I can find a group of active traders (my ex-coworkers) who are wealthy and don't need to have leverage. Do you think they will join a prop firm if I start a sub-LLC? What benefit will they get from joining a prop? How do I start a sub-LLC? How much is the initial cost, and the operating cost? If you currently run a sub-LLC business, what risk do you have as an owner of the sub-LLC?
If they don't need more than 4-1 leverage, there may not be that much of an advantage for your co-workers to join your newly created prop shop (they can get that on their own, unless they are licensed, in which case they can get maybe 20 to 1). The advantages to them would be to get much more intraday leverage and reduced execution charges. You would need to establish a relationship with a broker/dealer so that you can get reduced rates and volume discounts. You send an LLC application into whatever state you want to incorporate in. It's scary how easy it is. Your initial costs are the LLC formation (~$500), initial funding of your trading acct (unless your just going to use your co-workers money) and office space (unless you're going to have them trade wirelessly out of your car). If they're going to trade from home, you are in good shape. Otherwise, office costs (rent,computers, T1s, utilities,furniture, etc.) will be your largest expenditure. Your risk is only to lose all the money put into the trading account and getting a margin call.
Is this type of LLC (trading firm) different from other LLCs? Do I have to specify the type of business in my filing. They will trade from home. Do I have to register to do business in the all the states that they reside? MA LLC law doesn't favor the general partner. The general partner has to pay the SS tax for the profit. Can I just register in Delaware or Nevada and operate my LLC at home in MA?