Our Trader Entity Selection and Formation service is designed for the retail trader. Conducting your trading business in an entity unlocks several additional tax benefits.
The first step in the process is to determine if you qualify for trader status. Before you sign up for this service we highly recommend a 30-min consultation to determine your status.
Formation
During the formation phase our team works with you to ensure a proper tax plan is in place. The following services are performed:
- Entity Plans to include ownership percentages, initial capital contributions, and profit allocations
- Articles of Organization
- Federal Tax ID (EIN)
- Federal Tax Elections to include S-Corporation Status and Mark-To-Market Accounting (if applicable)
- Accountable Plan
In addition we have an of-counsel lawyer to provide services to our new trader business entities. You should consider a legal counsel for legal services. Our attorney performs the following:
- Customized operating agreements for Single and Multiple Member Limited Liability Companies.
- For Partnerships our attorney provides customized standard partnership agreements and resolutions.
- For C-Corporation clients our attorney provides customized standard bylaws, minutes of the first shareholder meeting and resolutions; resolutions for those electing or considering S-corp status; and preparation of state and federal S-corp election.
We charge a flat fee of $1,000 which includes CPA services, attorney services, and applicable filings fees. Filing fees typically range $125 – $200 depending on your home state. If you have any questions regarding our entity formation services feel free to contact us.
A limited liability company (LLC) is a corporate structure whereby the members of the company cannot be held personally liable for the company’s debts or liabilities.
Limited Liability companies are essentially hybrid entities that combine the characteristics of a corporation and a partnership or sole proprietorship. The default classification of single member LLC is sole-proprietorship where the tax payer would file a Schedule C.
A general partnership is an arrangement by which partners (2 or more) conducting a business jointly have unlimited liability, which means their personal assets are liable to the partnership’s obligations. The default tax filing for a general partnership is IRS Form 1065.
A Subchapter S (S Corporation) is a form of corporation that meets specific Internal Revenue Code requirements, giving a corporation with 100 shareholders or less the benefit of incorporation while being taxed as a partnership. The corporation can pass income directly to shareholders and avoid the double taxation that is inherent with the dividends of public companies, while still enjoying the advantages of the corporate structure.
Requirements include being a domestic corporation, not having more than 100 shareholders, including only eligible shareholders and having only one class of stock.
We typically enjoy this type of structure for traders as employee benefit plans and health insurance premiums can be deducted by the business.
A C corporation is a legal structure that businesses can choose to organize themselves under to limit their owners’ legal and financial liabilities. C Corporations are an alternative to S corporations, where profits pass through to owners and are only taxed at the individual level, and limited liability companies, which provide the legal protections of corporations but are taxed like sole proprietorship.