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Tax Preparation |
| Trader Consulting | ||
| Trade Accounting | ||
| Entity Accounting | ||
| Entities | ||
| Retirement Plans | ||
| IRS Exams | ||
| Testimonials | ||
TRADERS
SERVICES: ENTITIES
FOR TRADERS
Quick
Link: Entities. Start on this page first.
Services: Ready to form your entity? Click
here to learn more about our entity-formation service.
Highlights of a few special strategies involving entities for
traders:
As pointed out in Green's 2011 Trader Tax Guide, there are many good reasons
for traders to consider a pass-through entity, including but not limited
to: attracting less attention from the IRS on trader tax status (vs. a
Schedule C); financially engineering AGI deductions including retirement
plan and health insurance premiums; and having a “do over”
on Section 475 MTM.
- Strategy for year-end 2011: Year-end AGI-deduction strategies.
Setting up an entity before year-end is a great way to save tax money this year and next. You can pay yourself a fee or salary to create earned income as late as right before year-end, which unlocks a full-year of AGI-deductions for retirement-plan contributions and health-insurance premiums.
Sole proprietor business traders don't have earned income from trading, so they can't do these AGI deductions on their trading business. A trading entity opens the opportunity for these valuable AGI deductions. Most traders save over $5,000 in net taxes with this strategy, with income tax savings being greater than SE tax costs on the related fee amount paid.
A late year new entity is also good for considering an emergency Section 475 MTM election for trading within the new entity. If you set up your new entity in Q4, your 75-day deadline for electing Section 475 MTM is just after year-end, so you can see how things finish out on the year first.
If you still want a new entity for 2011, it's important to set it up and do material trading in it by early December. Otherwise, the window of opportunity closes. Last year, we noticed that many new entities we formed in Q4 and they didn't do sufficient trading by year-end, so watch that carefully for this year too.
If you don't want to rush the entity in for 2011, start the formation process in mid December to have it ready to go by January 1, 2012. It's nice and cleaner tax-wise to have an entire year with the entity for 2012, rather than business trading in your individual account too for part of the year. Consult with Robert Green, CPA about all these strategies.
- Strategy for Q1 2012: Entities (a clean start or a "do
over" on Section 475 MTM).
As you approach the April 15, 2012 tax deadline for 2011 tax returns and 2012 Section 475 MTM elections - for existing individuals and partnerships - consider making this special Section 475 MTM election. The deadline for existing S-Corps is March 15th. Section 475 MTM is great for delivering business ordinary loss treatment, exempting traders from wash sale loss deferral rules, and the puny $3,000 capital loss limitation.
For new entities set up in 2012, you have 75 days from inception of the entity to elect Section 475 MTM, under the "new taxpayer" exception, so no matter what you decide to do individually by April 15; you can have a do over on Section 475 MTM in the entity for the balance of the tax year 2012.
For example, if you have a large trading loss year-to-date 2012, elect Section 475 MTM by April 15 (March 15 for S-Corps), or within 75 days of the formation of your new taxpayer entity set up very early in 2012, to lock in a business ordinary loss with Section 475 MTM. If you have material capital loss carryovers to use up, you can generate capital gains in a new "do over" entity by skipping MTM in that new entity going forward.
Conversely, if you have year-to-date capital gains as of April 15 and you want to apply them against a material capital loss carryover, then skip the MTM election and consider a do over on MTM in a new entity for the rest of 2012. Consult with Robert Green, CPA about all these strategies.
Entities - more benefits for traders:
* Entities are needed now more than before to defend trader
tax status because the IRS is turning up the heat on trader tax status
(see our blog
article on this topic).
* Retirement plans: Our strategies are customized for GreenTrader tax
benefit strategies. They offer special features such as plan loans and
the ability to trade forex and futures at many leading brokers and invest
in hedge funds. Learn more here.
A Mini 401k (otherwise known as an Individual 401k) retirement plan —
the preferred plan for business traders — needs to be established
(but not funded) before year-end.
*Some retail business trader entities morph into an incubator
fund, which can have a historical performance record to attract
other investors. During the incubator fund phase, you can't take compensation
of any kind, but you can share expenses with your close friends and family
investors in the fund. Click
here to learn more about incubator funds.
We specialize in entity
formations for traders in all parts of the country. Start with a consultation
to find out if an entity is right for you.
Look before you leap. Don't quickly rush into an entity if you
don't need one.
Consult with us before forming an entity. Either way, we will save you
money. If you proceed with an entity, you can upgrade to our entity formation
service (the best-priced service around), and if you don't, you save formation
and annual filing costs.
Robert A. Green, CPA and CEO of GreenTraderTax, will consult with you
on whether or not you need an entity, the pluses and minuses, the costs
and benefits and which type of entity is best suited for your special
needs. The consultation also covers your trader tax status issues, mark-to-market
accounting and much more.
Ready for help? Click here.
Before jumping into an entity,
find out all the costs and benefits first. Make sure the benefits far
outweigh the costs.
