I am thinking of setting up a single member LLC that only does trading (stocks) and doesn’t have any other activities, it is taxed as passthrough. I can’t seem to find a clear cut answer to some of my questions.

Trying to figure out if it is worth trading stocks through an LLC vs without one. I know the brokers charge you for professional real time quotes if you are an LLC but is there any advantage that outweighs that cost? Primarily:

  1. Do I have to pay self employment tax for the capital gains?

  2. Can I contribute to a SEP plan?

  3. Does the LLC qualify for the 20% QBI deduction?

  4. Can I write off business expenses (e.g. traveling to a conference on investing, buying books on the topic or attending classes)

I appreciate your input.

Thank you

  • Komorbidity@alien.topBEnglish
    1·
    11 months ago

    1. Yes - you would need to take it a step further and file as an S-Corp. It can classify your earnings on capital as gains which would be a non-wage distribution. You may have to pay yourself a “reasonable” wage before taking non-wage distributions.

    2. Generally yes, in fact I think anybody self-employed can to SEP but there exceptions or limits/rules depending on your exact situation

    3. Generally yes it available to LLC but again there exceptions and you have to qualify

    4. Yes, “ordinary and necessary” as the saying goes.