Thank you all so much for the guidance and wisdom on my earlier question... what a GREAT group !!
If I may, can I please ask a follow-up question?
We would like to have a lawyer help us draft our club's initial paperwork (just out of an abundance of caution and to make everyone feel comfortable and confident that everything is organized properly).
Do any of you have a good referral for an Investment Club attorney?
Kevin Gillogly on
Ask away.
Lawyer? Why reinvent the wheel? There is a national not for profit organization that has the form. They help with investing and more specifically investment clubs. Organization is Better Investing (BI). Go to www.betterinvesting.org
Thank you all so much for the guidance and wisdom on my earlier question... what a GREAT group !!
If I may, can I please ask a follow-up question?
We would like to have a lawyer help us draft our club's initial paperwork (just out of an abundance of caution and to make everyone feel comfortable and confident that everything is organized properly).
Do any of you have a good referral for an Investment Club attorney?
David Andresen on
Thank you for the response and understood about re-inventing the wheel. Sorry for the newbie questions, we're not trying to rock the boat (we're just trying to find our way a bit).
We have chosen to set up our club as an LLC (we realize it's a more expensive and complex arrangement), but that's what our group has chosen to do.
Since the LLC set-up is a bit out of the norm, we'd like to have an attorney help us set it up. Again, all this is mainly to make everyone feel comfortable and confident that everything is organized properly.
Any suggestions or referrals would be greatly appreciated !!
Jayne Doyle on
BIVIO has a sample partnership agreement on their website.
Betterinvesting offers tremendous help to investment clubs!
On Sunday, June 14, 2020, 11:34:43 AM CDT, Kevin Gillogly via bivio.com <user*9886100001@bivio.com> wrote:
Ask away.
Lawyer? Why reinvent the wheel? There is a national not for profit organization that has the form. They help with investing and more specifically investment clubs. Organization is Better Investing (BI). Go to www.betterinvesting.org
Thank you all so much for the guidance and wisdom on my earlier question... what a GREAT group !!
If I may, can I please ask a follow-up question?
We would like to have a lawyer help us draft our club's initial paperwork (just out of an abundance of caution and to make everyone feel comfortable and confident that everything is organized properly).
Do any of you have a good referral for an Investment Club attorney?
Mark Eckman on
No problem with an LLC, it's your money. Spend as much as you want to take away from investing. If you are so confident that you decided you need an LLC and made that decision without the attorney, it just seems strange to be looking for one now. Perhaps ask the attorney which suits you better, first.
If you are positive you want an LLC, take the sample partnership docs to the attorney you choose. That gives them a starting point.
Thank you for the response and understood about re-inventing the wheel. Sorry for the newbie questions, we're not trying to rock the boat (we're just trying to find our way a bit).
We have chosen to set up our club as an LLC (we realize it's a more expensive and complex arrangement), but that's what our group has chosen to do.
Since the LLC set-up is a bit out of the norm, we'd like to have an attorney help us set it up. Again, all this is mainly to make everyone feel comfortable and confident that everything is organized properly.
Any suggestions or referrals would be greatly appreciated !!
--
Mark Eckman
Irina Clements on
The crux of the matter for any investment club is having committed people who all work on finding and monitoring investments and share in preparing and presenting education to keep the club interesting.
To my mind, this investment club is focusing on "appearance" with an LLC, considering paying members for tasks and paying a lawyer to draft partnership documents, instead of substance.
The journey to creation of partnership document is a bonding issue for the club. Fundamental or technical investing? What is the criteria for joining, ...attend so many meetings, buy ins or not, fees or ...? How you withdraw people, how you get rid of non-performers, and what are your buying, selling and portfolio monitoring processes? These elements are the meat and potatoes of clubs. Do you have a group of people who can disagree and still be productive?
Kevin's response had multiple truths learned from very hard lessons (that many of us in clubs have also learned the hard way). Please reread it.
Before you go to all this time and trouble to "buy the bus", ensure you have the correct people on the bus.
Best, Irina
On Jun 14, 2020, at 12:49 PM, David Andresen via bivio.com <user*38386200001@bivio.com> wrote:
Thank you for the response and understood about re-inventing the wheel. Sorry for the newbie questions, we're not trying to rock the boat (we're just trying to find our way a bit).
We have chosen to set up our club as an LLC (we realize it's a more expensive and complex arrangement), but that's what our group has chosen to do.
