Steps To Making A Horse Racing Partnership Succeed For You
Is it possible that you are thinking about signing up in a horse racing partnership or syndicate, or maybe you’ve already done so? Whichever, it’s extremely important that you learn how to set up your own interest correctly so that you will be in possession of all the necessary accounting and documents when your annual tax time rolls around.
If you want the IRS to treat your horse racing activities as a business then you must conduct your dealings in a businesslike manner. To get a proper start, before entering into any partnership you should have a clear picture of both what you expect and what the syndicate is bringing to the table. A business plan can outline what you are looking for in a syndicate and what you expect to see from your investment. Some of the things that should be included in your horse racing partnership business plan are:
* Where you plan to obtain the funds necessary to make both the initial investment in a horse racing partnership and to cover the monthly expenditures.
* A time frame for the partnership, how long is the contract, 1 year, 4 years, etc.
* How will the horse be acquired - will it be purchased at auction or from a private vendor, etc.
* Projected income and operating expenses.
* Mark out framework within which the partnership will function, specifically, do you want a horse that will be competitive at a national level or would you be more comfortable racing locally.
* Clearly indicate what level of insurance you intend to purchase to cover your risk.
* Does the contract provide a clause allowing you to get out of the partnership?
Looking beyond a business plan, it will be necessary for you to construct your business appropriately, recording income and expenditures. Some points you should consider when setting up your books are:
* Find an accountant with verifiable experience in horse racing partnerships.
* Establish a separate checking account for your share of the horse racing partnership and label it as such for example, John Smith d/b/a Partnership Name, LLC.
* Carefully file away all invoices and receipts, records of winnings etc. that can be identified with your horse racing partnership affairs.
* Keep an appointment book and travel log to document appointments, visits to the racing stable, phone calls, any travel, all associated mileage, etc.
With just a little forethought, it’s fairly easy to involve yourself in the “Sport of Kings” with specific prospects and arrangements, which will guide you toward selecting the horse racing partnership that’s right for you. You will also be set up to record all your tax related activities methodically. Good preparation eliminates issues and headaches, all of which will contribute to your increased enjoyment in your racehorse ownership!