1. Engage a Hedge Fund Attorney. We suggest that you engage an experienced hedge fund attorney and that you know exactly who will advise you and develop your hedge fund business plan. You should be able to reach that attorney by telephone, email, Skype.com, etc. Click Here for a Free Consult with a Hedge Fund Attorney
We suggest that you avoid boiler room "service aggregators" (typically brokers and other non-lawyers) who aggressively sell you a bundle of hedge fund services (capital introduction, hedge fund marketing materials, hedge fund web sites, hedge fund administration services, brokerage services, accounting services, and legal services) and then "farm" the various services out to whoever they can find to do the work for the lowest price. Usually they are taking a percentage of the professional fees (your money) while doing very little work and originates from the "pump and dump" strategy used by brokers to sell stock. If you have gotten this far on your own as a trader, you are smart enough to shop around for other services providers. A good hedge fund lawyer can and will make suitable introductions to you upon request. Click Here to Learn About Hannah Terhune, Attorney
2. Determine Hedge Fund Launch Date. Assuming no registration is required, in the United States, you should be able to launch your hedge fund in 3-4 weeks.
3. Track Hedge Fund Development Process Costs. Some of the costs may be deductible, either as a current or deferred tax expense. Click Here to Learn More About Hedge Fund Tax Issues
4. Evaluate Investment Adviser Licensing and Registration Requirements. Determine whether you must register as investment adviser with the SEC, your home state, and/or the NFA. If you do not expect to have $100 million of assets under management (AUM) within 120 days of launching your hedge fund, you are subject to the investment adviser law of your home state. If you trade forex or managed futures in your hedge fund, you must register with the NFA. Click Here to Learn More About Commodity Pools and Forex Trading In those states where the hedge fund manager must register as an investment adviser, the Series 65 is required, unless the state is satisfied with some other credential such as a Certified Financial Planner license. Many states require that you register as an investment adviser. You may choose to register as an investment adviser even if not required to do so by your home state. Click Here to Learn More About Our Investment Adviser Registration Services.
5. Define the Terms of the Hedge Fund. You are creating a unique financial product. Complete the Hedge Fund Terms Sheet we provide you. We identify, define, and provide examples of the core elements of a hedge fund based on our experience. Based on the this work sheet you should be able to understand, evaluate and then define your hedge fund. Core elements include the hedge fund's investment objective, investment strategies, management team biographical data, hedge fund performance fees, hedge fund management fees, hedge fund redemption, hedge fund lock-ups, hedge fund risk disclosures, etc. Click Here to Purchase Our Detailed Hedge Fund Term Sheet and Hedge Fund Outline
6. Form the Hedge Fund and its Investment Manager. To start a hedge fund you need to create the fund entity and its investment management company. In the United States, the hedge fund is established as a limited partnership and in some cases, as a limited liability company for offerings with multiple share classes. Click Here to Learn More About Incubator Hedge Funds and Starting a Hedge Fund
Your hedge fund management company can be set up in your home state. If you do not plan to stay in your home state, we then suggest Wyoming or Delaware as the best location for the hedge fund's investment manager/general partner. Click Here to Form a Wyoming or Delaware Company
7. Obtain IRS Tax Identification Numbers. We prepare and file IRS forms to obtain the Employer ID Numbers (EIN) for the hedge fund and the hedge fund manager from the IRS. You will need these tax identification numbers to open the hedge fund's bank and brokerage accounts.
