I'm considering starting a small financial management business to manage money for anywhere between 10-20 clients. My question, however, is how taxes will work in this situation?
For example, if someone gives me 10,000 and I make 12,000 with it, and after taking the fees I return the rest of their money to them, how do taxes work in this business. I know, of course, that I would pay capital gains tax when I sell their securities, but would they pay tax on their gain, beyond the capital gains tax that I pay when I sell the securities? Would I need to furnish an annual tax form for my clients? Or are the only tax forms involved in this sort of business the forms which record my capital gains and losses that I deal with?
I know this is not the usual business model discussed on this website, but any help would be great. I just want to have a better understanding of how it works before I seek professional help that is going to cost me money. This way, I will know exactly what questions to ask them.