Tax Planning Structures for Financial Traders
If you are a self-employed financial trader, whether you deal in stocks, derivatives, commodities or macros, you have several options as to how you arrange your business affairs.
In short, the main options available are:
- Sole trader
- Limited Liability Partnership
- Limited Company
Of course, each of the above options has their own advantages and disadvantages. However, by arranging your trading activities separately from any investment activities, you can minimise your risk whilst retaining excellent tax planning advantages.
Such a structure could allow the financial trader each of the following advantages compared to any single other option shown above:
- Limit your liability to any trading losses (subject to any personal guarantees that your trading house may impose)
- Arrange your investments separately to minimise any tax on monies used for investment purposes
- Enable you to invest profits in a virtually unlimited range of investments in a straight-forward manner
- Separate your other investments from your trading activities so that they are also safe from any adverse volatility in the markets (subject to any personal guarantees required).