8. Investment Adviser Registration. If you need to register as an investment adviser, start the registration process. This process should start concurrently with the development of the hedge fund as the investment adviser registration process can take a few months in some states. You should sign up for the Series 65 examination unless your state accepts an equivalent certification or credential. Obtain study materials and pass the Series 65 Exam. You must complete any state registration application forms. Contact Us for Investment Adviser Registration Services
9. Forex Trading. If your hedge fund will also trade in spot forex, your fund is also a forex pool. You need to start the process of becoming a member of the NFA. Click Here to Learn More About Forex Funds and NFA Registration
10. Commodity Trading. If your hedge fund will also trade in futures contracts, commodity options (including options on futures contracts), leverage contracts involving certain precious metals, futures contacts and commodity options traded on a board of trade, or foreign futures and foreign options, your fund is also a commodity pool. Unless you operate an exempt commodity pool, you will need to register as a commodity pool operator with the NFA. You must take the Series 3 Exam and start the process of becoming a member of the NFA. Click Here to Learn More About Commodity Pools and NFA Registration
11. Review First Draft of Offering Documents. We will send you a first draft of the offering documents which includes a private placement memorandum, a limited partnership agreement for the hedge fund, and a subscription agreement. Perform a very thorough review of the first draft of your offering documents. Ask us questions to make sure you understand all aspects of your hedge fund as defined in the offering documents and make sure your offering documents accurately reflect what you plan to with investor money. Click Here to Learn More About Hedge Fund Offering Documents
12. Review Second Draft of Offering Documents. Based on our discussions with you, we will revise the offering documents and we ask that you timely respond to our inquiries regarding regulatory questions and any outstanding Terms Sheet items. We will send you a second draft of your offering documents. Again, perform a very thorough review of the offering documents. Ask us questions to make sure you understand all aspects of your hedge fund as defined in the offering documents and make sure your offering documents accurately reflect what you plan to with investor money.
13. SEC Form D and other Blue Sky Filings. In the United States, a notice of sale on Form D must be filed by the issuer in connection with any offering under Regulation D. SEC Form D is filed electronically with the SEC and Form U-2 is filed for the hedge fund in most states. We prepare and file SEC Form D for the hedge fund and the blue sky filings for the states where you expect to distribute your offering documents and accept investors. Click Here to Learn About Hedge Fund SEC Filings
14. Finalize Offering Documents. Take your offering documents to a copy store (e.g., Kinko's, Staples, etc.) and have it printed and bound. Consider the image you wish your fund to project when choosing the printing materials and binding method. Once the offering documents are finalized, you are now in a position to find a suitable bank, broker, administrator and auditor for the hedge fund. You will not be able to obtain a solid fee proposal and obtain a consent letter from an administrator or auditor until they have reviewed your offering documents. If you obtain a fee quote in advance, you are not getting a firm quote and you will experience sticker shock then they start to bill you.
15. Brokers and Introducing Brokers. Open the hedge fund's brokerage account and bank trust account. The hedge fund will need both. Investor subscriptions should be deposited in the hedge fund's bank trust account and then transferred to the fund's brokerage account. Investor money should not be sent directly to the hedge fund's brokerage account as institutional brokerage accounts do not accept third party monies. If your broker offers to do, do not work with that broker! You do not need to use a prime broker or an introducing broker. Nearly all small hedge funds start out with retail online brokers.
16. Finalize Regulatory Licenses Registrations. If you registered as an Investment Advisor or with the NFA as a Commodity Pool Operator, ensure that the regulators have approved any such applications.
17. Hedge Fund Marketing and Sales. Deposit your seed capital and start the initial trading of the fund. Start distributing your hedge fund offering documents and attracting investors. Keep a log of all individuals to whom you distribute your hedge fund offering documents. We provide you with a form you can use for this purpose. You can use a web site that is SEC compliant to administer the hedge fund. You cannot use the web site to market the hedge fund and find investors. You cannot advertise to the public.
18. Stay Current with Blue Sky Filings. File your blue sky filings within the appropriate time -- either before distribution or within 15 days of the first sale in that state, depending on the state's rules.
19. Hedge Fund Administration. Many clients are accustomed to being a one-person business, trading from their home office. You do not need to hire an administrator to start a small fund, although it is a good idea if you do not have time to deal with hedge fund accounting. Hedge fund administrators provide fund accounting services, including net asset calculations, fee calculations and general administrative support (back office services). If you are going to handle your own hedge fund administration, we suggest you purchase the hedge fund accounting software you are going to use and start recording your fund's trading activity and the acceptance of investors. Click Here to Learn More About Hedge Fund Administration
20. Initial and Annual Audits. If you allow non accredited investors in your hedge fund, you will need as initial "launch" audit. Your hedge fund will need an annual audit as well. We will introduce you to auditors that we have worked with in the past.
