Setting up a LLC for Forex trading

Has anyone set up a LLC? What benefits do you realize?

Do you need to be classified by the IRS as a professional trader as a requirement to form a LLC?

Anyone can form an LLC.

As far as taxes, check this out.
http://www.smartmoney.com/personal-f...-trading-9531/

If you're trading for yourself, forming an LLC is a waste of money. What does the limited liability matter, are you going to sue yourself? You'll be paying to form the LLC, but there are no tax advantaged to having a LLC...there are no positives! Unless you enjoy filing annual statements with your state.

If you're trading for others accounts, that's a different story. But at that point, you already have an accountant and lawyer you'd be speaking with about this, not us.

For personal liability issues. What if a neighbor sues you if he slips on a wet slippery steps after consuming a bottle of brew that you provided?

Thats why God invented "Homeowners Insurance".

What if home owners insurance is not enough?

The more homeowners insurance you have the better the lawyer you get to defend you (from the insurance company) if a situation arises. Do you really think the insurance company will just hand over a $2M settlement without a fight?

And besides, if you are serious about trading you wont have time to have friends over to party and potentially slip on your wet steps

Off or on?

Don't waste you time with a ''Single Member LLC", unless you deal directly with and/or have clients, to where you would need the asset protection if any problems/suit arise. There are NO tax benefits for being a Single Member LLC. It's treated just like a Sole Proprietorship (which is another pointless business/tax structure). Your best bet is to, set up shop as a single professional trader -- if you don't have clients or need the protection of a Corp status.

Independent trades are taxed differently, but only if you trade fulltime. If not, you will have to file your trading Profits/Losses as Capital Gains (IRC 988). If you do trade fulltime, and have NO other sources of income, you may be able to to file as a Commodities Traders which benefits from the 60-40 Slip (IRC 1256) Just do a Google search for IRC 988 & IRC 1256 for more information.

Now, if you really want to benefit from an LLC, start a "Partnership LLC". For a Partnership LLC, there has to be a minimum of two members on the lien in order to benefit from the tax advantage. These members can be you and a relative, you & friend(s), you & business partner, etc... If you decided to go this route, you will need a partner. The best partner you can have is someone that is usually "family" and has not vested interest in you company. I will say this again. Keep it in the family and give your partner of choice a small steak in the company 1%, 5%, 10% or 15% ... which means, you will have to pay them a yearly, as they are investers/partner in your company. Basically, by the IRS ideal, you give something and get something.

To keep it simple, just Google all this information and come up with a plan that would most match the way you want to do business. Also, do not forget to give to charities. Can be a a nice tax deduction if you give to needy organizations.

If EVER you take 20 cents of someone elses money, you had best have covered your nether regions with some form of liability protection.

while an LLC affords you the liability protection of a corporation and many of its tax benefits, you are a PARTNER in the LLC and as such your income is taxed in that manner.

As a C corp, you are hidden behind many a wall, can be paid $1.00 per year yet enjoy the "perks" of the corporate largess (which then become writeoffs to the corporation) such as a home, car, yacht and homes in the caymans and ALL perfectly legal.

Lawyers like LLC's because they ARE partners in the firm, and this handles a multitude of liability problems in one stroke, but the reason most LARGE businesses remain corporations is because of the really advantageous tax benefits, even with the "double" taxation on dividens, cause who says you got to pay dividens ?

Your choice, but i remain a c corp and shall remain that way forever.

enjoy and trade well

mp

I'm thinking an LLC setup would have been a very good idea if you lost thousands from the Swiss mess. If your LLC was underwater by thousands your LLC would be bankrupt but wouldn't touch your personal net worth. So, some on this thread were 'joking' about suing yourself or slipping on something but I guess it DOES makes sense when you can lose more than the value of your account. In my state setting up an LLC is very cheap and easy. I don't currently trade under and LLC but I think this is going to change.

Two reasons to have an LLC, one is of course what it mean, you have limited liability which is of no use as a trader unless you are trading other people's money. The other real advantage is the tax advantages you get, which are numerous. I have an LLC for another business, and the tax advantages are way to numerous to list here. I would advise that anyone interested in getting an LLC is to file in Nevada, and talk to a tax professional.