Are you considering becoming involved in a horse racing partnership or syndicate, or are you already an active partner? If so, it is crucial to know how to get started properly in order to keep track of your partnership share and be prepared when you have to give an account of your records for yearly tax preparation or other purposes.
If you expect the IRS to view your horse racing venture as a business, you will need to be systematic and professional in your approach. To set off on the right foot, in advance of investing in a partnership, you need to establish positively just what you want to achieve as well as what the syndicate is offering. A business plan should list precisely what you are hoping for in a partnership and what you anticipate happening with your investment. A few important items you should list in your horse racing 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.
* Manner in which the partnership horse will be purchased: by auction, out of a claiming race, or by private purchase.
* An estimate of anticipated winnings and also costs.
* Define the boundaries in which the partnership will operate, for example, do you want to race regionally or go national.
* Be specific regarding insurance for your purchase, for example liability, serious injury and mortality insurance.
* Does the contract provide a clause allowing you to get out of the partnership?
As well as a good business plan, you should also learn how to organize your business correctly, accounting for all income and expenses. Important guidelines you need to follow so that your business runs smoothly are:
* Seek out an accountant who is well acquainted with 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.
* Set up an appointment diary and travel log and chronicle all appointments, phone calls, race track visits and all partnership associated mileage, etc.
With proper planning, you can get started in the sport of horse racing with defined expectations and organization, which will help you choose a horse racing partnership more quickly. You will also be prepared to keep track of your equine activities in a businesslike manner, which will prepare you for tax time. Being prepared prevents worries or problems, which will allow you to really kick back and enjoy your thoroughbred ownership!