Quote from LeonPhelps:One disadvantage to LP/LLC over IB friends and family accounts is you pay professional fees for market data.
Simply do not get market data associated with the professional (entity) account. Get your market data in a personal account.
Quote from LeonPhelps:Accounting for IB friends and family is easier, too. Need k-1 for LP/LLC with expensive accounting and auditing.
The cost of accounting is tracking the trades, expenses and allocating them to the taxpayers. Whether this is done via a LLC tax return or individual income tax returns is not necessarily going to result in much higher costs for the LLC. Actually, spliting trades could cost more in tax preparation fees if the trades are duplicated among various form 1040's.
This is like when real estate rentals are jointly owned but reported on form 1040 Sch E directly by each owner rather than run through a K-1 to each owner. The tax prep is duplicated over and over by each participant, often costing more than filing a form 1065 and issuing K-1s.
Auditing likewise could actually be higher if two or more form 1040's are interconnected resulting in multiple IRS examinations, whereas one LLC return done correctly generally is one examination, and perhaps a cursory review of one of more of the form 1040s.
That's assuming you meant IRS audits, and not CPA audits, which of course are not triggered because an LLC is used. But if you were talking about CPA audits, the audit of one LLC would generally be significantly less expensive than two or more individual CPA audits.
