| If you are like many people out there, then the thought | | | | do. The partnerships untaxed earnings simply flow |
| of investing your own money in the stock market | | | | through to the partners directly and are taxed only |
| yourself leaves you with a little bit of trepidation and | | | | once at the individuals specific tax level. |
| angst. Most people don't have the training or the skill | | | | Another benefit in a partnership structure is that losses |
| set necessary to invest successfully in the stock | | | | are also passed on to partners who can then use |
| market and often times lose a good percentage of | | | | those very losses to offset gains for tax purposes. If |
| their money. This makes saving for retirement | | | | this confuses you then you may want to talk to an |
| especially difficult. | | | | accountant or CPA. |
| One way that many people have found to get around | | | | Many states allow partnerships to form without |
| this problem is by joining an investment club where | | | | complicated registration requirements. You're still |
| many individuals pool their money and make decisions | | | | probably going to need to register the partnership |
| jointly on what to invest in. There are two main | | | | name with the County Clerk and pay a very small fee, |
| problems with this... the first one is that many | | | | sometimes only $10 or $20. Go online and check your |
| investment clubs are often closed and will not allow | | | | state's specific registration requirements or check with |
| new members to join. The second problem is that you | | | | an attorney. Many times the state's department that |
| may not feel comfortable with the people running a | | | | you'll want to check is the Secretary of State's office |
| particular club. | | | | for your specific state. You should be able to find |
| The solution to both of those problems is to simply | | | | information on forming a partnership online fairly easily. |
| form your own club and that is what many people do. | | | | You'll also need a partnership agreement which you |
| Forming your own investment club is a lot easier than | | | | may need an attorney to draw up. Run to the library |
| you may think, in fact you can do it with as few as 10 | | | | and look for a book on how to form a partnership and |
| or 15 people or less. | | | | many of them will come with a generic partnership |
| There are some technical forms that have to be | | | | agreement that you can modify yourself without the |
| applied to make your investment club legitimate and | | | | use of an attorney. |
| legal. I suppose it's okay to have a loose | | | | At the first meeting of your investment club, the |
| non-structured club, but if you're going to do a thing, | | | | members should elect a presiding partner... this is |
| you may as well do it right so today I want to talk | | | | merely the person in charge of running the meetings. |
| about how to form an investment club and the | | | | You should also select a recording partner who will |
| mechanics involved in doing so. | | | | keep minutes of every meeting, which is just a written |
| The first thing you need to decide is how to legally | | | | record of what occurred at each meeting. You should |
| structure your club. You have several options, for | | | | also select a financial partner who will be in charge of |
| instance... you could form a Corporation which is easier | | | | keeping records of receipts and placing buy and sell |
| than many people think, you could form a limited liability | | | | orders with the clubs stockbroker as well as prepare |
| company, or you could form a partnership. | | | | any statements for the members.. |
| For an investment club a partnership tends to be the | | | | So there you have the basic mechanics involved in |
| more favorable structure because partners don't pay | | | | forming an investment club. It doesn't have to be that |
| tax on profits twice like shareholders of a Corporation | | | | much more difficult than what I just described. |