How Traders Use LLCs to (Legally) Save $69,000/yr on Taxes
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- Опубликовано: 28 апр 2024
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Saving this video for 3 years later when im finally profitable😅
Me too.
Newsflash. You’ll never be profitable. 95% of retail traders lose money. But keep giving this guy views.
That’s an ape there!
After 4 years now I need to learn how to pay less taxes legally
THIS IS AWESOME!! This is one of the subjects that's barely covered on RUclips... at least to the extent that it deserves. Thanks for this! ❤
Very interesting thanks for the advice. The problem is finding a CPA that actually knows the code for traders
We asked, and you delivered Ross!! 🥳
Thank you so much for this more in depth explanation on tax and saving. This is a great episode. I'll watch it five times..
And hope you make more like this!
Thank you, Ross for touching the subject. I have been searching for a detailed explanation. This is amazing. No other video I have seen on the Internet covers it this way.
Genuinely appreciate your help with this 🙏
The other issue I didn't hear him mention is a brokerage will make you regoster as a professional trader if you try and setup your acct as an LLC or corp. Even if you are a newbie which means your trading fees are going to quadruple every month. So you better be making some serious profits before you do that or your going to be spending a whole lot on expenses if you are unprofitable
😮😮😮😮
Dont forget there is Rule 72(T), which allows you to take contributions before 59 1/2, but you must make them on a consistant basis that is approved by the IRS. So to get contributions for $3,000 a month with a seven figure account, would totally be do-able before 59 1/2.
Thank you so much Ross!! This is what I looking for in details ..Really no one giving these info like you doing as always .God bless you !!
There are much more deductions for an S Corp besides the things Ross mentioned, great video by the way. Your vehicles can be purchased (company vehicle) in the corp and completely deductible, including gas, insurance, tag, etc. Also, you can depreciate the vehicles for a further deduction. Corporate officers are also allowed a housing allowance, meal allowance, some entertainment allowance, etc. You don't have to be rich to pay little or no tax, you just have to do your research and be smart about it.
Thank you
that was extremelly informative thank you for sharing
Wow
The paperwork for LLC brokerage accounts is really annoying though. Far more intrusive than for personal accounts. Can’t really do it online, actual paper is required, with wet signatures. They want photos of your driver’s license even though they don’t for your personal accounts. Business checking accounts are the same way. You will pay substantial fees for market data too. Worth it in the end, but be prepared for it.
Thank you so much for the info you shared 🎉👊👊
Thank you so much Ross for sharing your knowledge and wisdom. Much appreciated
Needed this, thank you brother. This is phenomenal information 🔥
Thank you for sharing. Love this video!!!
Much needed content, thank you!
Awesome information. Thanks
Efing Great Video! Great Info Ross!
Awesome video-great info- thx. Ross
Yes! Thank you for sharing your knowledge ross
Great information.. Great share.
Love your channel, man. Helps a lot
Thank you so much. Very helpful
Thanks Ross love the video well explained!! Thank you 🙏
If you trade futures you’re taxed at 60% longterm capital gains rate and 40% short term rate…up to top marginal tax rate.
Help
Okay. You earned another subscriber😊
Great info Ross!
THANK YOU 🙏🏼 for covering this topic in trading. Will save it for when I get there 😊 sharing it with others.
Muchas gracias!!!! Great information!!!! Thank you
This is great info, thank you!
I've been waiting for this video Ross!
Awesome video! Thank you!
awesome info
Ross has been looking at my search history... I was literally looking up trading as an LLC vs S-Corp last night
Thanks Ross for the awesome video.
Could you please do another video on how to trade with IRA account?
amazing- THANK YOU
Not sure, but something to considered.... A "full time trader" under I R S classification have to meet certain requirements. IE Number of trades etc... Worth checking out before declaring sub chapter S status and being able to deduct biz expenses. If you don't meet their requirements deductions and biz expenses are a mute point. Just saying Worth verifying
Ross, it's 59 1/2 and you must have the roth ira for 5 years. good info, thank you.
IRS Section 1256
Great video. Does qualifying for Trading Tax Status change the type of entity?
