Your investment 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 partnership.
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 club.
· 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.
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investment clubs. Check Out his site at http://www.ez-investment-clubs.com
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