Creating a hedge fund to protect and manage your assets or the assets of others for a fee is a practical way to earn a living. Successful hedge funds continue to attract the wealthy, the working not-so-wealthy, businesses, and pension funds looking for better investment options. Despite recent law changes, the United States still offers a favourable environment for smaller hedge fund startups. The purpose of this article is to highlight key U.S. hedge fund development and planning issues of interest to hedge fund sponsors worldwide.
Why the United States?
Even if you are based in another country, consider forming a U.S. hedge fund. The United States offers easy low cost access to the legal, tax, accounting, retail and institutional brokerage, and the regulatory services needed by a hedge fund sponsor to organise a hedge fund. Despite what some investors think about the purported negativity surrounding the United States, many more investors continue to establish U.S. based hedge funds because of the minimal expenses associated with starting a U.S. hedge fund. Hedge fund sponsors (i.e., the organiser(s) of the hedge fund) based outside the United States are usually surprised and delighted to learn about the 窶詫ight touch窶兪of U.S. regulation and low costs associated with forming a U.S. hedge fund.
How long does it take to start a hedge fund?
It really depends on the particular circ*mstances because no two funds (including the people who want to start them) are completely alike. In the United States, companies can be formed in a matter of just a few minutes. For example, in the state of Florida, a company can be formed over the Internet in less than ten minutes for about US$120. In the United States, no minimal capital is needed to form a company. Even a U.S. tax identification number (i.e., EIN or 窶脇mployer identification number窶冓 can be obtained quickly from the U.S. Internal Revenue Service over the Internet.
In general, and assuming no registration is required, the average U.S. hedge fund takes about fourﾂ