Since the LLC set-up is a bit out of the norm, we'd like to have an attorney help us set it up. Again, all this is mainly to make everyone feel comfortable and confident that everything is organized properly.
Any suggestions or referrals would be greatly appreciated !!
Jack Ellison on
I have assisted in starting a couple dozen clubs. In my introductory remarks I have advised the clubs to focus on investing not the organizational structure. To quote another post, I tell the clubs don't try and "reinvent the wheel" and use the boiler plate agreement and by laws provide by Better Investing and or Bivio. Because of this I would stay away from an LLC and set up a Partnership. Further, the support from Bivio is superior for the partnership arrangement. Lastly, with emphasis by your club on such things as attorneys and LLC's you will diminish time, research and study to investing, the true purpose of the club. (If this club discussed paying officers, that is a non starter in my 35 years association with investment clubs).
The crux of the matter for any investment club is having committed people who all work on finding and monitoring investments and share in preparing and presenting education to keep the club interesting.
To my mind, this investment club is focusing on "appearance" with an LLC, considering paying members for tasks and paying a lawyer to draft partnership documents, instead of substance.
The journey to creation of partnership document is a bonding issue for the club. Fundamental or technical investing? What is the criteria for joining, ...attend so many meetings, buy ins or not, fees or ...? How you withdraw people, how you get rid of non-performers, and what are your buying, selling and portfolio monitoring processes? These elements are the meat and potatoes of clubs. Do you have a group of people who can disagree and still be productive?
Kevin's response had multiple truths learned from very hard lessons (that many of us in clubs have also learned the hard way). Please reread it.
Before you go to all this time and trouble to "buy the bus", ensure you have the correct people on the bus.
Thank you for the response and understood about re-inventing the wheel. Sorry for the newbie questions, we're not trying to rock the boat (we're just trying to find our way a bit).
We have chosen to set up our club as an LLC (we realize it's a more expensive and complex arrangement), but that's what our group has chosen to do.
Since the LLC set-up is a bit out of the norm, we'd like to have an attorney help us set it up. Again, all this is mainly to make everyone feel comfortable and confident that everything is organized properly.
Any suggestions or referrals would be greatly appreciated !!
David Andresen on
I genuinely appreciate all the help and guidance. I now realize that perhaps posing these questions without a formal introduction from myself and without some perspective about our new club may have been a mistake. I apologize for not supplying more context to my situation.
Our group has been studying the formalities of establishing an investment club and we are all new to this. At this point in time, we're simply trying to do our due diligence, lay a strong foundation and get all these formalities out of the way so that we can focus on the true nature of our group.
The intent of my questions were merely to answer some of the issues and concerns that were brought up by certain members and I was simply attempting to gather some helpful information from the more experienced members here at Bivio in order to report back to my group. Again, I was not trying to rock the boat or change the way things are normally done, I am just trying to properly navigate this initial set-up process and asking for any help and advice for these 2 specific questions.
Thank you again for all the helpful advice and guidance.
Linda Glein on
David,
Good for you.
Some of the answers given to you were perhaps a bit abrupt. But I'm sure they were well intended.
After more than 50 years the BetterInvesting organization has worked with thousands and thousands of clubs and has some very good advice and guidance. There are books, and articles and sample Partnership Agreements, Bylaws and Operating Procedures online.
That said, some of the 'boiler plate' could use some interpretation and 'historical background' on how things have changed in the past couple of decades. For that, you could turn to your local Chapter. These volunteers usually have many years of experience and would be thrilled to help you get started. If you local chapter is not forthcoming, there are national volunteers who will help.
I would personally give you these recommendations as you start your club. These are important.
Form a Partnership using one of the formats available from BI
Get started with Education Program right away.
Ask for a volunteer mentor from BetterInvesting
Learn how to use the SSG to evaluate the companies.
Encourage ALL partners to join BetterInvesting
Open a brokerage account and use the BI recommended accounting program
Start contributing to the pooled funds right away. Don't lose your enthusiasm messing endlessly with the organizational minutia. Keep the amount reasonable. (Probably no more than $100/month)
Regarding your specific questions:
Do not pay your officers. The possible exception is to hire an outside person to do your bookkeeping. I do not recommend this, nor do I think it is necessary. But, a few clubs have done so to keep their club viable when nobody is willing to be Treasurer and do those duties.
Referrals regarding the LLC. Well, all of the four clubs I've belonged to were Partnerships. There are a few clubs set up as LLCs. I'd suggest you go back to your club and ask them to verbalize specifically what liability protection they are worried about. I may be able to put you in touch with a club which was set up as an LLC so you can discuss details with them.
