Hello,

I need ideas on how to set up my business to be the most tax advantageous.

I currently am a short term stock trader in my spare time with my own money. Im fairly good at it and make roughly 25-35% annual return pre taxes. I am looking to turn this into a full time business. In order to raise more capital ( I currently only have 80k.) and gain some tax benefits. I think setting it up a corporation would be helpful, if not for taxes, then for raising capital.


Ultimately my stock system will only work with a maximum capital of 400k. So right now, I was planning on forming 4 C-corporations each holding up to 100k capital each to keep the tax rates on my profits under the 15% mark. Also keep in mind I have a 5% flat state cooperate tax, but no state personal income tax.

Long term, I would like the profits that exceed our 100k limit to roll into a local nonprofit and another corporation that I would like to set up to make loans.

I’m not sure if my setup is the best idea, so I’m looking for out of the box ideas or any input.

I don’t really need to take a paycheck from this business, I would like to just let it keep building until retirement.

Thanks in advance

I'm guessing you are thinking in terms of the capital gains tax rate. But keep in mind that if you set up these separate C corporations for the sole purpose of keeping profits under $100 K (and accumulating such profits rather than paying dividends) they might be considered holding companies, and incur tax liability that way.

I also am concerned that setting up a non-profit may, depending on how it is structured, be considered a for-profit venture in disguise.

I have to admit to being a bit rusty on these aspect of tax law. Obviously you should run this by a tax attorney or accountant with specific expertise in these matters.