21. Investor Relations and Communications. Prepare the monthly or quarterly statements for your investors and send out with your cover letter. Continue to attract investors and raise capital. Click Here to Learn More About Hedge Fund Marketing
Our Customers Hannah Terhune and her associates have provided legal advice and services to me for over a year. She provided initial guidance to help determine the kind of fund most suitable for my goals, created the legal documents that are the framework for my hedge-fund, and assisted with ADV submissions to register my company as an Investment Advisor. I continue to rely on her for ongoing compliance issues in this complex and dynamic industry. I found Ms Terhune and her associates to be extremely knowledgeable and helpful in a very responsive way, with friendly and professional manners. Overall a very good experience. Highly recommended. Marty Cawthon ChipChat Technology Group
Hedge Fund Startup Process and Procedures You should know how the hedge fund startup process works. Read our hedge fund business plan checklist for a general narrative of the process you will encounter setting up a hedge fund in the United States. We hope that you find it useful. Call (307) 213-4732 for a legal consultation to discuss your needs. In this consultation, you will speak to Hannah Terhune, a veteran hedge fund and tax attorney. She provides a customized hedge fund business plan consultation which includes advice on your offering documents, SEC Form D and state required hedge fund filings, investment adviser registration and other compliance issues, operating structure issues, and develops a marketing plan for your hedge fund business.
Why Hire Us? When you engage us for hedge fund you get a unique combination of securities, tax, and international experience, focused on the trader niche. We have established a leadership position with traders. We are one destination for all your very special hedge fund and trader tax needs. We think we have the best set of offering documents based on the current and ever changing federal, state and offshore securities, commodities, and tax laws. We aim and deliver quick turnaround times, because we understand that our customers want to begin their money management business as soon as possible. We conceive, structure, and deploy the best tax saving strategies into your hedge fund vehicle (for the benefit of the manager and their investors) and your management company. Investors value tax-savings strategies and we utilize all our special knowledge and ideas in this area. Our customers value our one-stop relationship. We will help you start your business and continue to assist you. Our tax services division handles accounting, software, and tax compliance, including all tax matters (tax planning and tax returns). Only one thing counts with us and that's our customer relationships!
Our Customers Hannah Terhune and her associates have provided legal advice and services to me for over a year. She provided initial guidance to help determine the kind of fund most suitable for my goals, created the legal documents that are the framework for my hedge-fund, and assisted with ADV submissions to register my company as an Investment Advisor. I continue to rely on her for ongoing compliance issues in this complex and dynamic industry. I found Ms Terhune and her associates to be extremely knowledgeable and helpful in a very responsive way, with friendly and professional manners. Overall a very good experience. Highly recommended. Marty Cawthon ChipChat Technology Group
PERSONAL CONSULTATIONS You get answers to your specific questions by speaking directly to Hannah Terhune, an experienced hedge fund and international tax attorney. Ms. Terhune's hard-earned knowledge and experience can be put to work to save you unnecessary steps and costly wasted effort. The consult is an invaluable opportunity to speak to Hannah one-on-one, and learn how to achieve more in less time. As a result, you can anticipate that the return on your investment will far outweigh the costs associated with our unsurpassed services.
Ms. Terhune's credentials reflect an invaluable resource that combines a well-informed professional practitioner with sound ethical judgment that cannot be over-estimated. After reading our many leading articles and web content, you will probably have questions for us. The best way to get quick answers to your specific questions is to speak directly to one of our leading attorneys. When you buy a 30 or 60 minute consultation, we contact you quickly to schedule. Most of our clients begin with a consultation by phone and then use email to follow up. The expertise required to recommend best solutions and provide sound advice should never be taken lightly.
We are confident that when you are finished with your consultation, you will be impressed and more informed about your business plans than ever before. Call (307) 213-4732 or Click Here to Request Services.
MEET ATTORNEY HANNAH M TERHUNE Hannah Terhune, a hedge fund and international tax attorney, contributes her expertise, experience and thoughts to many digital content media and magazine repositories. Hannah Terhune's articles are widely circulated on the Internet and recommended by TheStreet.com and other respected media. Hannah Terhune's articles will advance your knowledge and understanding of the industry. They are embraced worldwide as a definitive and reliable source of critical information. Contact Us for Articles & Reprint Rights
Strategic Hedge Fund Planning by Hannah Terhune. Wilmott Magazine Ltd. (Volume 2013, Issue 63, pages 8-11 January 2013).
