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once you make it a proper business, you will pay a bit "more" for some things (market data being one)... but it is well worth it when you can write off expenses and fund your own retirement, etc.. which "reduces" your profit.. and helps you manage your overall tax burden.
I have an LLC for my technology consulting, so I just trade one of the LLC's account in addition, but most of my trading is really on IRA account.
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I've read some of the articles referenced here, and some of the posts, but can someone who says a corp of some kind is better than reporting as a sole proprietor just bullet-point it? Maybe just 3 reasons. I see all this generalized stuff, but I don't see the real benefit, except to the company who you pay to do the paperwork.
On the presentation, just take a look at slide 7, and 41-44... those are the main benefits, the rest are all manuvering to minimize the tax liability...
I only disagree with one thing that most people say that shouldnt be done. A beginner would benefit greatly from having a SMLLC-SCorp setup from the start. The cost to setup a proper LLC will run you about $500-600 from a number of different sites, it is always wise to get the LLC done on your own state.
As long as you are going to capitalize it properly, and by that I mean around $20-30K (ideally $50K), the costs to operate the LLC are minimal and you will get from the start the ability to deduct everything you need to... even better, with your own business you can also move the IRA's into a soloK account and then do other things with that money that you could not otherwise do...
that is just my opinion and my own preference.. of course, the above doesnt work right if you are doing it with $5K.. as it would represent a big portion of your trading funds, but again with $5K one should be trading forex and microlots to learn to trade in reality, and should stay away from futures... a lot better to learn to trade risking $2-3.00 per day or even trade, than risking $50-100 and blowing up on no time.
btw, itemizing does not mean you can write everything off the same year... I believe your deductions must not be a lot, but at the same time.. I guess it all depends as to what you call "deductions"...
I like to write off all my computers, training, software, market data expenses, subscriptions, etc. without limitations... I also like to "deduct" my 401(k) contributions to my own retirement plan, along with my life insurance payments and other "deductions" aka benefits that I decide to provide for myself that fall within the law...
I deduct things like my office equipment using section 179 so I can deduct it all at the same time. I do not deduct anything currently where I have to depreciate it, as I used to when I owned rental property. But this doesn't answer my question as to why a corporation is necessary for these deductions?
Another common belief, that a corporation like an LLC provides protection for personal assets, is misunderstood--if it were that easy we would all just operate under an LLC and be liable for nothing.