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Message
Starting a Corp. Brokerage Acct Tips
Posted on 5/7/24 at 10:33 am
Posted on 5/7/24 at 10:33 am
I hope all are having a nice Tuesday. 
I have an LLC for IC work that I do, so I was talking with my CPA about how best to do some basic trading. He said to open a Corp. Brokerage Acct, so I'm wondering if anyone on here could give me some tips on how to get started and things to avoid.
I have a personal Fidelity Acct, that I dabble in some more long term investments, but I'm looking to do more day/swing trading. Basically I'm looking for more of a hobby. I have friends that do Fanduels, etc to make games more interesting, but I'm not that much into sports. I do have a very amateur enjoyment of economics and the market, so I guess this is an option. Not looking to make a living out of it, but something to keep my mind churning daily I guess. Not looking to put to much into it, but maybe $3-5k to open the acct, and do small trades to start to enjoy it.
Anyway, I was wondering the process for creating this kind of acct, and what all is needed from my end other than my TAX ID#. Is Fidelity (Active TraderPro?) the right way to go or are there other options that would be better? Would be cool if there was a good APP to move pretty fast with.
Lastly, any operational/process dos and don'ts from any of you that have a trading businesses that you would tell your younger selves?
Thanks!
I have an LLC for IC work that I do, so I was talking with my CPA about how best to do some basic trading. He said to open a Corp. Brokerage Acct, so I'm wondering if anyone on here could give me some tips on how to get started and things to avoid.
I have a personal Fidelity Acct, that I dabble in some more long term investments, but I'm looking to do more day/swing trading. Basically I'm looking for more of a hobby. I have friends that do Fanduels, etc to make games more interesting, but I'm not that much into sports. I do have a very amateur enjoyment of economics and the market, so I guess this is an option. Not looking to make a living out of it, but something to keep my mind churning daily I guess. Not looking to put to much into it, but maybe $3-5k to open the acct, and do small trades to start to enjoy it.
Anyway, I was wondering the process for creating this kind of acct, and what all is needed from my end other than my TAX ID#. Is Fidelity (Active TraderPro?) the right way to go or are there other options that would be better? Would be cool if there was a good APP to move pretty fast with.
Lastly, any operational/process dos and don'ts from any of you that have a trading businesses that you would tell your younger selves?
Thanks!
3
Posted on 5/7/24 at 11:08 am to HagaDaga
Why would you use a business account? Could that potentially trigger some self employment tax vs passive taxes?
Posted on 5/7/24 at 11:38 am to HagaDaga
Is your LLC taxed as a passthrough (onto your personal return) or as a C Corp?
You don't want to do this if it's taxed as a C Corp, as C Corps dont't get the benefit of qualifed tax rates (qualified dividends and long term capital gains)
You don't want to do this if it's taxed as a C Corp, as C Corps dont't get the benefit of qualifed tax rates (qualified dividends and long term capital gains)
Posted on 5/7/24 at 6:17 pm to LSUFanHouston
quote:
Is your LLC taxed as a passthrough (onto your personal return) or as a C Corp?
Thanks for your response. I will say I'm not a expert in any of this, total newb, so why Im asking. Before my more recent IC work I was a standard W-2 1040 type.
With that said, the below seems to be the case, as that sounds like how we did our taxes and I guess why he recommended I set up this type of acct up.
quote:
LLC taxed as a passthrough (onto your personal return)
Thanks again and for any guidance on how I should approach what I mentioned in my OP.
This post was edited on 5/7/24 at 6:27 pm
Posted on 5/7/24 at 6:38 pm to HagaDaga
quote:
Basically I'm looking for more of a hobby. I have friends that do Fanduels…
May I ask what is your trading background and/or experience level?
Posted on 5/7/24 at 7:02 pm to Jag_Warrior
quote:
May I ask what is your trading background and/or experience level?
I don't mind. Thanks. Very low super beginner but wanting to learn something new. I've bought a few long hold stocks in my personal acct but haven't done trading like this.
I'm definitely not looking to jump in with big trades, but small ones to build up and see where things go. Not going to use money I can't afford to lose, but do have $3-5k to open an acct with, if that's needed.
I'm an OPs/process minded person so why I'm looking to learn how to learn how to set things up instead of jumping in.
Posted on 5/8/24 at 9:13 am to HagaDaga
Although you mentioned that you’re not trying to make a living at it, it’s still important to learn the mechanics before you trade with real money (even a small amount). What I mean is, it’s typically easier to start out by learning good habits rather than having to unlearn bad habits (that were gained by random “hunt & peck”).
At the stage you’re at now, I wouldn’t worry about the type of account. You mentioned that you’re a process minded person. That’s very important. If you’re also able to separate your emotions from your actions, then that’s another necessary quality of a potentially successful trader (whether it be stocks, options, commodities, etc.). Another is being able to accept that there will necessarily be losses… so don’t let your ego tell you that you’re a failure if you have a loss (just learn how to manage losses), and you’re also not a hero if you have a smoking good trade.
You mentioned your friends enjoying Fanduel sports betting. That’s fine. But that activity is probably based totally on emotions as they watch their games on TV. Even as a hobby, all that’ll do in trading is establish bad habits for you.
Before I write a novel here (
), I’ll just suggest that you do some reading and research first, then establish a paper trading account with a set amount of “fake” money, then test out the trading methodologies and techniques that you’ve read about. Don’t worry about having a business account yet or setting up a fancy 6 screen trading rig.