Following are the entity formation costs you can expect to pay with our
firm. We are proud to say our prices are hundreds, even thousands, less
than our competition.
Our full entity formation price is very competitive.
Through our alliance partner for online filings, you pay state filing
fees, currently ranging from $70 (Oregon) to $505 (Illinois). Click on
the BizFilings link below to see their state price chart. BizFilings charges
$97 for their excellent basic service, plus $60 additional for their expedited
service (we suggest this). Partnerships aren't filled by state, so you
save the BFI costs and state filing fees (you only pay our fee). Everything
you need is included in our fee, so click here
to learn more about the details.
In addition to these entity formation costs, you should will have other
annual costs related to your entity if it's an LLC or S-Corp; generally
there are none for general partnerships.
Tax return preparation fees: All entities other than
single-member LLCs (with disregarded entity status) must file a separate
income tax return each year. That separate tax return is the goal of our
strategies. Most of our entity formation clients also use our tax preparation
service. Most traders form entities to take advantage of AGI deductions
like retirement plans and health insurance deductions. There are many
nuances and complexities to executing these strategies right. Click
here to learn more.
Annual state costs: Many states have annual report fees,
minimum franchise taxes or user fees for LLCs and S-Corps. Most states
don't have annual charges, taxes or fees for general partnerships. The
idea is that you can use the state court systems for LLCs and S-Corps
but not general partnerships (GP). Hence, with a GP, you can save on these
costs. Traders don't need liability protection or the court system since
they don't have customers. Therefore, a GP is a good low-cost solution
for many traders. We'll advise you of all these costs during your consultation.
We also list these costs for many states in Green's 2011 Trader Tax
Guide.
Benefits can far outweigh costs: If an entity can save
you thousands of dollars, then it's worth the costs. You can then upgrade
to our full entity formation service.
If not, save on the costs of having an entity, including the original
formation costs and annual reports, taxes and/or fees each year, which
also vary by state. For many traders, having an entity is a wise move,
but which type of entity, in which state and how to structure and use
it is very important. After the initial consultation, traders can upgrade
to our entity formation service, so it doesn't cost extra. Plus, we usually
complete our entity formations within three days time, so you can be up
and running in your business ASAP. Click here when
you are ready for your consultation to discuss entities, trader tax and
more, or to get started with our full entity formation service.
Ready for help? Click here.
Our GreenTraderTax Entity
Consultation and Formation Services are the lowest cost and best services
around. They include everything you need to be up and running within days.
Start with a consultation.
Then upgrade to our full formation service. Click
here to see what's included.
Check out our entity
accounting services too, they are the natural next step after entity
formation.
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For online filings we use Business
Filings Incorporated (BFI). They do excellent work!
Our GreenTraderTax Entity
Formation Retainer includes much of what you need. Robert A. Green, CPA
helps you decide if you need an entity and if so which one is best for
you. Conversely, our competitors sell one of more cookie cutter entities
to all who call on them; whether you need an entity or not. We design
the right entity around your special tax needs (considering family, other
work and state issues) and execute it fast. Our independent attorneys
prepare and review all the paperwork.
Our service is just what you need. Yes, you can form your own entity at
your state Web site, or ask your local attorney to handle it all (probably
at higher cost than our very competitive fee). But the most important
issue is not simply forming an entity; rather it's forming an entity that's
properly structured to take advantage of all the complex and nuanced trader
tax strategies. We consult with you on these trader tax strategies, design
the best entity and tax plan and then help you execute it all with our
customized entity formation service and annual tax preparation service
(to collect those tax benefits). Overall, we save you a lot of money!
Our retainer fee includes the below services and login access:
Time with
Robert A. Green CPA & CEO to discuss which entity is best and how
to use it correctly to get all the tax benefits you are entitled to
while maintaining minimal costs in the entity.
Consultation
on trader tax status and MTM in the entity vs. you individually.
Entity tax
structure planning and consultation.
Consultation
on how to open a retirement plan in connection with your entity.
Consultation
on how to avoid Nasdaq professional data feed fees if possible.
Consultation
on how the entity interacts with your individual tax file (contributions,
distributions, expenses, elections, accounting and more).
Online formation
of entity at bfi (see above), with the key description you need;
Our independent attorneys prepare the standard legal paperwork:
Online application
with the IRS for your tax identification number (EIN).
Preparation
of resolutions to open trading account, mark-to-market elections and
other related resolutions.
Preparation
of entity paperwork including (simple and standardized) LLC Operating
Agreement, or partnership agreement or corporate bylaws (for S or C-Corporations).
These are very basic and generic for traders. Our attorneys can customize
them further for your needs and also coordinate planning with your local
legal counsel (for example with trust involvement).
S-Corp election
paperwork.
Check out our entity accounting services too, they are the natural next step after entity formation.
GreenTraderTax Entity Formation login area. When you sign up for our GTT Entity Formation and Consultation Services, we give you login access.