One thing to be csreful of here is that the amount you can contribute to the solo 401k is based on your overall compensation. You can generally only contribute up to 25% of your salary. So actually in your example of a 50k W-2, you can only do an employer match of 12.5k. However, you can do employee deferrals on top of this.
After tax contributions can be 100% of W2 box 1, or the annual limit, whichever is less.
Deferral?
@@shyamvai "Employee deferrals" are what the tax code calls 401k contributions by paycheck deduction.
Thank you
Careful differentiating S Corp election for a C Corp vs S Election for an LLC.
They are the same.
However, a single member LLC that does not elect S must file on Schedule C of the 1040 personal return which would be subject to the 15% SE tax.
Also
Lots of people think incorporating in a particular state can be state tax favorable. Unfortunately, the income is supposed to taxed in the jurisdiction in which it was earned...
A K-1 distribution from an S Corp is taxed at your normal earned income rate when it flows through.
Generally, you have good ideas; we just need to be sure to continue to protect the public which you did nicely by recommending many times your listeners seek a qualified CPA.
Good stuff! Love the 401k and Roth ideas! (Also look up setting up a living trust and using a "back door 401k"
Do you have any tips for W2 earners whose primary income is w2 but they also make trading income close to the w2 income? My w2 income makes me ineligible for roth IRA account, so that option is off the table.
Thank You ❤
Are you able to depreciate the equipment over several years or just the year the equipment is purchased?
Do we need to file for Day Trader Tax status in the S corp? Or is just setting up the S corp all I need to do. Also did you do the S corp in Delaware?
now... if only I could make 100k a year instead of loosing it... LOL....
And you got a new subscriber and thumbs up
Hi Ross, do they need receipt for expenses in taxes?
Great explanation 2 mins in and I finally have my answer . Just pay regular taxes at the end of the year until I make too much money 😂 thanks
Great video! Can I still get a 2 week trial?
🙏🏿 thanks
this is GOLD!!!
What the app should I use for set up?? Quick books, ADP? Or maybe other applications?
Thank you
hey ross! how much do you need to make annually for it to be worth creating a llc/scorp or how long would you need to be consistently profitable? im on the verge of profitability and want to make sound financial decisions
wow Ross, THANK YOU
Hey ross im new to your channel but im wondering if you could go over this information but trading with a Prop Firm under an LLC, could this still work under that ?
Whats leftover to keep in your account to compound growth if its all taken out?
If i hadn't subscribed previously (actually I had) I'd certainly subscribe after this episode. Many thanks!
Thanks for the great video! Can I also deduct tax if I use my LLC or S corp to pay medical insurance for myself as an employee?
Can we do vehicle purchase deduction used for driving to store for office supplies etc?
Also, what I see is that you can take the home office and other related expenses if you are a 475f marked to market trader. Why do you say you need a business entity like s-corp/llc for this reason?
Great info, thank you! Is the level of asset protection the same for S-Corp and LLC or is one better than the other?
With an escort, the income flows through to your personal tax return. With a s corp, the corporation would pay income tax on its profits if it has net profits and then you would also pay your taxes as an employee so you could have double taxation.
Should that say, "with an LLC" instead of "escort"?
In the s corp pays you a salary, does it count as real income so you can pay medicare, ss? That will give you ss and medicare. There is a roth 401k?
How much do I need to gross from trading to create an LLC? I was chatting with a close friend in my trading group about creating an LLC to trade under
What about Traders from outside the US. We pay taxes in US and then again in our country? And if we pay taxes in US, what do we pay exactly?
Why not a Roth IRA? You can trade futures like the emini contract but you do it through a custodian, no taxes on earnings
So you start the s-corp but your trading isn't profitable how do you assign s salary when it's in the red
If you use S corp, can you use MTM accounting even if you don’t qualify as trader by IRS?
Can we still do this if we trade while at our day job that pays the bills, meaning I just day trade for a side hustle?
Personally I did a pass through LLC and realized that they make me pay professional market fees and that killed my profits!!!
Once I consistently make good money it's good, but I went back to trading outside the LLC and filed mark to market this April.
Does mark to market allow for the same deductions an LLC would?
@@certifiedfinest5065 sorry I just saw this. Yes it does. The key is filing before the April 15th deadline... which I didn't know to do when I first started trading.
