What is the best entity for active trader?

A

angeli

Would like to survey which is the best entity for active trader with 200K income Thoughts?

LLC - single member LLC
LLC - partnership with my spouse as 1%
LLC - S-corp so W2 income and SEP IRA.
 
Last edited:
angeli said:
I would like to keep my accounts separate and also not trigger Schedule C audit.
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LLC = (expensive) "professional" data fees + LLC maintenance fees + accounting and tax prep fees.
If you only trade your own capital:
In my opinion it is worth it if trading is your only job in addition of what you said, and if you day trade a lot and all the time equities and, if you claim TTS + MTM on your LLC tax returns.
If you lose money = LLC taxed as a partnership (with spouse)
If you are a successful trader = LLC taxed as an S-Corp.
The most important: If you don't know yet, then you (should) could practice until you know for sure if you really can make money in different market conditions. Don't jump on conclusion too quickly.
Before doing it, I would definitely get Legal tax opinions.
Best!
 
I can tell you what most millionaires do (backed by research). They will go to a specialized accountant/attorney. If you are serious and ready to pull the trigger, finding and retaining a knowledgeable accountant and attorney in your specialized field pays for itself very quickly. I will not quote the location, but in the best selling book "The Millionaire Next Door", the wealthy do not cut corners when it comes to tax and legal advice. THEY JUST DO NOT!! So, if you are really serious, spend the $500.-$2,000. for half hour-hour talks with both for the set up. Afterwords, you can use cheaper accountant/attorney (who are still in the field).
 
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