It’s time to get back to business. If you haven’t started your own trading business to conduct all your trades within, now is the time to get started. If you wait until the end of the year and then decide to do so, you’ll lose a tremendous amount of financial benefits of trading within your own business.
When I started my trading business there was no resource available on how to do this thing. That’s why I wrote my book The Business of Trading. It’s the A-Z of how to start your own trading business and how to garner a tremendous amount of benefits so you can keep more of your hard-earned trading profits.
There is no better time than now to start your trading business. Why in the world would you want to lose the benefits of being in your own trading business versus paying taxes on your profit at the maximum rate. Why not deduct your home office? Why not take a tax deduction for your computers, trading memberships, financial publications, and any other business-related expense. The next trading seminar you want to attend can be written completely off within your own trading business. Instead of eating those expenses you can use those expenses to offset the profits that you’re gaining from your training.
It is especially important to form a trading business if you’re new to trading. No one is more susceptible than 1st year traders to losing money. The professionals can spot you a mile away. Like a hunter waiting for his next 10-point buck to walk by, new traders walk right into an ambush. Remember at least 85% of traders lose money, and its probably higher in the first year. While some traders may get extremely lucky when they first jump into the ring like I did, the vast majority lose money and some very significant amounts of money.
The problem here is any losses you sustain at the end of the year over the current standard amount of $3,000 cannot be used to offset other income you have. It’s called a capital loss, and not ordinary income. If you have a trading business, all losses can be used to offset any other income you have that year. Let’s say you lose $50,000 in one year. Your other income from your significant other or another job is $68,000. When filing your taxes you would have a net adjusted gross income of just $18,000, but only if you’re trading within a business. If you do what most traders do your $68,000 of other income would only be reduced by a maximum of $3,000 per year and your taxable income would be $65,000 instead of $18,000. Do you see the huge tax advantage you have within a trading business.
Now let’s take the case where you lose $50,000 in trading for the year, and you only have $25,000 of other income. Your taxable income for that year would be $0.00 and you could roll the $25,000 loss to the next year to reduce your taxable income there. Having a trading business is like having trading tax loss insurance. Anything can happen in trading. It seems like the unexpected happens all the time. Great traders always protect their capital.
There has never been a better time to start your own trading business. Take the time to read my book and decide if it’s right for you. I am very confident you’ll be glad you did.
Enuf said.