Create an investment club or file under one members name and SSN?
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Create an investment club or file under one members name and SSN? Direct from the Trez_Talk mailbox........
Three friends and I are going to start
an investment club as of the new year(1/1/01). I am curios since I will be in
charge of the club if we should actually start a club and file a tax return
under a club?
YES! While there are some very limited
cases where you may not be required to file a tax return for your club, it is
still in your best interest to do so.
Most investment clubs, where members pool their
assets and share in the management of the club, are legally formed as
a partnership, as opposed to other forms of business entity such as LLC,
Corporation, etc. Partnerships are easy and inexpensive to
form.
The following articles may provide some additional
insight on this issue.
Or should we just pool are money and
file under a single person, which would be me?
If you were to do this you would be legally
responsible for all of the tax obligations of the club, not just your
share. Therefore, I would recommend that your club create
a partnership, obtain a EIN (equivalent to a SSN) for your club, and file the
appropriate partnership tax return each and every year. By doing
this, each partner is legally responsible for their share of any taxable items
realized by the club.
To start your club simply follow the steps outlined
at...
Once you've started your club, bivio easily handles
all of your accounting and tax preparation needs.
Would it be at all beneficial or
detrimental to me to put this club under my name?
Definitely detrimental!
Would it make any difference that i am
a college student?
Nope! However, I want to
congratulate you on taking steps early in life to prepare for your financial
future. The rewards of an early start are often very
impressive.
Much success with your new club.
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