Consultant’s Corner: Investing Through a Business Entity
Q: I am interested in trading on the Nadex. I am concerned about giving out my private information in order to do the trading; what are the pros and cons of trading as a business (Corporation, LLC, etc.) vs. trading as an individual?
Online Trading Security
Of course, essentially every business that conducts activity online (stock brokers, banks, retailers, etc.) is subject to having its files hacked or compromised; however, these companies have state of the art computer security systems that avoid or minimize these problems. Millions of individuals safely trade stock and other securities online under their personal information. Also, a security investment account under an LLC or corporation would have exposure to being hacked or compromised, though it would not involve your personal non-public information (social security number, etc.). You can review the following Nadex and industry articles regarding online stock trading security issues:
http://www.fool.com/investing/brokerage/is-online-trading-secure.aspx
https://trendshare.org/how-to-invest/is-buying-stocks-online-safe
Personal Investing through a Business Entity
Generally speaking, it is very unusual for an individual to establish a business entity simply to conduct personal securities trading activities unless the individual is a professional trader. We recommend that you consult your local tax advisor in order to determine if there is any possible tax advantage to using a business entity for your personal securities investing activities. You can review the IRS and industry information regarding professional stock traders through the following resources:
https://www.irs.gov/taxtopics/tc429.html
http://www.investopedia.com/articles/trading/09/incorporate-active-trading.asp