I genuinely appreciate all the help and guidance. I now realize that perhaps posing these questions without a formal introduction from myself and without some perspective about our new club may have been a mistake. I apologize for not supplying more context to my situation.
Our group has been studying the formalities of establishing an investment club and we are all new to this. At this point in time, we're simply trying to do our due diligence, lay a strong foundation and get all these formalities out of the way so that we can focus on the true nature of our group.
The intent of my questions were merely to answer some of the issues and concerns that were brought up by certain members and I was simply attempting to gather some helpful information from the more experienced members here at Bivio in order to report back to my group. Again, I was not trying to rock the boat or change the way things are normally done, I am just trying to properly navigate this initial set-up process and asking for any help and advice for these 2 specific questions.
Thank you again for all the helpful advice and guidance.
Lynn Ostrem on
David, one of the things I didn't see mentioned here was the purpose of the General Partnership. The LLC, in some states, can be costly to set up, and the tax year documents could require you to pay a CPA to complete them. These costs are simply not necessary. With a General Partnership, all income and expenses of the club are borne by each member based on their percentage in the club, and passed through by way of a K1 form. They simply include it in their personal tax preparation. Accounting software, like BetterInvesting or Bivio (I preferred the latter) will take care of the club's Federal tax return for you and in most cases the State form, as well. With Bivio, I know it's included in your annual subscription. So for me, the difference boils down to level of difficulty and added expense for the LLC. Plus, from everything I've heard and read, and LLC is usually entered into for protection purposes. But if your club is organized for the purpose of education and the dues are reasonable (many clubs require $30 to $50/month), it's going to be a long time before you have to worry about someone absconding with the club's assets! And if pooling your time and talents to learn how to invest in the stock market is not your intent, you should not start a club. Continue to ask questions here. You have decades of experience ready and willing to give you advice. Good luck to you.
Some of the answers given to you were perhaps a bit abrupt. But I'm sure they were well intended.
After more than 50 years the BetterInvesting organization has worked with thousands and thousands of clubs and has some very good advice and guidance. There are books, and articles and sample Partnership Agreements, Bylaws and Operating Procedures online.
That said, some of the 'boiler plate' could use some interpretation and 'historical background' on how things have changed in the past couple of decades. For that, you could turn to your local Chapter. These volunteers usually have many years of experience and would be thrilled to help you get started. If you local chapter is not forthcoming, there are national volunteers who will help.
I would personally give you these recommendations as you start your club. These are important.
Form a Partnership using one of the formats available from BI
Get started with Education Program right away.
Ask for a volunteer mentor from BetterInvesting
Learn how to use the SSG to evaluate the companies.
Encourage ALL partners to join BetterInvesting
Open a brokerage account and use the BI recommended accounting program
Start contributing to the pooled funds right away. Don't lose your enthusiasm messing endlessly with the organizational minutia. Keep the amount reasonable. (Probably no more than $100/month)
Regarding your specific questions:
Do not pay your officers. The possible exception is to hire an outside person to do your bookkeeping. I do not recommend this, nor do I think it is necessary. But, a few clubs have done so to keep their club viable when nobody is willing to be Treasurer and do those duties.
Referrals regarding the LLC. Well, all of the four clubs I've belonged to were Partnerships. There are a few clubs set up as LLCs. I'd suggest you go back to your club and ask them to verbalize specifically what liability protection they are worried about. I may be able to put you in touch with a club which was set up as an LLC so you can discuss details with them.
I genuinely appreciate all the help and guidance. I now realize that perhaps posing these questions without a formal introduction from myself and without some perspective about our new club may have been a mistake. I apologize for not supplying more context to my situation.
Our group has been studying the formalities of establishing an investment club and we are all new to this. At this point in time, we're simply trying to do our due diligence, lay a strong foundation and get all these formalities out of the way so that we can focus on the true nature of our group.
The intent of my questions were merely to answer some of the issues and concerns that were brought up by certain members and I was simply attempting to gather some helpful information from the more experienced members here at Bivio in order to report back to my group. Again, I was not trying to rock the boat or change the way things are normally done, I am just trying to properly navigate this initial set-up process and asking for any help and advice for these 2 specific questions.
