easiest thing to do is to trade prop. You get a K1, you get to deduct expenses. And you don't have to pay the self exmployment tax
Instead of going with what you "think" sounds right or not, I again direct you to download an LLC application from you broker and see. Stop guessing. Real simple.
I've never seen a "personal guarantee" requirement as such. Can you provide an example of the language used for this? It would seem to completely negate the primary purpose of an LLC.
That is what I am finding so confusing here. So there is protection via LLC but then such protection is not real? And do all hedge fund managers who trade in financial markets give such a "personal guarantee" which would open them up personally to lawsuits from brokers who have made mistakes on their end or from disgruntled customers? this doesn't sound right to me.
Here's two examples (I use IB and tried to link their language but couldn't, however...) Advantage Futures: http://advantagefutures.com/LLC_US.html 8th document OK, now maybe semantics, but applications also have language in it that says the undersigned are liable for all obligations of the LLC. Not exactly a "personal guarantee" but language to the same effect: RCG: http://www.mirusfutures.com/sites/default/files/RCGAcctForms/RCG_LLC_PARTNER_APP.pdf Booklet D, page 8, section 24: 24. The undersigned, being all of the General Partners/Members of the Partnership/LLC identified in the Commodity Customer Agreement agree to be jointly and severally liable for all obligations assumed in or arising out of the Commodity Customer Agreement. Further, any one or more of the General Partners/Members shall have full authority to act on behalf of the Partnership/LLC as if (s)he alone were interested therein, all without notice to the others interested in said account and all for the account and risk of the Partnership/LLC. I am sure you could find you more of these examples.
If "Dorman Trading LLC" can Protect their own Ass With LLC structure why can't I protect Mine? Found in risk disclosure statement on their corporate account application. "4. Limitation of Liability Exchanges offering an electronic trading or order routing system and/or listing the contract may have adopted rules to limit their liability, the liability of futures commission merchants (such as Dorman Trading L.L.C.), and software and communication system vendors and the amount of damages you may collect for system failure and delays. These limitations of liability provisions vary among the exchanges. You should consult the rules and regulations of the relevant exchange(s) in order to understand these liability limitations." pg13 http://www.genuinecta.com/Dorman_Corporate_Account.pdf I'm trying to find the part where they make individuals responsible for loss even though they are trying to trade through LLC. Is page37- 39 it?? http://www.genuinecta.com/Dorman_Corporate_Account.pdf
Because they have more bargaining power than you do and get to write the contract and decide who they will accept and on what terms. If you have a large enough trading account, it often does become negotiable. By the way, it is not just brokers. Every bank will also require a personal guarantee for any loan or extension of credit to a small newly-formed company. There may be a few brokers who will not require the personal guarantee.
Yeah I suppose, So it looks like as far as protecting my Liability to the broker; trading with an llc isn't of much help. Keeping risk and leverage in check at all times is all anyone can do. just hope that the perceived "closed positions" you have weren't left wide open due to broker error. It has happened. Broker" it was your end" Me " it was your end" Broker +1 Me -1
Depends on the structure of the LLC and how many partners you have. To keep it simple, a single member LLC your personal assets are at risk. If you have a 2nd partner who is not a family member, then your personal assets are not at risk. If your LLC is sued and the judge discovers that your partnerships are bogus, you're screwed regardless.