Kickstart Your Bitcoin Investment Club

Starting a Bitcoin investment club can be a great way to get into the world of cryptocurrency with the support of like-minded people. The first step is to find potential members who share your interest in investing in Bitcoin and are committed to a single investment methodology. You'll want to aim for around 10-15 members, but anything from 6-20 people can work. Once you've found your group, it's time to hold a preliminary meeting to discuss the formation of the club, including defining goals and determining financial contributions. After this, you'll need to establish yourselves as a legal entity, create a partnership agreement, and open a brokerage and bank account. It's also important to establish day-to-day operating and accounting procedures, as well as an educational agenda for the club. Finally, you can start researching potential investments and making decisions as a group.

Finding members: Search for like-minded people who are interested in investing in Bitcoin

When starting an investment club for Bitcoin, it is important to find like-minded people who share your interest in investing in Bitcoin and cryptocurrencies. Here are some tips to help you find potential members:

• Online Communities: Explore online communities and forums dedicated to Bitcoin and cryptocurrencies, such as Reddit, bitcointalk.org, and other social media platforms like Facebook, Google Plus, LinkedIn, and Voat. Engage with users, participate in discussions, and connect with people who share your passion.
• Crypto Clubs: Consider joining or visiting existing crypto clubs, either online or in physical locations. These clubs provide opportunities to network with like-minded individuals and gain insights into the world of cryptocurrencies. Some examples include the Crypto Currency Collectors Club, Cryptor Trust (Bitcoin Blockchain a Cryptor Think Tank), and Bitcoin Ben's Crypto Club.
• Crypto Events: Attend cryptocurrency conferences, meetups, and workshops to connect with potential members. These events offer great opportunities to meet people with similar interests and learn from industry experts.
• Social Networks: Utilize your personal social networks, including friends, family, and professional connections. You may be surprised to find that some of your connections share your interest in Bitcoin and could be potential members or know someone who is interested.
• Online Platforms: Leverage online platforms that cater specifically to investors or like-minded individuals. For example, eToro offers a social investment platform that allows users to connect, share ideas, and discuss investment opportunities.
• Local Communities: Don't underestimate the power of your local community. Reach out to local businesses, universities, or community centres to advertise your club and find interested individuals. You can also host educational workshops or seminars to spark interest and attract potential members.

Remember, when finding members for your investment club, it's important to ensure that everyone shares a common interest in Bitcoin and cryptocurrencies. Look for individuals who are passionate, curious, and willing to actively participate in the club's activities and discussions.

Meetings: Schedule meetings to discuss club formation, goals, and procedures

Meetings are an essential part of forming an investment club. Here are some tips to help you schedule and run effective meetings to discuss club formation, goals, and procedures:

Scheduling Meetings:

• Aim to hold your initial club meetings every two weeks to keep the process moving.
• Schedule a total of four organisational meetings to get your club up and running.
• Once the club is established, switch to monthly meetings.
• Choose a suitable meeting venue, such as a living room, library, church, or coffeehouse, depending on the size of your group.
• Online meetings are a convenient option, with platforms like Google Meet, Zoom, and Skype offering free services.

Discussing Club Formation:

• During the initial meetings, establish the roster of investment club members.
• Elect club officers, such as president, secretary, treasurer, and investor.
• Define the roles and responsibilities of each officer.
• Decide on an official name for your investment club.

Setting Club Goals:

• Discuss whether members are more interested in the club for its educational value or financial returns.
• Determine the investment approach, such as short-term or long-term investing strategies.
• Ensure members share a general investing philosophy and approach.
• Talk about the financial contributions each member can make and set minimum monthly contributions.
• Decide if you will pool your investment funds or invest through individual accounts.

Establishing Procedures:

• Outline the procedures for managing payouts, divestiture, or club dissolution.
• Develop policies for gaining new members and outline the process when a member wants to leave.
• Establish day-to-day operating procedures and review them periodically to ensure they meet the club's needs.

Legal entity: Establish yourselves as a legal entity and create a partnership agreement

Legal entity: Establish yourselves in the eyes of the government

To determine which type of legal “business entity” is best for you, carefully review the upside and downside of each one. Most investment clubs prefer general partnerships, as they allow taxes to pass through to the partners' personal tax returns and are the least costly business structure.

Create a partnership agreement

You will have to write out the rules of this partnership and its operation and have each member sign it once you all agree. Remember, your club can modify the agreement at any time in the future and should not let developing the agreement become a barrier to moving forward.

For a general partnership, file a “Certificate of Conducting Business as Partners” form, known as a “Doing Business As (DBA)”, with the county or state. Registration requirements vary from state to state and county to county. Have your club secretary or treasurer contact the Secretary of State’s office or licensing board, as well as the office of your local county clerk.

