Benefits/Drawbacks to trading through an LLC?

Discussion in 'Professional Trading' started by DragonDog, Feb 19, 2012.

  1. As long as it isn't your spouse, you are ok.
     
    #31     Feb 21, 2012
  2. garachen

    garachen

    First you open a personal account with a real broker and then after showing a track record of a year or two you can open an LLC account and negotiate to get the personal guarantee removed. You can get that done with about $1M cash in the LLC account.

    If you try to get it removed straightaway with no prior relationship you're looking at more like $5-10M requirement.

    Of course a real hedge fund doesn't sign a personal guarantee. If the clearing company has several hundred million in LLC assets it doesn't care about your personal assets.
     
    #32     Feb 21, 2012
  3. Ok. now THAT makes sense. Thanks
     
    #33     Feb 21, 2012
  4. If I form an LLC in WYOMING and use the LLC solely for the purposes of trading a brokerage account, do I have to register the LLC to do business in my state of residence? Lets say i open bank accounts in wyoming and list the wyoming address withthe brokerage firm I trade through but all trades I make will be made from my home in a state other than wyoming. In this case, would I have to register as a foreign entity doing business in the state I will be actually trading from?

    Anyone have any ideas? thanks
     
    #34     Feb 21, 2012
  5. Yes because the business is actually being run in the state you are actually trading from.
     
    #35     Feb 21, 2012
  6. Consider a trader who is always on vacation trading from different states allt he time? What hapens there? Also, what about the trader who owns, say, 5 houses in 5 different states? Must he foreign register his LLC in each of the states he owns a house in if he will be trading from those locations? What about the perpetual vacationer? Does he have to register his foreign llc in each state he travels to in order to make trades from each of those states?

    Just some questions for thought.....any ideas?

    Thanks
     
    #36     Feb 21, 2012
  7. No it depends where his normal residence is.

    What does he claim as his state of residence on his personal tax returns?
    Where is his driver's license issued?

    Just because it is possible to conjure up some difficult cases will not prevent your state's revenue department from assessing, especially since your case will not be so hard. You can call them up and they will be happy to discuss it. They are very used to this issue from people who incorporate in tax-free Nevada and try to claim they are doing business there and not in their home state.
     
    #37     Feb 21, 2012
  8. suppose i open bank accounts in wyoming and change my license to a wyoming address, but all my trades take place in new york? do they investigate where trades were actually placed?
     
    #38     Feb 21, 2012
  9. You might get away with you never know what investigative means they use.

    Among other things you would be committing offenses in both New York and Wyoming by failing to notify of your correct residential address for your driver's license. Cops ask where you live now every time they stop you.

    Also you would be doing business in NY without filing a tax return or obtaining a business permit which is also subject to penalties.

    You can look up all of the discussions on the Internet about incorporating in Nevada and all of the advise is not to do it and that it does not relieve you of filing in your own state.

    .
     
    #39     Feb 21, 2012
  10. take an ethics class
     
    #40     Feb 21, 2012