Checking accounts for investment clubs
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Checking accounts for investment clubs The Riverside Investment Club
asks...................
We have an established investment club
that has been in operation for about 4 months now. Because of some
difficulties with finding a reasonable cost checking account, we arrived at the
solution of opening two E-Trade accounts, using one for direct deposits and
writing checks, and one for the investments. We then transfer the money
deposited into the "checking" account from there to the "investment" account on
a monthly basis.
Now we are wondering if we even need the second "checking" account. We hope we will not need to write that many checks. At this point there are nine members of the club, each with equal ownership percentages. We are wondering if having just one account where all deposits are made will cause us accounting problems, both now and if we admit new members which will then cause ownership percentages for all members to not be equal. We use Bivio now for account valuation. Yes, it can be difficult to find a checking account
with reasonable fees for an investment club. That is why many clubs are turning
to brokerage firms with check writing privileges, just as you have.
I see no need to maintain two checking accounts. Evidently
you are doing this in an attempt to keep the investment function separate from
the expense function. There is no need to do this. With the bivio accounting
system, you get a complete analysis of both investment and expense transactions
without separating the functions into two separate accounts. Not only will it
not cause you any accounting problems, It should make
it easier to keep track of your transactions. Admitting new members will cause
no problems.
Thank you for your inquiry and for using bivio. If I have
not completely answered your question, please come back.
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