Trading Foreign Index Contracts? Know the Tax Rules Before You Trade by Hannah M. Terhune and Roger D. Lorence. Stocks, Futures and Options (June 2005)
Advising Clients on Internet Server Co-Location Agreements, Practical International Tax Strategies (March 15, 2004)
Structuring and Financing International Operations Using Hybrid Entities and Tax-Efficient Financing. Practical International Tax Strategies (Jan. 15, 2004)
Tax-Free Asset Acquisitions – More Strategies for S-Corporations: Sourcing Income to Preserve the Use of Credits and Carryovers: Practical International Tax Strategies (April 15, 2003)
Reducing Operational and Exit Taxes On Closely-Held Businesses. Practical U.S./Domestic Tax Strategies (August 2003)
Coming Ashore – Establishing U.S. Operations: Practical International Tax Strategies (July 31, 2003)
Financing U.S. Business Operations Using Cross-Border Income Trust: Practical International Tax Strategies (July 15, 2003)
Methods of Compensating the Executive – An Overview of Various Tax Features: Practical U.S./Domestic Tax Strategies (May 2003)
Update on Spanish Holding Companies. Practical European Tax Strategies (Aug. 2003)
Outbounding Income from Intellectual Property, Practical International Tax Strategies (March 15, 2003)
Taxable Stock Purchases: More Planning Strategies for S-Corporations, Practical U.S./Domestic Tax Strategies (Feb. 2003)
Business Globalization: Selecting the Proper Offshore Entity, Practical International Tax Strategies (Feb. 15, 2003)
Taxable Acquisitions: Financing Asset Acquisitions When an S-Corporation is Involved. Practical U.S./Domestic Tax Strategies (January 2003)
International Joint Venture Partnerships: Foreign or Domestic, Practical International Tax Strategies (January 15, 2003)
Corporate-Level Penalty Taxes on S-Corporations – Transaction Costs in Mergers, Acquisitions and Buy-Outs. Practical U.S./Domestic Tax Strategies (December 2002)
Taxation of Foreign Partnership Income: Issues to Consider in Reviewing Foreign Operating Structures. Practical U.S./International Tax Strategies (Dec. 31, 2002)
The Future of European-Based Business Operations: A Look at the Tax Aspects of the Societas Europaea. Practical European Tax Strategies (November 2002)
Tax Planning for Multiple Corporations: Domestication of Foreign Corporations. Practical International Tax Strategies (Oct. 15, 2002)
Acquisition Techniques Using Partnerships or LLCs – Planning Strategies to Defer Taxable Gain. Practical U.S./Domestic Tax Strategies (Oct. 15, 2002)
Tax Planning for Multiple Corporations: Canadian and Mexican Contiguous Country Companies. Practical International Tax Strategies (Oct. 15, 2002)
Acquisition Techniques Using Partnerships or LLCs – Planning Strategies to Defer Taxable Gain. Practical U.S./Domestic Tax Strategies (Oct. 15, 2002)
Domestic and International Tax Planning for Multiple Corporations. Practical International Tax Strategies (Sept. 15, 2002)
Tax Benefits of Spanish Holding Companies: A Planning Opportunity for U.S. Companies. Practical International Tax Strategies (Aug. 31, 2002)
Key Tax Aspects of International M&A – Planning Scenarios Involving Tax Acquisitions. Practical International Tax Strategies (Sept. 15, 2003)
Corporate-Level Penalty Taxes on S-Corporations – Transaction Costs in Mergers, Acquisitions and Buy-Outs. Practical U.S./Domestic Tax Strategies (December 2002)
Taxation of Foreign Partnership Income: Issues to Consider in Reviewing Foreign Operating Structures. Practical International Tax Strategies (Dec. 31, 2002)
The Future of European-Based Business Operations: A Look at the Tax Aspects of the Societas Europaea. Practical European Tax Strategies (November 2002)
Shifting Intangible Income to an Offshore Company Part II: Sale or License? Practical International Tax Strategies (Sept. 15, 2001)
Shifting Intangible Income to an Offshore Company "Round Tripping" and the Risk of Bringing §956 into Play. Practical International Tax Strategies (Aug. 15, 2001)
Update on Filing Requirements for Transfers of Property Offshore. Practical International Tax Strategies (July 15, 2001)
Want a Multinational Corporation In Your Backyard? Strategic Tax Planning for Countries Without a Clue. Practical International Tax Strategies (June 15, 2001)
