I have a few interested friends and family that are looking to invest money. They come with various backgrounds/experiences in investing but given a connection they are willing to try a different investment.
I have been wanting to set up a business and generate some cash flow, myself. I see a good alignment in these goals. I'd like to do something like the following:
- Connect with friends/acquaintances or 2nd degree connects through them.
- Agree on the investment amount, duration and gains/percentage.
- Deploy the money, get the gains from various investments, keep a cut and grow the business.
- Keep the contracts/return principal plus gains of individual investors.
On the point of 3, I have a few avenues which are, in turn, friends/family where they need capital to scale their operations and they will commit to some interest/dividends from their side.
One such investment could be a day trader in the stock market. Another could be a loan to a nearby farmer who will commit to some percentage back. (Of course these come with risks and there should be some language in the contracts.)
From my side to my investors I may need to do a Schedule K-1 or a 1099-INT or some such thing, but in the case of that farmer, if it is a cash deal and I get back cash, is that okay? Or do I need to insist on tax docs from the farmer/local business person or even the stock trader?
Is a Manager managed LLC the best way to do this? Or should I do this as a bank like structure that offers interest on principal? That way I can simply issue 1099-INT (if I understand correctly).
Location: California, USA Opening it to non-accredited investors too.