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The business of Trading
- Thread starter bathrobe
- Start date
Correct, but be prepared to answer quite a few questions from your broker and sign a letter stating what brocklanders wrote.Quote from brocklanders:
That is not exactly true. The professional status depends on whether you hold a securities license, are an investment advisor or work for a financial institution. Just having an LLC or Corp for trading purposes by itself does not qualify you as a "professional".
Thank you CFMTraderQuote from CFMTrader:
I set an LLC for trading.
Advatages I see ...
I will be desginating the accounting for the company an mark to market. From what I have read this will resolve some of the issues the IRS has with people running their trading profits and losses through their personal tax return. Using an LLC also helps with the issue of writing off losses (GULP!) if there are any and the issue of wash sales.
Also traking profits and losses and documenting them, IMHO, is much easier if kept in a sperate business enity. The ability to have a seperate bank account, expenses, etc if that audit ever comes make me feel better.
In New Mexico, where I live, setting up a LLC cost $50 and you are up in running. An LLC does not, in NM, require a board of directors, board meetings, board minutes, and profits and losses are run back into your own 1040.
Currently business taxes are at 35% for most businesses so that is probably higher then what most people are paying personally ... but McCain is talking about reducing the business tax rate to 25%, if elected, so that might change the LLC vs small corp equation for some.
For any business the other advantage of forming an LLC is libility protection. In this case, the issue of libility was not the important issue for me ... if I loose money I guess I can sue myself.
The usual disclaimer ... I'm not a tax attorney
Hope this helps with your decision ...
CFMTrader
There are tax advantages to having a C corp and a personal business. This is one of the main reasons to incorporate in my opinion. There are legal ways to shift income between your corp and personal business to help defer taxes, you can't do this in an LLC though. Also it's easier to have health insurance and some other benefits paid out of the corp. The hardest part is finding a smart aggressive accountant to help form a tax strategy so you won't get burned by the IRS or pay way too much in taxes.
Disclaimer bla bla bla, due diligence, I'm not an accountant, attorney bla bla, etc.
Disclaimer bla bla bla, due diligence, I'm not an accountant, attorney bla bla, etc.