Hello All, I would appreciate if you could help me figure out what corporation to start. I intend on trading exchange traded products daily. I will not have any long term capital gains; my holding period is going to be less than one month. I do not intend to take money out of the corporation. I will re-invest all profits and retain 100% (if possible) of my operating profit. I will be doing about 1000 trades per year. As a side note, I have a job that pays a livable salary. I do not intend to quit that job since I work on an evening shift. Should I go with C corporation, S corporation, or a LLC? What corporation is the most tax beneficial in my situation? Thank you all for your help, Fullset
Do a single member LLC or a General Partnership if you have a spouse. This will allow you pass through accounting which is much simpler and less headache than running a Corp.
But I will pay a higher tax rate when done under personal accounting as compared to a corporation right?
As I said on the expert on this. However I believe the corporate structure provides the highest tax rate. Will first have to pay a corporate tax and you also have to pay a personal tax when you pay yourself your salary
I will take a very minimal salary. $1 if I can. I need to grow the portfolio and bigger the balance, the better it is for me.
But eventually you will need to collect your profits and you will be double taxed then. If you do LLC or partnership as mentioned earlier you avoid double taxation but still pay tax as you normally would. I don't know if you have special circumstances but as one guy trading there really isn't a "tax edge" from establishing a separate legal entity to trade through. Either the IRS acknowledges it and double taxes you or ignores it and taxes you as if it's regular income.
No special circumstances. I am looking to retain my earnings as much as possible in the beginning, may be the first 5 years. I want to reduce the tax burden during that time.
You have absolutely nothing to gain by forming an entity with your circumstances and choice of products to trade. With a job, you can never claim this is your business. So you will never be able to turn capital gains into ordinary "earned income". With a S corp, you have nothing to gain either as everything will flow to your personal taxes. Just don't bother. Hint: Find a trading entity and look up public records as to what is their org structure. They are not corps. They are LP or LLC. And as a single member trading stocks & ETFs, they get you nothing. Disclaimer: IANAL