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Trading through Entity

  1. Hello everyone.
    I trade only 1256 contracts (SPX options). Is there any benefit in trading through Entity like general partnership or LLC? According to my Math, Cost of having Entity(Yearly renewal fee, data fee etc) is more than I can save on taking deductions(which are like home office, internet, ONE subscription etc)
    Am I missing something here. I would appreciate any advise.
     
  2. I am not a professional and recommend a consultation with one.

    My understanding is unless you qualify for trader tax status or even close to qualifying, do not bother setting up an entity.

    I did setup a trading LLC and currently working with TD Ameritrade on doing an internal transfer. My situation is uncommon though. I am physically disabled and looking to enroll in a government program to receive services private health insurance does not cover. The program has a $20K asset limit. My top options are to trade under a trust or a LLC. I chose the LLC.

    Also, if you trade under an entity, it may take longer to deposit and withdraw money. To withdraw money I will need to transfer from the trading account to a business checking account and then transfer the money to a personal checking account.
     
  3. Thank you Scott for your insight. Do you know any good professional who can guide me. I have heard of Robert Green, but he is very expensive.
     
  4. How much TD ameritrade charges for data for llc and also if there any other charges/fees/cost to trade through entity?
     
  5. Also, would like to know if anybody trades through entity on IB and how much they charge for the data?
     
  6. https://www.tdameritrade.com/pricing/brokerage-fees.page#tab_3

    To trade options, Real-time OPRA quotes for $30.50 is what's needed. I plan on keeping my personal account open by keeping a very small amount of money in it. I will be doing my pricing in the personal account and execute the trades in the business account. FREE! After the business account qualifies for APEX, I will close the personal account.

     
  7. The cash and options were transferred from my individual to the business account this afternoon. It took four tries but it is done. The online internal transfer form has issues. Filling out the paper form and sending it in to do an internal transfer worked. TDA expedited my fourth request because the previous three requests failed due to issues on their end.

    After the transfer completed, I noticed the business account qualified for APEX immediately. It qualifies because the account has $100K+ in it now. I already subscribed to the Realtime OPRA quotes for $0.00 in the business account. I guess I can close my individual account at any time. :)

    Just realized the account now qualifies for portfolio margining. I will wait a few days and contact TDA regarding that. I need a short break from TDA support.
     
  8. I talked to TD Ameritrade about this last week and the rep stated that an entity (LLC specifically) does not automatically trigger 'professional' status and there are no additional fees for trading within an entity.

    Sent from my SAMSUNG-SM-N900A using Tapatalk
     
  9. Brandon, did they say what does it take to trigger an entity to "professional" status?
     
  10. Interesting. The information you received may be correct.

    I just looked at my business account and the profile has Securities Professional as the status BUT the account is receiving realtime NYSE quotes. According to the market data fee table on the TDA website, NYSE quotes are not free even if the account qualifies for APEX.

    So, one of the following must be true:
    1. The fees on the TDA website are not 100% accurate.
    2. What Brandon was told is correct and my business account is not treated as a professional even though the profile says otherwise.
    3. The account is currently within a free trial period I am not aware of.

     
  11. If I remember he may have said something to the effect that professional status indicated money management for others requiring appropriate registration of the entity. Report back after a while and don't forget us Scott!

    Sent from my SAMSUNG-SM-N900A using Tapatalk
     
  12. An update...
    I have been logging into my personal account in TOS and then switching to the business account. When I do that, TOS says all data is realtime.

    When I log in directly into the business account, TOS shows "Partially Delayed Data". The business account is NOT receiving realtime NYSE quotes.

    I asked TD Ameritrade if my entity could be treated as a non-professional and here is the exact response:

    All LLC and business related accounts at TD Ameritrade are designated as professional accounts. Unfortunately, there is no work around in this case.
     
  13. Hey Scott
    I finally got around to calling the account representative that I previously spoke with at TD Ameritrade and asked him a similar question. His response was the same as yours. When I asked him why he previously stated there were "no additional fees" he kindly said that he was referring to "fees incurred by opening a corporate account and not fees incurred by market data." Talk about only answering half the question the first time around.

    I started thinking about the real need for live ORPA data and thought that one might link their corporate account to their personal account and then price out the spreads in the personal account before executing in the professional account to save the $30.50 per month data fee.

    I plan to make the personal change to a professional account for tax purposes towards the end of the year so I haven't actually tried this method... just figured it would work since I constantly tab between three different accounts during the day already.
     
  14. Brandon,
    Sounds like you have a plan.

    My business account is subscribed to realtime OPRA quotes, however, the account qualifies for APEX and receives the quotes for free. Using an individual account for pricing is the best alternative in my opinion.