You’ll need a federal tax ID number for your partnership tax returns and for your club’s bank and brokerage firm. You need IRS form SS-4 for this step.

Sample partnership agreement

BetterInvesting clubs typically adopt the general partnership agreement and operating procedures developed by the Mutual Investment Club of Detroit, one of the organization’s founding clubs. You can use these documents to get your club started and operating at a high level. Changes can be made without difficulty in the future if the need arises.

Brokerage account: Research and select a brokerage account for investing in Bitcoin

Brokerage accounts are a necessary step to buying stocks, bonds, mutual funds, and other investments. They can be opened quickly online, with many brokerage firms allowing you to open an account with no upfront deposit. However, you will need to fund the account before you buy investments.

When choosing a brokerage account for investing in Bitcoin, there are several factors to consider. Firstly, you'll want to ensure that the broker offers the ability to trade cryptocurrencies, as not all brokers provide this service. Some popular brokers that offer cryptocurrency trading include Robinhood, Webull, TradeStation, Fidelity, eToro, Swissquote, Interactive Brokers, and Coinbase.

It's also important to consider the fees associated with trading Bitcoin. Fees can vary significantly between brokers and can include per-trade commissions, spread markups, and the difference between the bid and ask price (spread). Some brokers offer commission-free trading but may have higher spreads, while others may charge a commission and have tighter spreads. It's essential to understand the fee structure of the broker you select to avoid unnecessary costs.

Another factor to consider is the security and regulatory compliance of the brokerage. As Bitcoin and other cryptocurrencies are highly volatile and susceptible to scams and hacks, it's crucial to choose a well-regulated broker that prioritizes the safety of your funds. Look for brokers that are licensed and registered with relevant regulatory bodies and have a strong track record of protecting client assets.

Additionally, you may want to consider the range of cryptocurrencies offered by the broker. If you're solely interested in investing in Bitcoin, most brokers will suffice. However, if you plan to diversify your portfolio with other cryptocurrencies, look for brokers that offer a wide selection of crypto assets, such as eToro, XTB, or HYCM.

Lastly, examine the broker's trading platforms and tools. Ensure that the broker provides an intuitive and user-friendly trading experience, especially if you're a beginner. Some brokers offer advanced trading platforms with various features and tools for more sophisticated traders.

By researching and comparing different brokerage accounts based on these factors, you can make an informed decision when selecting a brokerage account for investing in Bitcoin.

Accounting procedures: Determine accounting methods to ensure accurate recording and reporting of each member's share

Accounting Procedures

To ensure accurate recording and reporting of each member's share, it is essential to establish clear accounting procedures for your Bitcoin investment club. Here are some steps and considerations to help you achieve this:

• Determine the accounting method: The choice between cash-basis and accrual accounting will impact how transactions are recorded. Cash-basis accounting records transactions only when cash is exchanged, while accrual accounting records transactions when they occur, even if payment is not immediately made. Accrual accounting is generally preferred by the GAAP (Generally Accepted Accounting Principles) and provides a more accurate picture of the club's financial position.
• Hire an accountant or use accounting software: Depending on the complexity of your club's finances and your expertise, you may consider hiring an accountant or using accounting software. Online or desktop accounting software can be a cost-effective and efficient option for tracking transactions and calculating each member's share.
• Establish record-keeping responsibilities: While software or an accountant can assist, ultimately, one person should be responsible for the club's record-keeping. The treasurer is typically assigned this duty, but ensure all members understand the process to some extent.
• Implement a system for tracking transactions: Develop a process to track every cash transaction and calculate each member's share of the whole. This could involve using spreadsheets, accounting software, or a combination of both. Ensure that all income, expenses, and investments are properly documented and categorised.
• Reconcile accounts regularly: Periodically reconcile the club's accounts to identify any discrepancies or errors. This can be done monthly, quarterly, or at least annually. Compare the club's records with bank and brokerage statements to ensure accuracy and address any issues promptly.
• Provide financial reports to members: Share financial reports, such as income statements, balance sheets, and cash flow statements, with the members of the investment club. This promotes transparency and helps members understand their share of the club's funds.
• Comply with regulatory requirements: Ensure that your club's accounting practices comply with any applicable laws and regulations, such as those set by the SEC (U.S. Securities and Exchange Commission) or other relevant authorities. Seek professional advice if needed to ensure compliance.

By following these steps and maintaining accurate and transparent accounting procedures, your Bitcoin investment club will be able to effectively track and report each member's share, fostering trust and informed decision-making within the group.

Frequently asked questions