I heard this too, however when I used to trade retail I didn't have an LLC and my accountant made me pay the self employment tax... fwiw
I don't think it's an - either / or - question. A third option is to form a corp that you work for that you pay for investment/trading advise. Then what ever benefits you have trading as an individual you still have and also can take advantage of health and benefits from the corp and have enough income to take advantage of the SS without paying the maximum amount. Just an idea.
I see we have the Blind leading the Blind here! A $200K Loss and a $100K Gain in the same tax year is taxed as a $100K Gain.
People with small accounts donot form entities and trade. Most accounts range from 20,000 to 80,000. You buy 200 shares of BIDU and you are done. As far as idle time is concerned, you got more than me.
file as average joe, and your trading profits will be considered as "ordinary income", so don't have to pay SS\medicare\self employed taxes. same as with trader status. from tampatrader82 true. this is , what one of the accountants actually recommends,when i asked question about entity for trading.-you not going to save any money with LLC or C,but you do need to have certain SS score at retirement age for medicare and other benefits. best way to get there,he said-put some salary on your 1099(about 5K-6 a year, as taxi driver or something like that) and pay minimum SS tax from this salary.
Generally there are benefits to forming corps for small business even the one man show business. I'm not talking specifically about trading but the basic strategy should be the same. It's a pain and a little bit of work but it is worth it as far as tax savings and tax deferment is concerned.
You got that right, HT2. I've had it all figured out long ago, no more work for me. You keep workin' at it, all in good time, don't give up. Good luck and good fortune.
Unless you have some good info to contribute instead of talking trash, please leave my thread. I will get SS and pension checks from my previous job so it's not like there are no safety net. Hopefully the trading income will be so consistent that I dont even care about the SS check 20yrs from now. My thinking is staying retail and not pay into the SS program since it may not be around or the benefits are so little compare to what I put in. Thanks to all that contribute with some very good info.