Thank you again for all the helpful advice and guidance.
ira smilovitz on
David,
Returning to your original question in this thread - you should consult with a local attorney whose practice includes business entity formation. You need someone who is familiar with the legal peculiarities of the state where you are forming the club.
David, one of the things I didn't see mentioned here was the purpose of the General Partnership. The LLC, in some states, can be costly to set up, and the tax year documents could require you to pay a CPA to complete them. These costs are simply not necessary. With a General Partnership, all income and expenses of the club are borne by each member based on their percentage in the club, and passed through by way of a K1 form. They simply include it in their personal tax preparation. Accounting software, like BetterInvesting or Bivio (I preferred the latter) will take care of the club's Federal tax return for you and in most cases the State form, as well. With Bivio, I know it's included in your annual subscription. So for me, the difference boils down to level of difficulty and added expense for the LLC. Plus, from everything I've heard and read, and LLC is usually entered into for protection purposes. But if your club is organized for the purpose of education and the dues are reasonable (many clubs require $30 to $50/month), it's going to be a long time before you have to worry about someone absconding with the club's assets! And if pooling your time and talents to learn how to invest in the stock market is not your intent, you should not start a club. Continue to ask questions here. You have decades of experience ready and willing to give you advice. Good luck to you.
Some of the answers given to you were perhaps a bit abrupt. But I'm sure they were well intended.
After more than 50 years the BetterInvesting organization has worked with thousands and thousands of clubs and has some very good advice and guidance. There are books, and articles and sample Partnership Agreements, Bylaws and Operating Procedures online.
That said, some of the 'boiler plate' could use some interpretation and 'historical background' on how things have changed in the past couple of decades. For that, you could turn to your local Chapter. These volunteers usually have many years of experience and would be thrilled to help you get started. If you local chapter is not forthcoming, there are national volunteers who will help.
I would personally give you these recommendations as you start your club. These are important.
Form a Partnership using one of the formats available from BI
Get started with Education Program right away.
Ask for a volunteer mentor from BetterInvesting
Learn how to use the SSG to evaluate the companies.
Encourage ALL partners to join BetterInvesting
Open a brokerage account and use the BI recommended accounting program
Start contributing to the pooled funds right away. Don't lose your enthusiasm messing endlessly with the organizational minutia. Keep the amount reasonable. (Probably no more than $100/month)
Regarding your specific questions:
Do not pay your officers. The possible exception is to hire an outside person to do your bookkeeping. I do not recommend this, nor do I think it is necessary. But, a few clubs have done so to keep their club viable when nobody is willing to be Treasurer and do those duties.
Referrals regarding the LLC. Well, all of the four clubs I've belonged to were Partnerships. There are a few clubs set up as LLCs. I'd suggest you go back to your club and ask them to verbalize specifically what liability protection they are worried about. I may be able to put you in touch with a club which was set up as an LLC so you can discuss details with them.
I genuinely appreciate all the help and guidance. I now realize that perhaps posing these questions without a formal introduction from myself and without some perspective about our new club may have been a mistake. I apologize for not supplying more context to my situation.
Our group has been studying the formalities of establishing an investment club and we are all new to this. At this point in time, we're simply trying to do our due diligence, lay a strong foundation and get all these formalities out of the way so that we can focus on the true nature of our group.
The intent of my questions were merely to answer some of the issues and concerns that were brought up by certain members and I was simply attempting to gather some helpful information from the more experienced members here at Bivio in order to report back to my group. Again, I was not trying to rock the boat or change the way things are normally done, I am just trying to properly navigate this initial set-up process and asking for any help and advice for these 2 specific questions.
Thank you again for all the helpful advice and guidance.
Laurie Frederiksen on
We'd highly recommended that you start with the sample partnership agreement we provide here:
It represents the most up to date operating guidelines that will keep your investment club operations simple and keep you from getting into complex operating and/or taxation situations.
It has been used successfully by thousands of investment clubs for over 20 years.
Most attorneys will not be familiar with the nitty gritty details of running an investment club, keeping investment club records and preparing investment club taxes.
If you want to get an attorney involved, we'd recommend that you start with the agreement above and have them review it. Then, feel free to review any changes they suggest with us and we can let you know if they'd lead to any issues that the attorney might not have been aware of.
As others have suggested, when starting a club it is good not to get bogged down in legal details which is why we suggest using what many others have used successfully for many years. People join an investment club to learn about investing. The sooner you can get to that, the better you can keep the starting momentum and interest going.
Laurie Frederiksen Invest with your friends! www.bivio.com