I have always traded on my own full time, soon I plan on hiring a second trader (my brother) and an assistant; later an assistant for him as well. Do any of you have experience with Incorporation or L.L.C., which is the better way to go? Also, I assume an EIN is also a good plan with either. If any of you have done this I appreciate your help. TIA
doesn't everything on this site start with...it all depends. well that applys here to. lots of factors go into the decision of which entity to form. i am in an LLC with my brother and several friends. we are involved in more than trading. we are more like a cross between private equity. investing in asset classes/businesses as a group and a prop firm trading our own accounts. not offering legal advice here, but an LLC is easier to set-up and there is less paperwork. Corporation is more paperwork, but provides more personal liability protection. i would personally stay away from a one-person LLC though. check out http://www.greencompany.com/Traders/TraderEntities.shtml either way an EIN will be a definite.
Generally the "entities" are a waste of time and money. But, as stated above, it depends. Are you talking retail or licensed? We don't have LLC's or other entities within our LLC because of the negative tax consequences to the traders and the the loss of "limited" liability as well. Give me some more details, and I may be able to offer a couple of alternatives. Don
That is not exactly true. The professional status depends on whether you hold a securities license, are an investment advisor or work for a financial institution. Just having an LLC or Corp for trading purposes by itself does not qualify you as a "professional".
Don, I am a retail trader. I trade financial futures (my brother still has 1 year left of university, then he will join me). I read an article in futures magazine or active trader magazine a few months ago that made this seem like a logical choice (LLC or INC). LLC seems like it would be a terrible choice, especially for futures traders. Would an ein be a good idea for me? I recently had to move to Scottsdale, AZ and cannot find any lawyers or cpa's with knowledge of what is best for traders Thank you
are you licensed? if not,why an LLC? you want to start a group where each member contributes money? if so,you can go the LLC route to protect yourself from personal liability.
I am not licensed, I believe the info I recieved was not correct, or maybe I completely misunderstood?
I'm no lawyer but I believe the benefit of incorporating is mainly to separate your private assets from your corporate assets. IOW, they can sue your corp, but not you. Your case might be different, but most folks do not need to incorporate.