I just got done reading the thread "Another one hangs it up" http://elitetrader.com/vb/showthread.php?s=&threadid=69400&perpage=6&pagenumber=1 and realized that maybe, it wouldn't be so bad for him, if he established his trading activity as a business. Then, if/when he ever needed, he would have something to show..something like "I ran my own business"..That always looks good on a resume. Not only that, but materials..like your 21'' LCD's can be deducted . Is anyone set up this way? - nathan
I never thought of it that way - as a resume BOOSTER. Hardly a boost, speculative "daytrading" is looked upon by 99% of the people in the USA as a bunch of kooks and wildmen, nut cases and the like. Several steps lower than people who might tend to "go postal" when things get a little rough out there. But forming your LLC with a more nondescript name, a more respectful name would certainly make a resume LOOK nicer at first blush. e.g. "West Coast Enterprises, LLC" rather than "Billy Smith Trading Partners, LLC"
I was thinking of "Billy Bob's Big Swinging Dicks and High Rollers, LLC." Or maybe " Hans Schweaty Ballz unt Sauerkraut Bourse Trading, GMBH." The "international" aspect gives it more pinnache, I think. Anyway, setting up trading as a business has some disadvantages such as pro status. Pro status means higher costs and potentially more scruntiny. You should treat your trading as a business. Not necessarily set it up as one.
If you are referring to "professional" for the fees charged for real time quotes, it is true the the NYSE charges more for anyone in the business. An entity such as an LLC is defaulted to as a professional. An individual, in theory, needs to fess up and admit he is a business. Assuming one can sleep at night with a little bit of non-disclosure, it is fairly easy for an individual to sign up for the services that provide real time quotes as an individual, and forget to mention that he's in business either as a sole proprietorship or as an LLC or corporation. As to more scrutiny? I've not noticed any additional SEC scrutiny, though I'm not an expert there. There is definitely LESS scrutiny as far as federal and state income taxes are concerned. As proof: ask your broker if they send form 1099-B to their corporation clients, same as they do for individuals. The answer for most brokers will be NO, the IRS does not want them for corporations because the IRS trusts corporations, whereas individuals need the 1099-B as a method to tell the IRS what's going on. Taken a step further you might say - well IRS doesn't want 1099-B for stock options sales... so what's that mean? The answer here has nothing to do with trust. The 1099-B rule was made before Congress realized what options were. I have no clue why they simply don't require it now, 20 odd years later.