Traders Entities - Trader Entities for Traders

For a quick overview, see our Entities For Traders page. For more detailed information, we recommend Green's 2014 Trader Tax Guide, Chapter 7 on Entities For Traders.

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  • Q1 is an excellent time to form a new entity. The entity can elect Section 475 MTM within 75 days of inception and unlock 2014 deductions for retirement and health insurance. Entities look much better to the IRS for trader tax status and business expense deductions. Entities often help avoid some of the Obama-era tax hikes on the upper income, too.

More content on entities for traders:

If you're not sure you will qualify for trader tax status and you don't see the benefits of having an entity, wait to form one. You can trade an individual account and transition into an entity when you're ready.

We have the lowest priced and best entity services around.

Robert A. Green CPA handles the tax advice, helps with the entity formation process and handles several key start-up issues. Our outside attorneys at Rimon Law Group handle legal services, including legal agreements (general partnership or LLC operating agreements, corporate documents and resolutions).

Start with a 30-minute consultation with Robert A. Green, CPA.

After a consultation, upgrade to our entity formation consultation service below.
Click here
to see what's included.

Green NFH, LLC: Trader Entity Formation Consultation Service – Advance Payment. (Upgrade after a 30 minute consultation).

Comes with download of our engagement letter. For simple LLCs, general partnerships and S-Corps, the fee should not be more than this advance payment. If we go beyond basic entity formation consultation service through extra consultations, the additional time will be charged at our standard hourly rates - that rarely happens..

*Requires separate purchase of outside legal time below.

Total cost is $350 Green NFH + $225 Rimon Law Group = $575.

There are additional costs for the online incorporator and state filing fees for LLCs and corporations.

Promotional Price through 4/30

(Regular price $395)

Green NFH, LLC store

Start with Green NFH, LLC. You can add the legal paperwork part afterward.

Rimon Law Group - outside law firm for legal document preparation and EIN.

• $225 for standard entity formation documents, including EIN and S Corporation election.
• $325 for complicated jobs like carried interest or proprietary trading firm models.
*See further details on the Rimon Law store (click Add to Cart on the right).

**Requires a separate purchase of the entity formation service from the Green NFH, LLC store above ($395).



Rimon Law Webstore

For online filings, we use Business Filings Incorporated (BFI). They do excellent work!

What's included in our GTT Trader Entity Formation Consultation Service

Our GreenTraderTax entity formation consultation advance payment 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. Our competitors sell 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 outside 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 — 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 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 advance payment fee includes:

We lay out our scope of engagement, terms and conditions in an engagement letter, which also empowers us to communicate client information to the outside attorney engaged separately by the client (see above).

Consultation with Robert A. Green CPA to discuss:

  • which entity structure is best for your facts and circumstances, to maximize trader tax benefits;
  • how to use that structure correctly while maintaining minimal costs in the entity;
  • qualification for trader tax status in the entity;
  • tax treatment elections for securities (Section 475), futures (Section 1256) and forex (Section 988) in the entity;
  • how best to handle general accounting and trade accounting;
  • how to handle startup costs (Section 195) and organization costs (Section 248);
  • how to handle pre-business education costs;
  • which type of retirement plan is best for you, how to handle retirement plan rollovers or Roth conversions, and how to utilize retirement plans in the most tax efficient manner, using your entity to generate the earned income needed for retirement plan contributions;
  • how to handle payroll to the owner;
  • how the entity interacts with your individual tax return (contributions, distributions, expenses, elections, accounting, home office and more).

Online formation of LLCs or corporations with the outside incorporator BizFilings (see above). General partnerships do not have an online formation.
Preparation of a master memo to the client, outside attorney and our CPAs to be assigned for tax preparation.

Our outside attorneys help with the entity name, give guidance on state and local filings and prepare the entity legal paperwork, resolutions and elections:

Attorney searches some state and local databases that are easily available online, to see if the name chosen is already on file. If it is, the attorney will suggest a new name.
Tax ID Numbers: The attorney files the online application with the IRS and state for your tax identification numbers (EIN). These are needed for filing income tax returns later on (you can't e-file without it).
LLCs and corporations are formed with a state filing, whereas general partnerships and sole proprietorships are not, since the latter are not limited liability companies.
While general partnerships are not obligated to file with a state, most states require them to file fictitious business name certificates with their local county clerk. It generally costs under $25. For filing the fictitious name or DBA, we can utilize BizFilings or the outside attorney.
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, partnership agreements or corporate bylaws for S- and C-corporations. These are basic and customized for traders. Our outside attorneys can customize them further and coordinate planning with our local legal counsel (for example, with trust involvement).
S-corporation election paperwork including federal and state if required.
The outside attorney uploads the entire work product to the ShareFile at Green NFH, LLC and we advise the client to download it.

