The only advantage I could see trading from an LLC entity was to get a health insurance tax break. Otherwise I always thought I was "paying myself" regardless of entity or not.
yes, In my day the only consideration was taxes. For kids today who want to get a mortgage, especially at these low rates, it is something to consider. Like I said, I couldn't even rent a $500/mo apartment telling them I was a "Private Investor", So it's something to think about if you have plans to take out a loan for a house or something else.
If you have a margin account get long 100% dividend paying stocks then take a margin loan by wiring out cash to your bank account. No need to speak to anyone. At interactive brokers you can get a margin loan for 1.66% for the first $100,000 then 1.16% up to $1,000,000. The dividends will be greater than the interest. Can be done in currencies other than the dollar as well.
Why not just get some job and get on payroll until you get a loan and then quit? Easier said than done?
thats an idea. Say for example if I wanted to buy house/condo for 100k . I wonder if it would work just to go long aud/jpy with 100k ( or more) and tell the bank I won't touch it. Pledged asset loan I think it's called? Then make the carry or dividend in the case of stocks. Edit: I reread your post, no need to talk to anyone if you do it your way. Good Idea. Will be talking to lender anyhow to see what they expect now days, I will report back on what they say about the whole thing . WRB trader probably hit the nail on the head where you have to be in touch and be established on a personal level with them ....regular deposits for a few years before they trust you .
I know a few that have done this regardless if they went into trading as a business or any other self-employed business venture or they run their business during hours that don't conflict with their payroll job...thereby allowing them to keep their payroll job.
well now, getting a job is harder than getting a loan. Try telling them when they ask about your work history, "I just sit in my pajamas and stare at my computer" oh yeah, and I file as "Unemployed" (it raises fewer red flags)
Yeah, its a whole different story if you are able to pledge collateral--- but you cant just "tell" the bank-- they will want control of the assets like in a CD or something at their bank. I am talking about the average self employed with limited cash and no collateral. if you have substantial cash or collateral loans are available. surf
For an individual trader the small advantages of setting up an LLC or LP are probably outweighed by the disadvantages. Main advantage: Cleaner to expense stuff. Disadvantages: Can't use exchange seats without some special exemption Setup costs. Some data feeds are slightly more expensive Perceived advantage that are fake: You can 'walk away' from trading losses in excess of your account value. Limiting your liability. No broker is going to accept an LLC account without a personal guarentee until you have at least 500K in assets with them. And even then you have to negotiate it with them. When you start hiring people or want to get a corporate exchange membership or need to formalize a partnership operating agreement then forming an LLC / LP makes sense. By then you should be big enough where you won't have to sign a personal guarentee with your clearing company either. The advantage to using an LP over an LLC is that prior to next year there were some loopholes that allowed an LP to avoid SE taxes even if it owned exchange memberships. It's a grey area and not all accountants promote it.