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It’s the time for filing taxes again with the IRS and accountants around the country would be going over the financial standing of the companies and clients they represent. While Britain’s Brexit is slowly making its impact all over Europe, the United States market haven’t fully recovered from the remnants of the recent years’ global economic downturn just yet. You can also check out contract templates.
Amid trade wars with China and the present administration’s efforts to fulfill the promise of a greater America, small and medium business owners are trying to cover for overhead costs and investments that would see their business grow. It usually takes a lot of work to find the right investor these days. When you do, it’s important to have an investment contract with the following elements factoring the interests of everyone involved:
1. Opening/Introduction: The recital or introduction serves as the formal opening of the written contract. It should include the name of each party or business entering into the agreement, addresses, including the company name and addresses of the parties which would be further identified in the contract.
2. Articles: The articles is the written version of the sum of all that has been agreed to and initially discussed between parties. Your articles need to be listed one at a time with corresponding numbers as “Article 1,” then “Article 2,” and so on. Ideally, articles of an investment agreement indicate the amount of money being invested and how you plan to use it if you’re the business owner. You should also include what the investor is expected to receive in exchange for their contribution.
3. Payment Terms: The terms of payment can vary depending on the company and is often based on the amount of investment to be received. Some businesses accept investments as a lump sum payment where the amount of the transfer, the agreed date and the information of the receiving bank are listed. Other times investment is divided and given as multiple payments in which case you should refer to your file and add the dates and amounts for each transfer made.
4. Term and Termination: Contract term should state how long the agreement is valid for, with details of the investment return to be given as promised and the process by which the contract will be amended, renewed or terminated. There should also be options for how both parties can terminate the contract in case one opts for an early exit.
Experienced and new brokers, traders, financial analysts and investors from established corporations to business owners earning decent profits continue to try making money through dividends. The only way they can protect their shares and years of hard-earned investments is if they keep every agreement on written record to hold weight on court. Follow these steps for writing an investor contract that protects the interests of all parties:
1. Invest in yourself: You can’t put a price on the skills and abilities you develop and build on when you decide to invest in yourself. Most successful investors didn’t make it to the top just because they chose the right businesses to fund or made millions by expanding their shares alone. Success isn’t only dollars and figures because when the going gets tough, you will not falter if you have a great career and expertise to back you up. It’s always wiser to invest in yourself first, then go from there.
2. Identify any deliverable: Most of the time, investment will need certain benchmarks to be accomplished on a deadline or products and services to be developed as the outcome of business activities. These items are tagged as deliverables. You should have a list of all the deliverables in your contract including the date the target date for each of their fulfillment.
3. Clarify the choice of law: Since the law may vary slightly from state to state or one location to another, make sure that the area where your contract will have jurisdiction is clearly stated before you sign it if it has to have legal bearing. Most state laws list the area of the investor’s residence as the law ruling the contract and any disputes or legal actions must be appropriately taken up with the right courts of that location.
4. Sign the document: After finalizing the contract and making the necessary revisions, each party must sign the contract with ideally one witness as a Notary Public and have the signatures notarized although this is not necessarily a requirement. Make a copy and sign both copies then file them for your own records.
5. Trust your investments: While they’re known to be risk-takers, investors don’t ride on luck when investing in a business or a project. No one can make a fool-proof prediction whether it’s about the next clothing trend, teenage fad or social media conversation. Even when you have done enough research your predictions won’t be completely accurate, which is why it’s a challenge to trust your investments, but you’ve got to trust your decision-making ability as an investor.
Return on Investment is a performance measure for the evaluation of an investment’s efficiency versus the number of different investments. ROI tries to measure the number of returns directly regarding a certain investment, representative of the investment’s cost. ROI is calculated in this formula:
ROI = (Gain from Investment – Cost of Investment) / Cost of Investment
Most states require certain documents to be notarized such as a real property deed. Unless it is specifically required by your state or municipal law, an investor contract doesn’t have to go through a notary public.
At the end of the day, you have to make your own investment decisions and trust them, especially since you’re protected by a contract in case the level of risk is something you may not manage. As an investor, you’re bound to make mistakes sooner or later, no matter how good you are. Just make sure that when you do, you can afford them and that you’ll be able to get back with greater returns. You can also like free contract templates.