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EDUCATION CENTER
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Mark
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stranger
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Reged: 06/01/04
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Posts: 2
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Loc: PA
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Sole Prop - 2 issues
#625 - 02/11/07 06:45 PM
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Since I am now trading nearly full time (no regular job) for income, I've decided just to use a sole proprietorship for now. If I ever start to trade OPM or hire traders, then I'll go LLC.
My question is (and I researched this site already on this !):
1) Should I set-up a DBA name and register with my state (PA) ? This requires a ficticious name filing as well.
2) Should I obtain a separate TAX ID from the IRS for this proprietorship ?
TIA !
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Re: Sole Prop - 2 issues
#626 - 02/14/07 10:18 AM
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Sole proprietor (Schedule C) businesses do not need a separate tax id, unless they have employees and need to file payroll tax returns.
Sole proprietors do not need a DBA (doing business as name); it's a preference only.
Some local jurisdictions require local businesses to file with them and pay a small fee. Sometimes they also charge intangible property tax on your business assets. Most traders skip this and take the position that their trading business is not a business for local purposes; its really an investment activity. It's business treatment for IRS purposes only.
PA and OH (and a few other states) have local taxation. Trading gains are usually exempt from that local taxation, as its mostly charged on earned income.
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Robert A. Green, CPA & CEO
GreenTraderTax.com
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