Please what broker or platform i can use unided states after i get my s Corp.
Where does the business get its initial finances to trade with
All the comments are saying nobody is making money, only losing money
I did it under a c corp, but an llc works fine
This should’ve been your first tutorial video
How much we pay to open S Corp and how much accountant charges monthly yearly?
HA! For a minute I thought you went British on me. It took a minute to get the gold reference. I'm sharp like that. HAHAH.
Thanks again great video! So, are you thinking when you reach 59 1/2 you trade fully out of the ROTH IRA and just money for cost of living, etc.? Then just collapse your S-Corp? Good stuff man thank you
At that time I might help grow my children’s accounts or do something like that.
@@DaytradeWarrior Great idea man. I'm a couple years away and making "okay" progress. 80% green days even small, so will start following the guidance for the ROTH and start building that out for retirement "help" in a few years. Bad choices from the start so really no retirement - I feel I have a light at the end of the tunnel. Thanks again
I am quite confused and can you please explain.
I have been told that one cannot do Trading or Generate Investment money from Stock Market, under S-Corp. The income generated by S-Corp is treated as Capital gains and is passed to the S-Corp officer.
No deductions are taken against trading or investment income
Great video thank you!! Do you have a video on how to setup a scorp for traders?
That is a better question for a CPA.
Guys. I have a good question. I have opened my LLC. We all is asking for minimum 50k to trade under LLC. Is this how it works? 50k is too much
Ross, thanks for the awesome video. I'm always wondering how much trading I should do before I start, or if a minimum number is required. Obviously, if I make $1000 a year and write off $10,000 in expenses, something is off. I'm slowly becoming more and more profitable and I'm not sure when to make this leap. Thanks in advance to anyone who comments.
I am not sure this makes sense, the solo 401K would only work if you aren't already contributing the max $23000 per year through your normal day job. Would be great to work this up assuming someone has a day job that they are earning the majority of the living income on.
You cannot make contributions to an IRA with unearned income.
Can you itemize all your losses and write off losses?
401K is not tax free, you pay taxes later, when you got retired. You will be paying taxes and getting less money as retiree. You should take it into consideration you may need more money as retiree
Re: Solo 401(k). Might want to double check the rules about having an employer match in your solo 401K.
Bro I don’t know who cooked harder , you or Kendrick 😂 🔥🔥 thanks for sharing.
That's why we need flat tax!!!
Ross leaves out the fact you have to get a virtual address/virtual office for your LLC when trading in these types of broker accounts. The cost outwegihs any benefits if your trading income is less than $100,000. It sounds too good to be true.
What about prop firms (Apex, Topstep, etc)?
I too would like to know this. So far in my LLC, I've been expensing eval fees and booking payouts as revenue. Essentially, they are treated as my "client".
I was wondering, others say you need a certain large capital requirement to open a trading account as a business; Webull’s is $100k. If you start an S-Corp, can you use it as your holding company for your individual trading account?
Good question!
Do you have any video for W2 earners whose primary income is w2 but they also make trading income close to the w2 income? My w2 income makes me ineligible for roth IRA account, so that option is off the table. Also, the expenses for computer, desk etc is one time, you dont buy those every year.
An S-corporation with passive income is subject to passive income tax rules - you failed to mention this. A corporation forfeits its S-corp status on passive income exceeds 25% for 3 consecutive years.
I have a Trading LLC and I’m having a hard time opening a Business Bank Account for my LLC in NYC. Any suggestions??? Thanks in advance!!
I’ve had this trouble too with some banks, just keep shopping around
So I just opened an llc and very beginner-can these not be deducted unless an S Corp?? If I project to be under $100k should I convert to S Corp?
all im hearing is deferred taxes... example solo 401k and you still pay the taxes when you take it out.
Roth IRA is really the best if you don’t want to differ taxes. But differed is okay imo cause it lets you focus on growing your balance today.
s-corps don't protect you from personal liability or bankrupty...... because, WHO owns the company? It's you personally as the shareholder, so your shares are worth something (assets-liabilities of the s-corp)
When trading out of the Roth, that Roth account is under your S Corp correct not your personal Roth
A Roth is in your personal name