Case Study
How Three Companies Successfully Streamlined And Simplified The Complex K-1 Process
BY Scott Turner
September 6
The K-1 tax form is notorious for its complexity and the challenges it presents to organizations, especially due to the lack of standardization, intricate reporting requirements, and issues with how the K-1s are produced. While many assume that outsourcing tax preparation alleviates these challenges, the reality is that in-house staff still bear a significant workload in data collection, organization, and investor relations. This often leaves organizations struggling to manage the K-1 process effectively and efficiently.
In this blog post, we’ll explore how three different companies have successfully navigated the complexities of K-1s by adopting K1x solutions. By streamlining their tax processes, these organizations have not only reduced costs but also increased efficiency, helping their teams to focus on analysis and strategic decision-making.
Family office eliminates 80%
of manual data entry
A family office faced the daunting challenge of annually processing and reconciling 600 K-1s, some as large as 150 pages. This manual and time-consuming task was further complicated by the fact that most tax preparation software largely ignores the complex K-1 aggregation process.
To overcome these challenges, the family office adopted the K-1 Analyzer and onboarded the K-1 Navigator. These tools offered a more robust solution that not only automated 80% of manual data entry but also provided seamless integration with third-party software such as GoSystems.
“Reconciling every investment to the K-1s was a real administrative challenge for us. K1x was a huge help pulling in information because it took data entry off us. We love its ability to move data from one K-1 line item to another—this reduces the hassles with reclassification and eliminated data entry work. We needed something more robust. Now we have drag and drop and integration with important third-party software. I think everybody should use this!”
FAMILY OFFICE CLIENT
Large insurance company
decreased weekend work
A large insurance company had to process more than 900 K-1s, coming in dribs and drabs of up to five distributions per year, requiring up to 8 weeks of 40 hours/week of data entry. This also required a team of four (Staff, Sr. Staff, Manager, VP) to spend two months on foreign filing requirements.
To address these issues, the insurance company replaced their homegrown K-1 tracker with K-1 Analyzer eliminating a source of technical debt and becoming the central hub for their investment tax function.
As a result, their team has eliminated 90% of manual data entry and decreased weekend work. Now they just download what they need from K-1 Analyzer—no more hand keying reports.
Large institutional investor streamlines
K-1 and K-3 processes
A large institutional investor struggled with manual tax preparation challenges. For example, they weren’t able to efficiently drill down into analysis and view partnerships with nonresident withholding, forcing team members to spend hours clicking through 400 K-1s. This manual work took away valuable time they could have used for analysis. In addition, they were held up by logistical bottlenecks.
“Everyone from the IRS to the software providers to the preparers had problems with the K-3 last year.”
LARGE INSTITUTIONAL INVESTOR CLIENT
In response to these challenges, the institutional investor explored technology solutions and decided to adopt K-1 Analyzer. The results were impressive.
With the ability to pivot data and easily select and export information, our client could quickly find answers and verify whether preparers were analyzing data correctly. This led to better analysis and error detection. The K-1 Analyzer also helped multiple people to work on the return simultaneously, significantly improving convenience and saving time. Moreover, the software made processing K-3s more manageable by providing an organized list of foreign branch income sources for easy analysis.
“It was huge for us to be able to use the select all and export all investments feature. This produces a large grid that has each level of input for each K-1. We can easily discover now whether the preparers picked up that information correctly. Did the intern remember to pick up a transfer to another fund in the tax basis calc? Maybe not, but K-1 Analyzer definitely did.”
LARGE INSTITUTIONAL INVESTOR CLIENT
Partner with K1x
Trusted by more than 8,000 organizations, K1x is the only AI-powered platform that streamlines alternative investment data distribution for investors and advisors.
K1x is proven to eliminate over 90% of manual data entry and costs and save over 26% in end-to-end data processing task time, restoring over 11 hours each week to each member of your tax accounting team and slashing 6 to 8 weeks for each cycle.
Learn more about how you can streamline, standardize, and simplify your K-1 and 990 processes.