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What Type of Business Should a Serious Trader Use to Maximize Tax Benefits?

What Type of Business Should a Serious Trader Use to Maximize Tax Benefits?. Presented by: Traders Accounting. Traders Accounting. www.tradersaccounting.com learn@tradersaccounting.com 800.938.9513 15396 N. 83 rd Ave Ste. D-100 Peoria, AZ 85381.

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What Type of Business Should a Serious Trader Use to Maximize Tax Benefits?

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  1. What Type of Business Should a Serious Trader Use to Maximize Tax Benefits? Presented by: Traders Accounting

  2. Traders Accounting • www.tradersaccounting.com • learn@tradersaccounting.com • 800.938.9513 15396 N. 83rd Ave Ste. D-100 Peoria, AZ 85381

  3. What Type of Business will Best Serve You? • C corporation • LLC • Limited Partnership • Sole Proprietor There is no cookie cutter approach to tax savings, each type of business has plus and minus attributes. Talk with a Traders Accounting Professional to determine which would be best for you.

  4. Benefits of Trading in a Business • Increased cash flow • Asset Protection • Psychological reasons

  5. Downside to Trading as a Business • You must learn to document • You must learn how to keep your money separate • You must learn how to have a meeting once a year or more • You must learn how to deduct your expenses

  6. Sole Proprietorship • Commonly called Trader in Securities or Traders Status • If you qualify, no election necessary • Qualifications? (IRS Pub 550) • “You must seek to profit from daily market movements in the prices of securities and not from dividends, interest or capital appreciation” • “Your Activity must be substantial” • “You must carry on the activity with continuity and regularity” • Benefits – No cost to set up • Concerns – Qualification & audits

  7. Benefits of Trading in an Entity • While you must be an active trader, you do not have to adhere to the rules of a Sole Proprietor • Deduct expenses • Asset Protection • Generally fewer audits • Psychological

  8. Downside to Using an Entity to Trade In • Cost (at TA $395 plus state filing fees) • Learning curve in treating your business as a business • Annual meetings

  9. Benefits of an LLC • An LLC is a flow through entity • Profits and losses flow through with same characteristic • You must trade as a partnership • Asset Protection • No payroll tax due if you are trading • Ability to set up a self-directed 401K • Deduct all of your trading expenses • This increases your cash flow • Able to make the mark to market election

  10. What Must an LLC Have To Be a Viable Entity? • Articles of Organization • Operating Agreement • Membership Register • Membership Transfer Ledger • Minutes & Written Consent Forms • These should be done for your organizational meeting • Banking • Brokerage • All Members and managers decisions

  11. Downside of using an LLC • Cost • At Traders Accounting we charge $395 plus state filing fees

  12. Benefits of Trading in a C Corporation • Medical reimbursement plan • Income Splitting • Deducting expenses • Lots of asset protection

  13. Downside to Using a C Corporation • Cost to set up (TA will set your C Corporation up for $395 plus state filing fees) • Annual meeting • How do I get my money out?

  14. What Constitutes a Business? • You must have a profit motive • You must carry on the activity in a businesslike manner • The amount of time and effort you put into the business • If you are not profitable do you change your way of doing business See IRS Pub 535 for other items

  15. OK, I Get It! • How does a trader go about setting an entity up?

  16. You Set it Up • It can be done • Most of us should concentrate on our trading, not learning how to be a para-legal • If you are audited or sued, do you have the proper documentation?

  17. Attorney Set it Up • Generally most attorneys can set up entities • Do they know what a trading entity should have as far as minutes & resolutions? • Cost

  18. Your CPA • Generally speaking, most CPA’s set up entities • Does he/she know trading? • Cost The Truth is that most professionals use boiler plate documents!

  19. Nevada Puppy Mill • Be careful!!! • Generally it’s best to set your entity up in your home state

  20. Traders Accounting • Everything you need for only $395 + your state filing fee • We understand trading

  21. Free Consultation • Traders Accounting understands the importance of making the correct decision • Free 30 minute consultation with one of our coaches to help you decide which is the most tax efficient business type • Don’t be fooled by those puppy mills out there that will try to convince you that one size fits all Call 800.938-9513 Ext. 215 to set up an appointment to talk with your business coach

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