I am a Forex trader and would like to establish a business entity to allow me to more easily deduct costs such as my internet connection, mobile web bills, hardware, etc. I have a relatively small amount of capital (less than 100K) and live in the U.S. Currently I will be the only one “employed” by the entity, but I am looking to bring on other traders in the future.
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hire a proper tax professional with experience in exactly this area.
your enterprise is taxable at both Federal and state levels. Both income taxes and self-employment taxes may apply, or may not, depending on circumstances and elections.
there are several relevant revenue rulings and a Tax Court decision that I know of offhand which bear on this decision — a proper professional will have or find these and counsel you properly in light of what they say.
anyone else’s opinion is about as valuable as their opinion on whether to long or short the Canadian dollar.