The number one mistake newbie clubs make is that they do not have an investment club agreement in place before they begin investing.
It is imperative that an agreement be developed and agreed upon by all members right at the formation of a club.
The agreement serves multiple purposes:

• Assures checks and balances to keep all activities legitimate.
  
• Defines the responsibilities of the club management and who is to fill those roles.
  
• Serves as a guideline and mediator when there are disagreements in the club.
  
• Sets expectations of when meetings and various reports on the club's activities are due.
  

There are several ways to find existing agreements that can be modified and tailored specifically to any club.
The internet is a good resource, as well as an attorney or checking at the library.
A good agreement will include:

• Job descriptions for each role, including all the responsibilities, term length and purpose of each position.
  
• Responsibilities of each individual member, including description of proper and improper behavior.
  
• Procedure for removing an unethical, dishonest or any other type of unwanted person from the club.
  
• Due dates and structure of reports necessary for review by the members.
  
• Topics to be covered in regular meetings.
  The meetings may be weekly, monthly, annually, or all of the above.
  
• The number of maximum and minimum members.
  
• Procedure for taking on new members.
  

Once an agreement has been drafted and all members of the club have agreed to it, it is a good idea to have an attorney review it.
This way, if there are any problems in the future, either between members or any questions from the IRS, then the club is assured of having conducted their affairs lawfully.