Planning Notes for U.S. Businesses Operating Overseas: U.S. Outbound Tax Issues. Practical International Tax Strategies (May 31, 2001)
U.S. Strategic Tax Planning and Other Modern Day X Files An FSA to Remember. Practical International Tax Strategies (May 15, 2001)
More on International Tax Planning for Highly Compensated Individuals Combining Individual Leasing Programs, Deferred Compensation and Rabbi Trusts. Practical U.S./International Tax Strategies (April 30, 2001)
International Tax Planning for Highly Compensated Individuals Taking Advantage of Special Treatment for "Rabbi Trusts." Practical U.S./International Tax Strategies (April 15, 2001)
More on Dealing with Passive Foreign Investment Companies Using Inter-Company Loans, Handling Start-Up Costs and Other Matters. Practical U.S./International Tax Strategies (March 31, 2001)
Dealing with Passive Foreign Investment Companies How the System Works and Strategies to Avoid PFIC Status. Practical U.S./International Tax Strategies (March 15, 2001)
Swiss Corporate Ventures, Inc. – Advantages of Establishing a Holding Company in Switzerland. Practical U.S./International Tax Strategies (Feb. 28, 2001)
Cost-Sharing Rules under IRS Attack, Part IV. Practical U.S./International Tax Strategies (Feb. 15, 2001)
International Tax 101. Practical U.S./International Tax Strategies (Jan. 31, 2001)
International Tax 101: More Cliff Notes to Cross-Border Business. Practical U.S./International Tax Strategies (Jan. 15, 2001)
Cost-Sharing Strategies Under Attack, Part III IRS Challenges to Cost-Sharing Arrangements. Practical U.S./International Tax Strategies (Dec. 15, 2000)
Cost-Sharing Strategies Under Attack, Part II, Transfer Pricing Rules and Cost-Sharing Arrangements. Practical U.S./International Tax Strategies (Nov. 30, 2000)
Cost-Sharing Strategies Under Attack How Transfer Pricing Rules Affect Cost-Sharing Arrangements. Practical U.S./International Tax Strategies (Nov. 15, 2000)
Dutch Tax Treats Use Them or Lose Them. Practical U.S./International Tax Strategies (Oct. 15, 2000)
Going Global? Go Home – Unless You're Prepared for the U.S. Tax Consequences. Practical U.S./International Tax Strategies (Sept. 30, 2000)
Commissionaire Use in Austria: Focus on a Commissionaire-Friendly Jurisdiction. Practical U.S./International Tax Strategies (Sept. 15, 2000)
Using Stripped Subsidiaries for Foreign Country Sales Another Alternative to the Traditional Buy-Sell Model. Practical U.S./International Tax Strategies (July 31, 2000)
Handling the IRS Corporate Tax Audit: In Defense of the U.S. Tax Director. Practical U.S./International Tax Strategies (June 30, 2000)
Avoiding Taxable Income by Managing CFC Guarantees of U.S. Parent Company Debt. Practical U.S./International Tax Strategies (June 15, 2000)
Tax Measures to Hedge Against the U.S. Equity Devolution. Practical U.S./International Tax Strategies (May 31, 2000)
Bringing Home the Bacon: Planning Strategies for Offshore Income, Part III. Practical U.S./International Tax Strategies (April 30, 2000)
Commissionaire Use in France: Vetting the VAT. Practical U.S./International Tax Strategies (April 15, 2000)
Bringing Home the Bacon: Planning Strategies for Offshore Income, Part II. Practical U.S./International Tax Strategies (March 31, 2000)
Bringing Home the Bacon: Planning Strategies for Offshore Income, Part I. Practical U.S./International Tax Strategies (March 15, 2000)
Commissionaire Use in Spain. Practical U.S./International Tax Strategies (Feb. 28, 2000)
Commissionaire Use in Belgium. Practical U.S./International Tax Strategies (Feb. 15, 2000)
Crafting the Cross-Border Contract: Foreign Taxes and the U.S. Foreign Tax Credit. Practical U.S./International Tax Strategies (Jan. 31, 2000)
Crafting the Cross-Border Contract: Structuring a Services Agreement. Practical U.S./International Tax Strategies (Jan. 15, 2000)
Crafting the Cross-Border Contract: Drafting to Obtain Sales or Business Profits Treatment. Practical U.S./International Tax Strategies (Dec. 15, 1999)
Crafting the Cross-Border Contract: Unbundling Show-How from Know-How. Practical U.S./International Tax Strategies (Nov. 30, 1999)
Managing the Cross-Border Payroll, Part II: Withholding and Reporting Obligations. Practical U.S./International Tax Strategies (Nov. 15, 1999)
