Tax accounting in hedge fund
Do hedge funds have tax accountants or is there an accounting department in hedge funds or do they use a third party?
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Based on the most helpful WSO content, it's mentioned that for tax reasons, hedge funds are structured as two entities: an LLP partnership and an LLC management company. However, the context doesn't provide specific information on whether hedge funds have an internal tax accounting department or if they use third-party services. It's common in the industry for both scenarios to occur, but I can't confirm which is the case based on the information provided.
Sources: Hedge Funds in a Nutshell, How Difficult Would It Be to Start A Hedge Fund After Two Years As Analyst?, Investment Banking to a Hedge fund... Can You Make the Jump?, Q&A: Hedge Fund Allocator at a $2B+ E&F
From my experience, it will depend on the size of the AM/Fund. Most outsource to firms with a wider breath of tax experience due to the wide range of tax issues they will need coverage of.
The internal fund accounting team will have some review and knowledge of the tax but again at bigger firms this may be more likely to be done in house.
Seems common to have at least one person in house, with an outside firm helping get returns filed. You certainly could outsource everything though.
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