services are tailored specifically to your individual needs.

Assistance in Designing Efficient Tax Structures. Without working closely and collaboratively with your financial services provider, can you be confident that your tax structure is being designed and implemented with a keen understanding of your firm’s complex operations and strategies? If every nuance isn’t taken into consideration, the consequences can be overwhelming to the point of having a negative impact on both investors and principals. We won’t advocate any structural course of action without first taking the time to understand all facets of your operation, and being sure that such action will ultimately position your organization for success.

Research and Development (R&D) Tax Credits. Hedge funds are evolving alongside technology, but are you aware that the implementation of new technologies, whether trading systems, valuation models, security software or coding techniques, can potentially qualify your management company for research and development (R&D) tax credits? Due to the novelty and complexity of these rules, traditional service providers can overlook significant tax benefits for which you could qualify.

As you review your firm’s various accounting and tax initiatives, consider whether you’re truly receiving everything you need from your current service provider, or if a specialty advisor could fill the gap and take your management and compliance efforts to the next level.

If Anchin’s Financial Services team can be of assistance to you, please contact your Anchin Relationship Partner.