| Although there is no investment club tax liability, each | | | | to have their own tax plan in place, possibly even |
| individual member is responsible for reporting their | | | | consulting a certified public accountant. |
| own gains and losses within any given tax year. Clubs | | | | - Because members are able to easily manage their |
| can help members in tracking just what those gains | | | | tax liability, they will most likely have more money to |
| and losses are by having good, reliable accounting | | | | invest into the club, thereby making the profits of |
| systems in place. Without accurate record keeping, | | | | the club even greater. It's a win-win situation. |
| members may get burned by the IRS when tax time | | | | - Members of the club will be secure in the fact that |
| comes around. | | | | all of the investments are being tracked and there |
| Some clubs will elect to track their accounting with | | | | are checks and balances in place to affirm legitimate |
| traditional means, using cumbersome paper methods | | | | practices. |
| that are not easy to share with members who may | | | | Good software programs are relatively easy to find |
| be anywhere in the world. | | | | through the internet. Assign someone in the club to |
| Smart clubs will elect to purchase software that is | | | | head up the search. This way, the project will not |
| specific to investment clubs and current with all the | | | | get lost in the shuffle. When conducting research, |
| requirements necessary for individuals to file their | | | | look for software that specializes in investment clubs, |
| taxes. | | | | making sure tax sensitive reports are available. Ask |
| The benefits for the club and its members are many: | | | | the software company for a free trial period, test it |
| - Members do not have to worry about becoming | | | | out, ask questions, and make the decision to |
| tax experts because they are provided with accurate | | | | purchase. |
| gain/loss reports on a regular basis. They will still want | | | | |