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People basically can have names for their business that are convenient fictional names that sound good, without incorporating or otherwise establishing a legal entity separate from themselves. Very common.
Bob.
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Edit: As @SMCJB pointed out, you can also have a corporation or an LLC (Limited Liability Corporation) that is doing business under another name using a DBA name. You just like the name better for business purposes.
When one door closes, another opens.
-- Cervantes, Don Quixote
People who file Schedule C's have a higher audit risk than those that do not. It is because the line between personal and business finances (such as for a sole proprietor) can get fuzzy. It is mainly because so many people try to cheat the system and it is easy to do on a Schedule C.
1) It has been a while since we set up our LLC trading accounts, but there is more paperwork. As you state, the liability protection does not extend, but for us it was more about the accounting and taxes (and we had it anyhow). It all ends up flowing to our 1040 anyhow.
2) It has been so long we've been trading professionally that I forgot about the data costs.
CME flattened data rates across pro/non-pro, so there has been no difference in the two over the past few years, as I recall. There are some cost benefits for non-pros on other exchanges like CBOE, Eurex, and stock exchanges, but we have not participated in those markets for quite a while. One thing, like death and taxes, I know to be true: CME is gonna get paid.
I'm setting up our new accounts on IB since we had to migrate away from TradeStation Securities, but IB's market data rate pricing is structured differently.
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals, U308 and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,058 since Dec 2013
Thanks Given: 4,410
Thanks Received: 10,226
Which is why the separate Bank Accounts is such a good idea. I also have my investments and my trading accounts at different places. That way there is no confusion as to what is considered my trading business versus my investments.
A google search for CME Schedule 5 returns something that is effective Apr 2020, which I'm pretty sure is not the most recent fee schedule. It lists Pro data fees as $105/month/exchange (it's actually $110 now) vs several Non-Pro options as cheap as $3/month for all 4 exchanges.
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals, U308 and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,058 since Dec 2013
Thanks Given: 4,410
Thanks Received: 10,226
Sorry to reply to my own post.
But to make this even clearer I also make transfers between my accounts for expenses so that there is a data trail. For example transfers from my business account to my personal account for office expenses (% of utility bills based upon square footage of my office vs entire house), second internet connection (first is not deductible as a business expense). Also transfers from my personal account to my business account for cell phone (wife and kids are on my plan, so their share of the account is not a business expense). When I buy office supplies I use the business account. etc etc. Every one documented in Quickbooks & a spreadsheet.
Just FYI I actually had my business expenses (not my revenues though!) audited several years ago. While it was annoying to have to spend the time replying, it was actually a reasonably simple process for me to respond. I already had all the data, spreadsheets and Quickbooks so it was just a case of pulling it all together. Good record keeping now can save you a lot of time in the future!
On a tangent, I'm also a believer that truly understanding all the numbers (in this case profits and expenses) gives you a better understanding of how everything really works, and from that better understanding comes a better run and more profitable business. I actually think the same applies to trading. The more you understand PnL down to the $1, the better the trader you will be.
Thanks for sharing. Are you using TS for data or another provider? I was paying $2/month each for Nymex, CBOT, and CME, delayed, on one of our accounts with TS.
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals, U308 and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,058 since Dec 2013
Thanks Given: 4,410
Thanks Received: 10,226
I have a NYMEX seat, which makes me a member, which makes me a professional - which is a pain! One nice thing about being a member though is 'data netting'. CME Data fees are per user per device. But under 'data netting' I pay the CME directly for my data, and I then have no device restrictions. Hence I don't pay Tradestation or Trading Technologies for my CME data.