Good to see noone chimed in with 'just do a google search and find a contract you can use'. Maybe this volatility has wiped out all the wannabe's!
Heh This vol is nice, scatters pretenders. Even the non-wannabe's (is that a word? lol) are busy putting it on. I think the OP is not ready but this is a pure guess and is not meant to start a debate. I don't even know the OP.
hey - i really appreciate all the thoughts here. they are really helping me get off to the right start. now i am wondering about auditing based on recent post. if i wanted to show my track record to other people to solicit business, what do people expect to see? are monthly statements and/or charts created by my brokerage firm good enough? or do i really need a CPA to create some kind of "official" audited results? if so, what makes the audited results "official"? as far as the contract itself goes - from what people are saying the only way to fly is to pay for something professionally done - that is what i will do. It is a bit annoying to have to pay out $5k to create a contract to use with a personal friend which is my current goal. i've always considered this agreement would be very much on the simple side - but i guess the downside of not using a contract is that someone i trust now would no longer be a friend if the circumstances changed... and who knows how they'd act if there were losses in the account.
You're getting ripped off if you're paying $5,000 for a Partnership Agreement!!! My attorney drew one up for around $650 and it has been working fine and protecting my assets for the past 4 years. To the OP, seeking legal advice is necessary as you will be managing people's money and need to protect your assets at all times. May I suggest a Limited Liability Partnership, so that all partners are liable up to the amount in the firm. If you want to do it the partnership way, which, in my opinion, is the best way to do it, just form it as an LLP (filing costs vary with states) and make sure you have a management section that details the compensation of you and your team (if you have one) and that it fully discloses you will be making the investment decisions on behalf of the partnership.
Trader01123: It shouldn't cost you $5,000 to draw up the partnership agreement. If you're in the Chicago area I can refer you over to an attorney who can do it for around $650~ which he said is a pretty standard rate. Are you going the partnership way or something different? An LLP would be easiest and most cost effective providing great asset protection.
to the last 2 posts - currently i am trading withing a single-member LLC. however, the agreement i would make with my aquaintance would be completely outside of this. IOW, she would not be given any membership within my LLC. that being said, i am open to forming various types of partnerships with her. however, my current goal is not to set up something that will work for anyone that's a member - my main goal right now is just to trade her money and see how it goes. for that reason, i was thinking that maybe creating an LLC is a bit too much for this situation - especially considering she may choose to take money out at any time. i don't think i want to form an LLC for every agreement i ever make. that being said, let's say whatever agreement i make with her works out for the best. it would be nice if i could easily replicate what i'm doing with her - but for new clients. considering that is a possible (likely) situation, i guess i wouldn't want to re-invent the wheel every time i got a new client. All that being said, do you have different opinions? would you still suggest i create an LLC just between myself and her anyway? or simply a contractual aggreement between us? if an LLC, are you suggesting that anyone who's money i traded in the future would also become a member of the LLC? thanks again for your thoughts Adam
Well, I agree that you shouldn't add her to the LLC if you're trying out something new. What you should do is form an LLP, Limited Liability Partnership, which is different than an LLC, Limited Liability Company. With the LLP, it is easier to remove the money as you don't have to buy back or issue new shares, you just keep the percentage of ownership on book. Of course, with the LLP, you also have to be a partner, meaning you have a financial stake in it too, no matter how small it is. If, when things go well, you expect to add others' capital onto your management, you can just add them to the partnership agreement. You wouldn't have to form anything new, you can retain the name, all I think you do is just file something with your state saying you have a new partner on the partnership. I think your best bet is an LLP, not LLC. An LLP will give you liability protection up to your investment. Just make sure with your attorney, that you have clauses in the agreement about your compensation, how accounting will work, and about that you are the sole investment manager.
Sorry as a lawyer I have to jump in because people are throwing around alphabet soup too liberally. An LLP is different from an LP and an LLC. However you do not need an LLP as that is ovrekill. The two basic forms of entities used by hedge funds and asset managers are LLCs and LPs. LLPs are little out dated now and only used by professional firms such as law firms or medical offices. I did not scroll through all the facts but the basic structure for a fund is a limited partnership (LP) where all investors are limited partners and the fund manager is the general partner. Since the general partner does not have limited liability like the limited partners, most people form an LLC to be the general partner. The LLC has limited liability and both the LLC and LP are tax pass throughs so income/losses etc pass through to the respective entities. There are no shares or stock and they are very easy to set up with the State of your choice. Forget LLPs. LLPs were necessary before LLCs were created. No they are no longer used too much and LC are so flexible and easy they have become the entity of choice in many commercial areas. Whether an LLC or LP it is quite easy to add new partners or change the agreement. Forget but I do not think you have to file partnership agreements with the state of registration so if you add new partners you simply amend the agreement. I do know that with most states you do not need a Operating Agreement if you have an LLC and therefore do not need to file it if you create one or amend it. Real simple.
optioncoach - i appreciate your thoughs - thank you for posting. i would like to ask you 1 question as i'm not sure how much of the thread you have read - would you still suggest me creating an LLC or LP even if i'm not sure i want to branch out and add clients? (even if i don't plan on this becoming a main business for me) i'm more in the phase of wanting to try out money management but not sure if i want to commit to it. would you still go through the trouble of setting up an LLC or LP? or something simpler? Thanks again - Adam
Why dont you just setup an account in his/hers/companys name and then you act as POA with a standard deal you both sign to the broker giving you right to manage the account.