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How to Start an Investment Club - Business Model
club will need to decide what type of entity you're going to adopt
for business purposes. You'll have to decide whether you're going
to be a corporation, a general partnership, or limited liability
Each of these business models has their own advantages and disadvantages.
· Corporation. Most investment clubs will avoid becoming a corporation.
This is because corporations are taxable business entities that
require knowledgeable accounting skills to make them run smoothly
and in accord with government regulations. A corporation generally
means a lot of paperwork. This paperwork can be avoided by choosing
another business model for your purpose of running an investment
· General partnership. This type of business model requires less
paperwork and knowledge about taxes and other financial issues.
Most investment clubs choose a general partnership as their choice
of a business entity. A general partnership has nominal paperwork
and costs associated with it because the taxes are passed to each
partner's tax returns. This type of business model will let you
accomplish what you need to do to run your investment club with
the least amount of tax influence.
· Limited liability corporations. This type of a business model
is much like the general partnership but it gives individual members
of your investment group a bit more liability protection. Keep
in mind that this type of business entity can be expensive and
will need more paperwork.
Members of your investment group will have to decide which of
the above business models works best for your club.
You will have to make a decision one way or the other since establishing
a business entity is a requirement for tax purposes.
About the author:
Chris Hickman owns a full info site about investment clubs. Check
Out his site at http://www.ez-investment-clubs.com
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