ForumsStarting a Business

Congratulations for your entrepreneurial spirit! Before you start an business endeavor it's important to carefully evaluate the competitive landscape and understand how you would differenciate your business. For example, have you checked out all the existing resources out there that provide investment related information without a fee? What would differenciate your website/services/club? Good luck.

thanks for your opinion.
First, I will post a page at my blog for seeking partners for my investment club.
second, I will list all the step to get my club runing. e.g after have enough partners, i will advertize my club through google, yahoo, or msn.
club rules, positions.
meeting schedules...
Can I setup my club into a blog(new one) where I only authroized people can see the contents.
Is that possible?
any more comments?

There are IRS documents that you must prepare with all names, SS #'s and the PURPOSE of the club. The online brokers have a section for investment clubs and you can download all the documents you need from the website. Then you must fund the account and decide WHO gets to place trades. You will also need an internal specification detailing HOW the club is to be run, % of profit splits etc.

Hi Too-Late,

I just saw your post and since I recently started my investment club, I thought I'd share some valuable information I found out along the way.

Everyone responding seems to have the gist of what is required. I only want to add:
1. Investment clubs provide no liability protection to the members. E.g. when tax times comes, if everyone does not pay their individual share of taxes on the gains, the club as a whole will be held liable for any back taxes not paid. I thought this was really important.
2. If you want to make money from this venture, that means you're classified as being paid for your services to the club (stock recommendations, decisions, trade executions, etc...). If you are compensated, some states mandate you become a registered investment advisor (RIA). To become an RIA, you need to take a pass the series 65 exam, adminstered by FINRA. You may need to fulfill some additional state requirements. If you plan to solicit investors to become members that aren't family and friends, they will probably want to know if you're registered to do what you say you "CAN" do, which is make money with a pool of other individuals money.
3. I'm with OptionsXpress, Inc. They have low fees for trades. I specialize in option and option spreads. If you need an online broker that's relatively cheap, may I suggest them?
4. Get an EIN from the IRS. Your investment club will be recognized by the IRS as a general partnership. You'll also want to know what the IRS expects from the club concerning filing.
5. I don't have officers in my club. I take care of all management decisions and trading. I structured to Partnership Agreement to say so. You may want to do something like that if you want to be responsible for the stocks that are selected for the club to invest their resources.

I don't want to belabor the point, but if you're interested in anything I might be able to provide, just let me know.

I too am looking to start an investment club, so I appreciate all the responses. I had a few questions of my own:

1. Is there any preference to what business structure is used for this club? I am leaning towards a LLC, with the intention of eventually paying officers some compensation for managing the club.
2. If these officers are performing operational duties for this club (e.g., accounting) and receive compensation, do they need to be an RIA and register with the state/federal government even when that compensation is nonperformance-based -- i.e., no relevance to profits/losses?
3. Is there a limit to how much and how often contributions can be made?

Thanks again!