Formation checklist for fund managers

Forming a fund vehicle is more than just filing the entity with a state. Before accepting investments, you need the work on establishing a legal structure, creating governance documents, and the operational systems that would be needed to support the investment vehicle. While the specific requirements can vary based on the type of fund or investment strategy, most fund formations will follow a similar process. The steps are outlined as follows: 

1. Form the Entity: 

Once a structure has been selected, the entity must be formed in the appropriate jurisdiction by filing formation documents with the state and appointing a registered agent. 

2. Obtain an EIN: 

After the entity is formed, it will need an Employer Identification Number (EIN) from the IRS. An EIN functions as the entity's tax identification number that is needed for many business activities. 

3. Adopt governing documents: 

These documents can include an operating agreement, a subscription agreement, manager consent, or other organizational records. These documents help to establish ownership, management authority, investor, and operational procedures. 

4. Open an business bank account:

Maintaining separate business accounts helps preserve liability protections and simplifies accounting and reporting. 

5. Admit investors:

You can admit investors in accordance with the governing documents. This process will include collecting subscription documents, maintaining investor records, and documenting ownership interests. Managers should work to ensure that investor information is accurately recorded and maintained. 

We here at PaperOS can help you with these steps via the appropriate Workflows.