LLC Operating Agreement for Investment / Trading company

Andiroo

Andiroo

Hi All

I am in the process of thinking through creating a corporate vehicle (LLC) for my investments / trading activities. This would be owned by myself, my wife and possibly another family member.

Does anyone have any examples of operating agreements for this type of LLC. I am sure we will need something custom developed but seeing an example would help me think through how this would all work. Alternatively do you know where i might find one.

Many thanks in advance

Arb
 
plenty. just use google or better yet order the kit. it's comes with everything you need. these guys are cheap and good:

http://www.corporatekit.com/

$25 for kit. your lawyer or CPA will charge you for same thing at least $200
"custom" developed will give you nothing, but more headache.KISS
 
Hi

I am interested to hear how well the boilerplate legal zoom type operating agreement fitted an investment / trading focused business. Also to what extent asset protection was part of your thinking for putting your trading activities into a LLC or was it purely to attract the tax benefits of a full time trading business.

Thanks



Quote from ajcrshr:

I used legaldoom for the LLC formation (http://www.legalzoom.com/), It's around $200 a year to keep them as an agent which you are required to have in most states (http://en.wikipedia.org/wiki/Registered_agent). If you have many members where there is possibility of future conflict you probably want to sit down with a "real" attorney and construct something more specific. I don't have any clients so I didn't need anything too complex/high cost.
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Quote from Andiroo:

Hi

I am interested to hear how well the boilerplate legal zoom type operating agreement fitted an investment / trading focused business. Also to what extent asset protection was part of your thinking for putting your trading activities into a LLC or was it purely to attract the tax benefits of a full time trading business.

Thanks
More...

Out of town right now but if I remember right it has no mention of trading. It just has very basic items like who the members are, how profits are distributed, who manages the LLC, withdrawal and addition of new members, and that there would be no corporate formalities (this is a pass through entity not an s-corp). It has wording to the effect that the LLC operations and assets are separate from personal which I think is the most important issue with the operating agreement. Again, I'm not 100% sure but I don't think it actually says what the LLC operations are.


I chose an LLC mainly for tax benefits. It has its own checking account and credit cards for equip., software, etc to deduct on taxes and depreciate. There are no clients or debt so I'm not overly concerned with personal/business liability separation.
 
Quote from ajcrshr:

I chose an LLC mainly for tax benefits. It has its own checking account and credit cards for equip., software, etc to deduct on taxes and depreciate. There are no clients or debt so I'm not overly concerned with personal/business liability separation.
More...

ajcrshr:
what kind of benefits are you getting now that you dont get by filing as a trader?
 
Quote from kcgoogler:

ajcrshr:
what kind of benefits are you getting now that you dont get by filing as a trader?
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can't you just read?

I chose an LLC mainly for tax benefits. It has its own checking account and credit cards for equip., software, etc to deduct on taxes and depreciate. There are no clients or debt so I'm not overly concerned with personal/business liability separation.
More...


i trade full time for a very long time, but i didn't apply for a trader status. why? cause you have to meet and most importantly KEEP UP with the requirements. go to tradederstatus.com and read about consequences. on top of that-there is no clear explanation about how to surrender your trader status when you done with trading. none. and penalties are pretty severe. the only thing i found is to write a letter to chief of IRS and ask personal permission..common..it's fucking silly to say at least..
 
While I have been flowing 1256 income in the form of blended capital gains into my individual tax returns for almost 20 years now, I started the LLC because from time to time I have employees as traders, and also to accomodate the liability protections from other business activities.

In terms of the bottom line, there are no real or practical tax treatment advantages to an LLC in terms of deductions per se.
 
My 2 cents...

I have an expensive lawyer representing my business...
$500/hr for partner
$200/hr for associate

A good attorney is a necessity when assembling offering documents and all other due diligence materials if you are going to be offering your investment services professionally.

A good attorney IS NOT necessary for creating the entity itself if the entity is not complicated. The entity however, is a necessity. I prefer LLCs and that structure is quickly replacing the LP and C corp in this arena. In terms of taxes, the C-corp has almost no advantage in this arena. This is evidenced by the fact that you'll rarely find an investment company operating as a c-corp.

I got the same thing from LegalZoom that I would've gotten from my lawyer, and he acknowledged it. The LLC articles of organization are not specific to trading and don't include any special legal jargon. I chose LegalZoom for the ease and speed. Could've done it myself and saved a couple hundred bucks, but my time is worth more than that.

Once the entity was formed cheaply through LegalZoon, my lawyers went to work creating all the other necessary documentation which costs many times more than the formation of the entity. IF you're not going to offer professional services, you should be talking to a CPA and not a lawyer. Even then, you can just do it yourself. Not too difficult.
 
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