How to Set Up a Business As a Stock Trader
Experienced part-time stock traders that are ready to become professional traders can learn how to set up a business as a stock trader in just a few easy steps. By taking the time to set your trading operation up properly you avoid unnecessary expenses and make it easier to become successful by acting as a professional would.
Other People Are Reading
Things You'll Need
- DBA
- Business bank account
- Computer with dual processors
- 25-inch computer monitor
- Accounting ledger
Instructions
-
Setting Up Shop
-
1
Go down to your local county clerk and get a DBA or "Doing Business As" application as a sole proprietorship. You want to setup a business name like "Acme Stock Traders" so that you can keep track of your business expenses and revenue separately from your personal life. This will make it simpler for you to write off expenses such as broker's commissions, margin interest, trading software, and Internet service fees, and take advantage of the tax benefits.
-
2
Open a basic business checking account with your DBA at your local bank. Having a DBA account helps prove to the IRS that you are an actual business and have an intent to make a profit.
-
-
3
Invest in a good computer with a dual processor. A computer processor is what makes a computer "think" and run trading programs with ease. This is going to be your lifeline to the markets and you need to have a computer that is powerful and fast, so it can run several trading programs simultaneously, quickly and accurately.
-
4
Invest in a good computer monitor with a 25-inch screen. Having a big screen to look at when scanning the stock market for trading opportunities makes it much easier on your eyes and less likely that you'll miss a good trade setup.
-
5
Purchase a ledger at your local office supply store with dual columns. One column will be for the profits you generate with your stock trading business and the other will be for expenses and losses. Write your credits, or money earned, in one column and the your debits, or money going out for expenses or losses, in another column. By keeping good records you will have accurate information for tax records and stay out of trouble with the tax authorities at year end.
-
1
Tips & Warnings
When forming your business entity the easiest entity to form is the sole proprietorship, which is what most stock traders do for their business in the beginning. However, depending on your needs you may need to look at forming a General Partnership or Limited Liability Company. Consult with an attorney and your tax advisor for the best entity for your particular needs.
Always start small when beginning your stock trading business avoid spending sprees. Some traders make a huge return in the beginning with their trading and then spend it quickly. When they go through a slow period of losing trades or few trading opportunities, they find they have no funds to fall back on.
