Dan asks "Does ICLUBcentral handle the accounting for LLCs or is it specific to General Partnerships?"

Dear Doug:

Most of what I've read suggests forming an investment club as a General Partnership.  However, many members of my group have a great deal of experience with Limited Liability Corporations and would prefer organizing under this structure.  Does the software for purchase from ICLUBcentral handle the accounting for LLCs or is it specific to General Partnerships?  If it doesn't handle the accounting for LLCs, are there software packages available that do?
 

- Dan S.

Dear Dan:

Yes, the investment club accounting software made by ICLUBcentral accommodates LLCs equally as well as general partnerships.

While I am not a lawyer, my understanding is that in an investment club situation, there's not much advantage in the LLC form over a general partnership. The partnership agreement itself limits the liability of members to some very specific activities that relate solely to investing. The added costs of forming and maintaining an LLC can be quite high, which is the primary disadvantage of this approach.

Tax reporting on the federal level is the same for LLCs as it is for partnerships. The IRS says "A domestic LLC with at least two members that does not file Form 8832 is classified as a partnership for federal income tax purposes" in the Form 1065 instructions.

I can't speak for all states, but most of them follow the IRS in this regard, so you can use our tax generator modules for the IRS and state returns as well.

- Doug