I have an options trading business now and that’s how I pretty much make my living. I did that part time for several years before realizing that I could be consistently profitable. I don’t really trade stocks (because it’s capital intensive and the probability of profit is typically 50/50), so I’m not in that world enough to point you to the best resources to learn. Hopefully others here can make those kind of suggestions. But if anyone says to just hop in and start making (blind, random) trades, politely ignore them. Everything in life is more “fun” when you know what you’re doing.
I hope that this works out for you.
At the stage you’re at now, I wouldn’t worry about the type of account. You mentioned that you’re a process minded person. That’s very important. If you’re also able to separate your emotions from your actions, then that’s another necessary quality of a potentially successful trader (whether it be stocks, options, commodities, etc.). Another is being able to accept that there will necessarily be losses… so don’t let your ego tell you that you’re a failure if you have a loss (just learn how to manage losses), and you’re also not a hero if you have a smoking good trade.
You mentioned your friends enjoying Fanduel sports betting. That’s fine. But that activity is probably based totally on emotions as they watch their games on TV. Even as a hobby, all that’ll do in trading is establish bad habits for you.
Before I write a novel here (
), I’ll just suggest that you do some reading and research first, then establish a paper trading account with a set amount of “fake” money, then test out the trading methodologies and techniques that you’ve read about. Don’t worry about having a business account yet or setting up a fancy 6 screen trading rig. I have an options trading business now and that’s how I pretty much make my living. I did that part time for several years before realizing that I could be consistently profitable. I don’t really trade stocks (because it’s capital intensive and the probability of profit is typically 50/50), so I’m not in that world enough to point you to the best resources to learn. Hopefully others here can make those kind of suggestions. But if anyone says to just hop in and start making (blind, random) trades, politely ignore them. Everything in life is more “fun” when you know what you’re doing.
I hope that this works out for you.
Posted on 5/9/24 at 10:37 pm to Jag_Warrior
The advise is much appreciated.
I'm definitely trying to do research, but there is so much info out there it gets overwhelming. Thats one of my issues, I tend to do so much research that I keep putting off actually doing what I'm wanting. Why I'm hoping to get into some conversations about it, on a forum like this, as part of my research.
Is there a good simulator to practice with? Fidelity doesn't have that option, so if there is a good one that has a good trading platform to use, once I go live then that would be a good way to practice too.
I don't know much about Options, but figured that once I get the basics down on a trading acct I could start learning more about Options.
I get the point of not worrying about creating a business trading acct, but my CPA said that it would be the best option for me since I have the LLC as the pass thru. I don't totally get it, but figured I would do some small trades this year to get my bearings and then I'll learn about the taxes come next year when I work with him on it.
I'm definitely not looking to do big trades, so hoping I could get more advise on a specific Trading Platforms to work with and difference between doing it thru a personal and business acct.
Thanks again for your tips.
I'm definitely trying to do research, but there is so much info out there it gets overwhelming. Thats one of my issues, I tend to do so much research that I keep putting off actually doing what I'm wanting. Why I'm hoping to get into some conversations about it, on a forum like this, as part of my research.
Is there a good simulator to practice with? Fidelity doesn't have that option, so if there is a good one that has a good trading platform to use, once I go live then that would be a good way to practice too.
I don't know much about Options, but figured that once I get the basics down on a trading acct I could start learning more about Options.
I get the point of not worrying about creating a business trading acct, but my CPA said that it would be the best option for me since I have the LLC as the pass thru. I don't totally get it, but figured I would do some small trades this year to get my bearings and then I'll learn about the taxes come next year when I work with him on it.
I'm definitely not looking to do big trades, so hoping I could get more advise on a specific Trading Platforms to work with and difference between doing it thru a personal and business acct.
Thanks again for your tips.
Posted on 5/11/24 at 9:02 am to HagaDaga
quote:
I'm definitely not looking to do big trades, so hoping I could get more advise on a specific Trading Platforms to work with and difference between doing it thru a personal and business acct.
I’ve been using Think or Swim (TD Ameritrade/Schwab) for many years. Others may suggest Interactive Brokers or something else. I stick with TOS because it does what I need it to do and also because I’m so familiar with it.
One consideration for you is what type of stocks are you looking to start out with? Please stay away from penny and OTC equities. Many, if not most of those companies are cons and scams. Yes, for day traders they will move, but sometimes unexpectedly and violently in unpredictable directions.
Another consideration, what type of trading are you looking to do? Swing trading over a period of days or weeks or true day trading (where you close positions daily and don’t carry anything overnight).
Because I don’t trade stocks per se, I don’t have any good educational resources to direct you to. For options, I’d recommend TastyTrade or Options Alpha. I’d like to tell you about a stock trading site that does the same sort of strategy backtesting that they do with options. Because I’ve gotten to know them and Seth Freudberg (head trader on the options side), I could recommend SMB Capital. They’re a proprietary trading firm in New York. In addition to the options desk, they also have an equity trading desk and they have tutorial videos on YouTube. I can’t endorse the stock videos, because I haven’t actually watched them. But I do know they work with beginning traders on things other than options. And I know that they push backtested strategies, and discourage “winging it” or seat of the pants trading.
Based on your available “free” time, you may find that swing trading suits you best. It’s less stressful and time consuming than day trading. And while both are rather capital intensive (compared to options trading), swing trading won’t require you to be “right” by 4PM ET.
Very good questions.
Hopefully some others can add to this and help you more than I can. 
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