Disclaimer: Our outside attorneys or BizFilings advise clients throughout the U.S. and some issues vary by state, county, city and town jurisdiction. Consider getting local attorney advice for compliance when appropriate. There are other issues to consider like local property taxes, too.

Check out our entity accounting services too.

If you have any questions about entities, please email us at or call us.

More Content

Year-end strategies and more
Setting up an entity before year-end is a great way to save tax money this year and next. You can pay yourself a salary before year-end, to claim a full year of deductions for retirement-plan contributions and health-insurance premiums. Most traders save over $5,000 in net taxes with this strategy, with income tax savings being greater than payroll tax costs. Married couples often save over $17,000. Sole proprietor business traders don't have earned income from trading, so they can't take advantage of these deductions on their trading business.

If you have an entity in place already, it's important to execute year-end transactions before Dec. 31. This includes paying salaries, opening an individual 401(k) plan on the entity level, reimbursing expenses and more.

If you have a new late-year entity, consider an emergency Section 475 MTM election. 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. You also break the chain on wash sales in your individual account by switching to an entity with Section 475 MTM.

Strategy for Q1 2014: A clean start
As you approach the April 15 tax deadline for 2013 tax returns and 2014 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 15. 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.

New 2014 entities have 75 days from inception to elect Section 475 MTM under the "new taxpayer" exception. 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 tax year 2014.

For example, if you have a large trading loss year-to-date 2014, elect Section 475 MTM by April 15, 2014 (March 15 for S-corps) or within 75 days of the formation 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 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 in a new entity for the rest of 2014. Consult with Robert Green, CPA about all these strategies.

More entity benefits
* 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 401(k) (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 rush into an entity if you don't need one.

Consult with us before forming one. 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. 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 significantly 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. 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 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). You save on these costs with a GP. 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 some states in Green's 2013 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're 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.



Many Webinars in March

Highlighted Recent Recordings:

*Entities & Retirement Plans for Traders
*Trader Tax Law Update: Current Developments
*2013 Tax Reporting & 2014 Planning
*Forex Taxation
*Audits of Performance Records
*Kick-Off to 2013 Tax-Filings for Traders
*ObamaCare taxes are starting to affect traders
*The Tax Court Was Right To Deny Endicott Trader Tax Status
* Investment management: Key updates
*Learn the DOs and DON’Ts of using IRAs and other retirement plans

Trader Tax Center

Tax Newsletter & Calculators

Highlights (see the full archive):

Mar 27: Protect yourself from market losses with a Section 475 MTM election Read More

Mar 25: IRS guidance on bitcoin transactions will chill its use Read More

Mar 24: SEC Large Trader Reporting Rule Read More

Feb. 27: Another trader tax court loss (Assaderaghi) Read More

Feb. 1: Net investment tax details Read More

Jan 14: New IRS guidance on SE tax deductions affects partnership AGI-deduction strategies. Read More

Jan 9: A major tax reform bill in 2014 is unlikely, and “tax extenders” may be history, too. Read More

Jan 7: Kick off to 2013 tax filings for traders. Read More

Dec 4: IRS final regulations for Net Investment Tax help traders. Read More

Dec 3: Bitcoin is a hot commodity, but is it taxed like commodities, assets, or currencies? Read More

Nov 15: Another non-business trader gets busted in tax court trying to cheat the IRS. Read More

Nov 6: Hedge fund investors depend on “assurance” from quality independent CPA firms. Read More

Oct 29: ObamaCare taxes are starting to affect traders. Read More

Sept 15: Not Easy For New Yorkers To Escape Big Apple's Tax Bite. Read More

August 30: The Tax Court Was Right To Deny Endicott Trader Tax Status Read More

August 18: Common trader tax mistakes Read More

July 24: Learn the DOs and DON’Ts of using IRAs and other retirement plans in trading activities and alternative investments Read More

March 31: PFG investors can deduct theft losses on 2012 tax returns with Rev. Proc. 2009-20 safe harbor relief. That’s great news! Read More

March 5: Caution, downloading securities Form 1099-Bs into TurboTax often leads to incorrect tax filings Read More

Sept 5: High-income traders and ObamaCare’s 3.8% Medicare tax Read More

GreenTrader blog archive, Forbes blog, Benzinga blog.


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