IF I SET UP AN LLC OR CORP DOES THIS LIMIT MY DAY TRADING FUTURES LOSSES TO ASSETS WITHIN THE LLC/CORP OR AM I STILL PERSONALLY LIABLE IN THE EVENT OF A VERY LARGE (50+ ES POINTS) INTRADAY MOVE AGAINST MY POSITION?...THANKS.
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Setting Up Llc / Corp Limit Losses ?
- Thread starter SP500SYSTEMTRADER
- Start date
I am not 100% sure, but I will venture a reply based on logic. Check with a CPA.
The company is a separate entity and is responsible not you. The amount does not matter (remember Enron).
It would surely be a bankruptcy though for the company, and there is your name on it, even though you are not bankrupt.
in extreme case, court can go after managers, directors in a company (regardless of the fact it is supposed to be a wall between them).
Anyway, for this reason, it's not bad to consider a llc or c-corp (despite some disadvantages we already mentioned on ET). a S-Corp or no corp at all means you as an individual are responsible without any limits.
I personally use a C-Corp.
tntneo
The company is a separate entity and is responsible not you. The amount does not matter (remember Enron).
It would surely be a bankruptcy though for the company, and there is your name on it, even though you are not bankrupt.
in extreme case, court can go after managers, directors in a company (regardless of the fact it is supposed to be a wall between them).
Anyway, for this reason, it's not bad to consider a llc or c-corp (despite some disadvantages we already mentioned on ET). a S-Corp or no corp at all means you as an individual are responsible without any limits.
I personally use a C-Corp.
tntneo
Originally posted by SP500SYSTEMTRADER
IF I SET UP AN LLC OR CORP DOES THIS LIMIT MY DAY TRADING FUTURES LOSSES TO ASSETS WITHIN THE LLC/CORP OR AM I STILL PERSONALLY LIABLE IN THE EVENT OF A VERY LARGE (50+ ES POINTS) INTRADAY MOVE AGAINST MY POSITION?...THANKS.
Yes, unless you are trading serious size and your clearing firm required a personal guarantee, however you would not be asking if you were in that position.
Whenever I have asked for literature for opening a corporate account for trading futures, I have always been sent a "Personal Guarantee" statement for completion...That being said, I have never actually gone forward with actually funding an LLC for trading, I have just thrown the idea around a few times...
Metooxx would know better than myself the actual restrictions, etc... and I imagine that if you are going directly to a clearing firm then this would be a different issue...But if you are going through a retail broker, I can see no reason why they would not force you to guarantee the funds in case of account deficit...If not, the entire futures trading population would be overleveraging LLC accounts and taking swings for the fences...
Metooxx would know better than myself the actual restrictions, etc... and I imagine that if you are going directly to a clearing firm then this would be a different issue...But if you are going through a retail broker, I can see no reason why they would not force you to guarantee the funds in case of account deficit...If not, the entire futures trading population would be overleveraging LLC accounts and taking swings for the fences...
Just a thought here...but this is the second time in the last five minutes that I have seen a thread with a question about a 50 pt ES move running against them...
Kind of makes me wonder what's in store for the market...Is there a group intuition going on here or is this group just going through trader paranoia???...hehe
Kind of makes me wonder what's in store for the market...Is there a group intuition going on here or is this group just going through trader paranoia???...hehe
DON'T PANIC "VULTURE", I JUST GOT THE IDEA FROM THAT OTHER THREAD (REFERRING TO A 50 POINT ES LOSS) AND RATHER THAN ADD TO THE ORIGINAL THREAD WITH MY QUESTION I THOUGHT A NEW THREAD UNDER THE TITLE "SELF EMPLOYMENT" WOULD BE MORE APPROPRIATE. THANKS FOR THE COMMENT.