| If you have decided to start your own investment | | | | are going to be the one running the show. Since you |
| club, one of the first things you will need to do is get | | | | are in effect creating what is known in IRS terms as |
| some good investment club software. In recent | | | | an investment partnership, you are required to file an |
| years, investment clubs have been gaining in | | | | income tax return each year reflecting your |
| popularity rapidly, and because of that, it isn't that | | | | investment earnings. Even if your club wasn't |
| difficult to find good investment club software, if you | | | | successful, and didn't make any profits at all, or even |
| know what to look for. People join investment clubs | | | | went in the hole, the IRS still demands that you file |
| for various reasons, to make money and to learn the | | | | this return. The club form that you must file is called |
| ins and outs of investing, being two of the more | | | | Form 1065, and then each person who is listed as a |
| common reasons. | | | | member of the club is required to file a Schedule K-1 |
| For those people who have always wanted to invest, | | | | form. Since you already know this up front, you |
| but have never actually done so, investment clubs | | | | should try to look for investment software that can |
| are a great way to start. If you create or join one | | | | help you keep accurate records that can be used for |
| of these clubs, you will be able to benefit from the | | | | tax purposes. |
| knowledge and experience of the other members of | | | | You, as owner or manager of an investing club, are |
| the club, allowing you to build and hone your own | | | | required to keep records of every transaction made, |
| investing skills. If you stay in the club long enough, | | | | such as member deposits, the club's investments, and |
| you will soon have the skills you need to strike out | | | | your tax liability. Many investment club owners make |
| on your own, and have a profitable investing future, | | | | the mistake of trying to use basic accounting |
| if you choose to do so. Since you will likely have | | | | software to keep up with all of this data, and it |
| many novice members in your club, you should | | | | usually does not work well for them. You need |
| provide them with investment software that is easy | | | | specially designed investment club software, unless |
| to use, that will help them achieve their success. | | | | you want to explain to the IRS why you have not |
| When looking for investment club software, you | | | | kept the required documentation for your investment |
| should also keep your own needs in mind, since you | | | | club. |