+1 Surf. you can open LLC without anyone's help. it's really easy. cost about $145 to file in my state. charging $1000-2000 for simple 1 -3 member LLC -it's a crime
The formation is simple. The operating agreement is easy for a single member LLC. IF you have other members, you might need an attorney to look over the doc the members write up to make sure it's enforceable and meets your goals.
----------I could screw up because trading LLCs are complicated to set up---------- how exactly it's different from lemonade stand? in fact-lemonade stand LLC is probably more complicated,cause you have to deal with "food" and people
What is the reason you want to setup LLC while trading for yourself? You try to protect your (loss) liability? Do you trade a lot of uncovered options?
my question would be why have your investments in your name rather than an llc,lp, or trust? given you have a decent amount of money
I am not sure about the rules in your certain state, but the costs should be minimal. All you need is an EIN (free or used to be), an operating agreement and to file the proper paperwork with your state's business registration department(it was $100 in my state). You can find free versions of sample operating agreements online and just reword a lot of the parts that either don't apply or need to be changed for your specific situation. All in all its pretty easy and cheap once you do the research on the requirements for your state.
Thanks to you and others for the replies. So, basically, setting up a multi-person LLC (the guy I spoke with said DON'T us a single-person LLC because they are disregarded entities for trading purposes, so you can't legitimately use "trader" status within them) is a turnkey process? Which makes sense, since they've been around for long enough. So, what could the guy have meant by the possibilities of screwing it up? LLCs aren't just for trading, obviously, but I was reading that if you put that it is being formed "for any legal purpose" (or words to that effect), that basically enables you to use it for trading or anything else and then when you do your taxes, you would flow your trading income and expenses through the LLC and it would just as straightforward as if you were using the LLC to run a restaurant. Again, this is all new to me, so I might be missing something crucial about the "trading-specific" aspects of the LLC structure. If so, please, someone point it out. Are there special forms I have to fill out as a trader that someone running a restaurant would not need to fill out, for example?
Be nice to write off expenses, too. Also, say I have a year with large losses, I can deduct them immediately, rather than at $3K/year on a 1040, and use that deduction to get back taxes paid previously.
Would these LLCs be good for multiple members too like upto 35 or 99 where one can charge hedge fund like fees under the name 'operating fees' etc. Someone on ET, few years ago, it was mentioned LLCs are the best way to bypass the hedge fund set up headache and expenses. Cheers!