NYC S Corp

[lwlee]

As a futures trader living in NYC, does anyone know of any disadvantages incorporating as a S corp versus LLC/partnership?

I understand there is something about NY treating S corp as a C corp. Though I had to register as S corp status with NY through form CT-6. Why the registration if S is treated as C?

Part of the reason for doing a S corp is because it leaves me the option of doing side work as a computer consultant. Most financial firms prefer corporation rather than LLC.

 

[trader_rachel]

I think you better speak to a good accountant - you facts are wet

 

[traderstatus]

Quote from lwlee:futures trader - reason for doing a S corp is because it leaves me the option of doing side work as a computer consultant.

Unless you are a licensed professional trader "on the floor" so-to-speak, then commingling a computer consulting business operation inside the same s-corp. as your trader status activity can only cause you problems with the IRS when it comes time to uphold your position of being a qualified trader status taxpayer.

 

[lwlee]

Understood. Say there was no commingling, just solely trading. Which is a better entity for a trader?

Yes, of course an accountant will be consulted. It seems someone always has that disclaimer.

Corp appears to be better for health benefits and retirement plans. LLC are easier for paperwork.

Quote from traderstatus:

Unless you are a licensed professional trader "on the floor" so-to-speak, then commingling a computer consulting business operation inside the same s-corp. as your trader status activity can only cause you problems with the IRS when it comes time to uphold your position of being a qualified trader status taxpayer.

 

[traderstatus]

Quote from lwlee:Which is a better entity for a trader?
Corp appears to be better for health benefits and retirement plans. LLC are easier for paperwork.

Generally a c-corp should not be a trader. Some more sophisticated techniques (some call it unnecessarily so) call for a c-corp to be associated with a primary entity more suited for the actual trading. That way the few extra benefits are taken in the 2nd entity. If you care to type in Why Form Your Own Entity? at Google, you'll see my write-up about why form an entity (if at all), and which entities might better accomplish your goals

 

[lwlee]

Traderstatus,

Many thanks. Informative site. I'm just getting up to speed on entities for traders. I had done research concerning S corp for IT consultant. It was the best way to go for programmers but traders appear to be a different story.

BTW, the reason why I had this question was because I had posed this question to Bob Green at Traders' Expo and he said I shouldn't be a S corp IN NYC instead a LLC or partnership. I had already incorporated as a S corp with thoughts of full time consulting but since then decided I wanted to give full time trading a shot. Some of the info on his site seems contradictory, since he does recommend corp structure for health/retirement plan. The "NY treating S corp as C corp" exclusion threw me for a loop.