Fusion CPA started offering online outsourced accounting back in 2010 and soon realized that there is a need for complete financial transparency, stability and control in accounting for private equity. This can only be achieved with suitable accounting software for private equity companies, so we branched into software integration. Now, we offer much more than just accounting for private equity companies and similar organizations. We optimize our clients’ finances from the inside out to achieve high-performance on their investments. Accounting is just the first step to success.
To really make a difference and to reach our clients’ goals we use the data we collect during the stabilization of their accounting to determine what the best tax planning strategy will be. From there, clients can implement other measures to optimize their business processes, like making use of our business advisory services. After all, we’ll know your finances best, and we can help you streamline every part of your company, from finance to operations, to sales and marketing, so you can focus on what really matters to you.
It’s also essential to understand how the government has decided to tax private equity. Doing so should keep you prepared for this financial obligation and ensure you won’t be stressed by wondering, “How is private equity taxed?”
One of the main differences between public companies and private equity companies is the way capital is received. Individuals who have the required capital to purchase shares of a public company can do so via one or more of the available brokerages handling stock market transactions. Individuals who want to make a private equity investment must meet more stringent requirements based on their net worth, income, professional experience and ability to make a significantly sizeable initial investment. These people are usually referred to as accredited investors. They have an annual income exceeding 200,000 or $300,000, a high net worth exceeding $1 million and can afford to put their money into more risky investments.
Setting up a private equity fund or company is usually done by utilizing a limited partnership structure as doing so provides several benefits. As a limited partner in this type of business entity, you’ll receive asset protection. All assets in the limited partnership are protected if you get sued. Also, as a limited partner, you don’t have to worry about day-to-day operations. The general partner completes this activity, and you’re only liable for the investment you make in the company.
Understanding the method used by the government to tax private equity is essential if you want to ensure you’re meeting all expectations and guidelines required by the IRS. Setting up a private equity investment as a limited partnership provides a tax benefit as the partnership pays no taxes on income. Using this flow-through entity allows the limited partners to receive income via dividends or distributions. Another advantage is the carried interest provision. It allows the limited partnership to provide a share of the profits as compensation. It’s considered a return on investment and taxed at the capital gains rate, avoiding the income tax bracket’s higher rates.
The tax obligation for limited partnership is also modest. Losses pass through to the partners and can help offset gains that have been generated from other investments. Knowing how to account for this and ensure it meets the IRS guidelines may be more straightforward to handle when a professional tax accountant is involved in the tax planning and preparation process. Paying management fees using a de facto dividend can also be advantageous as it is classified as a nontaxable business expense.
Knowing more about how the government has decided to tax private equity should provide you with the information needed to see why utilizing a limited partnership can be beneficial.
At Fusion CPA, we have experienced CPAs who work with this type of business structure frequently. Tapping into their knowledge and experience may be what you need to handle your taxes correctly and efficiently. Contact us today if you have any questions. We’d be happy to assist you in building a strategy for your tax obligations.
Taxes for private equity companies can be very complex. We specialize in interstate tax laws and compliance, as well as tax planning, which will further guide you to make informed financial decisions. With our help you can close a deal without being bogged down by governance issues.
Accounting software for private equity groups is no longer just for accounting. At Fusion CPA, neither are we.
You’re also aware that while your book of business becomes more profitable over time, it must continuously grow to ensure your company’s longevity. Trying to manage new and tenured client relationships while shuffling legal documentation is more than anyone can handle alone. Let’s also not forget managing cash flow and leveraging assets. Software for private equity firms like the ones listed below are now paving the way for entrepreneurial equity firms to better manage their company from the closings to compliance and ultimately, capital gain.
Jumping back and forth from platform to platform is inefficient. It also requires more time and man power when you’re operating from two or more different systems. Managing prospective clients, contacts, and accounting go hand in hand in the private equity industry. Software for private equity firms should go beyond the typical financial dashboard. You need a software that will provide complete transparency to every division of your business to ensure corporate cohesiveness. Accounting software for private equity have streamlined the management for your company from sales to back office.
