Form a club with member residing in different states

Raka maka on

Would like to form an investment club with about 10 members residing in different states. The founder resides or club will be registered in Maryland. Everything will be done online including financial transactions and meetings etc.(it is 2015!! ha ha!)
What will be difficulties expected regarding,
1. physical signatures required on same page of club documents? (digital signatures may not be accepted)
2. opening brokerage(fidelity or scottrade) account with members dispersed across places
3. preparing K1 and tax filing issues and state deductions
4. will it be better to register club as LLC or LP when members are spread across different states?
Thanks

ira smilovitz on

See below.

On Thu, Aug 20, 2015 at 9:16 AM, Raka maka <rakamaka@inbox.com> wrote:

Would like to form an investment club with about 10 members residing in different states. The founder resides or club will be registered in Maryland. Everything will be done online including financial transactions and meetings etc.(it is 2015!! ha ha!)
What will be difficulties expected regarding,
1. physical signatures required on same page of club documents? (digital signatures may not be accepted)

Speak to an attorney. Most documents can be created in a fashion that allows signatures on separate copies to be considered as being on the same copy, but there is specific language you need to include in your document to allow this.

2. opening brokerage(fidelity or scottrade) account with members dispersed across places

No problem at all. The account is established in the name of the club which has a single address.

3. preparing K1 and tax filing issues and state deductions

You will have to file a federal return (obviously), and a MD return. You may have to file in other states as well, depending on where your members are resident. You can see the current requirements here: https://www.bivio.com/site-help/bp/State_Tax_Requirements_Help.

4. will it be better to register club as LLC or LP when members are spread across different states?

Generally, no. Registering as an LLC usually subjects the club to an annual filing fee to maintain its LLC status or a franchise tax with the state (MD doesn't levy a franchise tax on LLCs but I don't know about annual fees).

Ira Smilovitz

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