| Your investment club will need to decide what type | | | | and other financial issues. Most investment clubs |
| of entity you're going to adopt for business | | | | choose a general partnership as their choice of a |
| purposes. You'll have to decide whether you're going | | | | business entity. A general partnership has nominal |
| to be a corporation, a general partnership, or limited | | | | paperwork and costs associated with it because the |
| liability partnership. | | | | taxes are passed to each partner's tax returns. This |
| Each of these business models has their own | | | | type of business model will let you accomplish what |
| advantages and disadvantages. | | | | you need to do to run your investment club with the |
| · Corporation. Most investment clubs will avoid | | | | least amount of tax influence. · Limited liability |
| becoming a corporation. This is because corporations | | | | corporations. This type of a business model is much |
| are taxable business entities that require | | | | like the general partnership but it gives individual |
| knowledgeable accounting skills to make them run | | | | members of your investment group a bit more liability |
| smoothly and in accord with government regulations. | | | | protection. Keep in mind that this type of business |
| A corporation generally means a lot of paperwork. | | | | entity can be expensive and will need more |
| This paperwork can be avoided by choosing another | | | | paperwork. |
| business model for your purpose of running an | | | | Members of your investment group will have to |
| investment club. | | | | decide which of the above business models works |
| · General partnership. This type of business model | | | | best for your club. |
| requires less paperwork and knowledge about taxes | | | | |