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Stock trading is the business of buying and selling stocks for financial gain. Stock traders often act on behalf of other individuals and handle the buying and selling of shares and gain a profit from the shares sold. Some people do the trading themselves and do fairly well. However, since some others are not familiar with the ways of the stock market they hire stock traders to trade on their behalf for better chance of success. This article provides answers to some of the most commonly asked questions about issues related to this. I do some stock trading myself. How should I go ahead if I want to do it as business?
Usually, a person incorporates or forms an LLC, but since the IRS is changing their policies there is no reason that you should do this. Before the change of IRS policy, someone could pay a small wage to themselves while claiming an S status. This enabled the excess cash flow through them personally as dividends thereby avoiding paying any self- employment taxes. Now there is no advantage of having an LLC since you have to pay yourself according to the income that your company produces. If you try to avoid the self – employment tax and get caught in the process, you might end up paying hefty fines and / or harsh penalties. However, claiming a sole proprietor status will help you recover some of the expenses. That way you can deduct the office expenses like office supplies, computer supplies, internet fees etc. I have been trading stocks for a long time and I am wondering if I can register this profession as my home business. If yes, under what category?
You have to check into the Securities and Exchange Commission to confirm whether or not you have to register to trade stocks for other persons. Usually, it is necessary to register while buying / selling stocks / securities. There are a few exceptions to this law. But it is a complicated law for the uninitiated. However, you should be registered with your state in order to a business tax in case you have one. Another thing to consider is applying for an LLC. By applying for that you can protect your personal assets in case a law suit is filed against your business. I had an agreement with a stock trader to manage an account for me. He emailed me saying that he could get a special deal where trades will be $4 instead of $7. After we had signed the agreement, he began trading. Even after a month the trades are still $7. Is this a breach of contract?
Since there is a written agreement stating that the trades would be of a certain amount and they have not yet changed, you can cite this as a breach of contract. At first you may send a letter of demand stating that you want a refund of the difference amount as had been agreed upon. State clearly in the letter that you wish to terminate the agreement if the amount is not refunded soon. The broker’s activities could be reported to the BBB if the person is a representative of a brokerage company. If you wish to trade in stocks you should ask a business lawyer who is an expert in the stock market laws and can advise you about the various aspects of stock trading.
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