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How
to Start an Investment Club
- Business Model
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by: chris
hickman
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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.
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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