Managing the Cross-Border Payroll, Part I: Overview of U.S. Payroll Taxes. Practical U.S./International Tax Strategies (Oct. 31, 1999)
Cutting Foreign Tax Costs Using Well Known, Multi-Jurisdictional Tax Planning Strategies. Practical U.S./International Tax Strategies (Oct. 15, 1999)
Structuring an International Joint Venture: Transferring Intangible Property and Other Assets. Practical U.S./International Tax Strategies (Sept. 30, 1999)
Integrating The Foreign Sales Corporation Into Commissionaire Distribution Operations. Practical U.S./International Tax Strategies (Sept. 15, 1999)
Using A Foreign Sales Corporation To Fund An Individual Retirement Account: Some Practical Examples. Practical U.S./International Tax Strategies (Sept. 15, 1999)
Integrating The Foreign Sales Corporation Into commissionaire Distribution Operations. Practical U.S./International Tax Strategies (Aug. 15, 1999)
Commissionaire Modeling for European Union Customer Sales. Practical U.S./International Tax Strategies (July 31, 1999)
Commissionaire Use in Japan. Practical U.S./International Tax Strategies (June 30, 1999)
Taking Charge of Foreign Profits Through Commissionaire Operations. Practical U.S./International Tax Strategies (June 15, 1999)
Final Regulations Clarify Cost-sharing of R&D Expenditures, The Tax Advisor (January 1997)
Employer Operated Eating Facilities, Journal of Compensation and Benefits (September 1990)
Capital Management Services Group, Inc. is an authority in the hedge fund industry. It is a forward-thinking law firm focused on creating long-term collaborative relationships with a select group of clients interested in the same. It strives to provide “high touch” service and perform a defined set of legal and other services with impeccable efficiency.
Offering Exceptional Care for a Select Few Capital Management Services Group is a small law firm catering to active investors, active traders, day traders, investment advisers and hedge funds worldwide. We offer comprehensive legal, tax and accounting services. We also offer hedge fund development services, small business planning, wealth preservation and wealth management services, and asset protection services. Our goal is to offer exceptional care for a select few.
Concierge Service We offer corporate “white glove” concierge service to select clients. We set up many types of funds, provide business advice and offer ongoing support to all clients. We try to help people as their needs evolve. Our best ideas are not on this website. Are you trying to develop a tax or regulatory footprint outside of your home country? We offer extended office services in Delaware and in other locations beyond the industry norm. We offer unique ideas and the bandwidth to implement them. We offer tax planning services, tax accounting, books and records preparation, and tax return filing services. If you have a business plan that is unique, know that countries offer “sandbox” regimes for businesses that do not fit into an existing regulatory framework.
24/7/365 Service You may have an unusual situation that needs special attention. We are ready to help. We offer complete 24/7 access and great working relationships. We are simply second to none. Think outside the ordinary. Our best ideas are not on this website. When you consult with us, you have access to a unique and desirable blend of personalized, yet, professional experience. Give us the opportunity to put our knowledge and expertise to work for you. We provide high quality services at competitive rates. We look forward to connecting with you personally and are confident that you will be impressed. We help our clients as their needs evolve and take pride in maintaining long term relationships with our clients.
Henry David Thoreau wrote: "Do not hire a man who works for money, but him who does it for love of it." We are committed to bringing you the best possible options. We are an internationally recognized business serving clients while educating the industry. We do this by striving for the best results. We are a law firm and not a document chop shop. A lawyer is a philosopher and role model. The ability to improve client lives is a privilege that we do not take lightly. There is tremendous power in being able to effect a positive change in the world.
