I plan on starting a trading account with about $20,000. Probably going to trade bond futures primarily (ZF, ZN, ZB) until I learn the bond market like the back of my hand. Here is my question: Am i better off just trading the account as an individual or should I incorporate an LLC, declare myself and a few family members as members of the LLC, and trade the funds by opening a brokerage account in the name of the LLC? For the purposes of taxes, which would be the better route? I have been told that as an individual trader I may not deduct expenses incurred as part of my trading business such as purchase of a new computer, commissions paid, and etc... unless I apply for trader status with the IRS. But even if I apply for trader status, I have been told that there is no guarantee that I will be approved for such status by the IRS even if I trade full time for a living. On the other hand, I have heard from other people that if I trade from the LLC account, the trading I do will be subject to self employment tax as well as income tax. I don't plan on pulling money out from the LLC brokerage account when profitable; the goal is to build the account to a nice comfortable level ($500,000 or so) and then maybe start to have the LLC disburse funds to its members (in this case, I would be the only member receiving 100% of the disbursement). So here's another question: if I keep making money year after year without disbursing funds, how would I be taxed? Do I still have to pay taxes on the funds even though they have not yet been disbursed (well, i know i have to pay taxes on them but would i have to pay taxes on funds in an undisbursed state right away or would i have to pay the taxes on the funds only when the disbursement is made?)? If so, what kind of tax treatment would such a situation warrant (i.e. do i pay capital gains taxes or just treat it like income...also, on top of that tax do i still have to pay self employment tax as I have been told by a friend?) I'm trying to get into the trading business in a smart way in order to minimize the tax liability of my account. I also would like, if possible, to one day turn the LLC into a hedge fund if I am profitable enough (this is my dream, actually) and so I want an easy transition from trading just my own money to someday trading money for multiple investors. I believe the LLC is good for that sort of thing as I can simply make future investors members of my LLC and simply deposit their money into the LLC account and trade with not much headache. Does anybody have an idea about the best way to start trading as a business? I would very much like to go the LLC route but I really need to hear from people with more knowledge than me on all of this. Thanks!!