A sales platform integration creates a sense of accountability and expectation across your sales team. Keep track of pre-planned meetings, document meeting notes and information, and create follow up reminders for specific needs throughout the closing process. With the red flag notifications for upcoming items that are due, your sales team can work with the operations team to make back office work more manageable. It also looks more professional to remember signatures up front! Easily monitor fundraising and set goals and deadlines and retain clients longer with future dated reminders to check in.
Let’s face it. Sales people are focused on closing deals – not filing paperwork. With the new software for private equity, though, integrating compliance with closing a deal has never been easier. With each step of the process, sales representatives are reminded of what needs to be completed to be in good legal standing – protecting the client and your company. These easy-to-use software companies have taken the guess work out of gathering documentation in a timely fashion and retention. Finally, sales and security work hand in hand to create a sound financial institution.
With a click of a button, the right software can generate a report on nearly anything you could imagine. No more guessing about the pipeline. Gone are the days of wondering how much revenue would be generated off projected closed business. With built in calculators and reporting, you will save time (and money) on crunching numbers. In addition, you will be minimizing your margin of error significantly.
Keep the whole company engaged by generating monthly reports that encourage each division. Track closed business, compliance exceptions and overall revenue. While you can limit who can see which reports, it is faster and easier to share company successes than ever before. Never before has there been a more suitable software for private equity.
When it comes to managing other people’s money, we, like you, understand the need for trust and transparency. By building working relationships with our clients, we can better understand their professional goals and help take the next steps in achieving them.
Enjoy being in charge of a company that has access to real-time data that is reliable. From conception to execution, our financial services can help you get where you need to be – and faster than going at it alone. Turn to us for better business practices based on accountability and results. We’ll be there with you when you need to realize a deal’s value in the first critical 100 days after it closes.
As a private equity business fund manager, you need to be laser-focused on market trends while aligning investors with businesses that can help them reach their own financial goals.
Outsourcing private equity advisory and accounting services provides you with the freedom to pivot as markets dictate with the support of a professional team of money managers.
Often, you’ll be wearing many hats as you fill your pool of investors and coordinate transactions. In the current fast-paced trading environment, you need to remain confident and agile. You can’t afford the time or the attention necessary to manage all of the moving parts.
Private equity CFO advisory can make all the difference. We’re the lynch pin that steadies and directs your business, leaving you free to strategize and react in volatile markets.
The goals, activities, and structure of private equity consulting firms are different than those of individuals or more traditional business models. You need to practice due diligence while making investments work throughout their life cycle. Each and every transaction must be weighed to attract multiple partners and leveraged within the limits and constraints of high finance.
This requires a combination of experience, ideas, and innovation to unlock the potential of companies under your purview and create value for your equity partners.
As such, private equity business development is paramount for the financial viability and health of your enterprise.
Our experience allows us to keep your company in full compliance while adjusting traditional accounting standards and processes to reflect the realities of managing private equity funds.
Our team of CPAs is able to identify and implement the right accounting standard for you while adhering to the frameworks provided under the American Institute of Certified Public Accountants guidelines for private equity investments.
This includes proper asset valuation under each standard with the goal of minimizing risk and leveraging the potential of each investment.
The wrong decision on our part will impact you and your funding partners, and that’s a responsibility we take seriously.
We won’t lure you into a false sense of security, but we won’t inhibit innovation, either. Our services are guided by industry standards and best practices as well as our keen insight into financial management to help:
We achieve this through a combination of personalized consultations and planning sessions, current technology, and an attention to detail that’s unparalleled in the accounting profession. Our knowledge is local, but our reach is global.
In addition to business development support and advisory services, you’ll experience strategic tax planning and preparation, financial advisory, and bookkeeping services that adhere to the principles of private equity fund accounting. This includes a full statement of assets and liabilities with separate listings of financial bright spots.
When it comes to financial services for private equity consulting firms, you’d have to search far and wide to do better than Fusion CPA. Our private equity business development is designed to provide you with the insight and direction you need to flourish in today’s markets.
Contact us to discuss your future with a seasoned private equity CFO today. We offer the stability and guidance necessary to gain traction and realize your vision.