Investment LLC / best brokerage

[Complete_newbie]

This is going to sound totally dumb but...

Is there any IRA/401k type of accont for an LLC with members but its sole purpose is investment. No employees. I see that major brokerages have "organization" account but was wondering if there is any tax saving / defer type account for such a setup or its all taxable

Also, Sorry if already posted, but which is everyone's favorite brokerage platform for just holding ETFs on set asset allocation (no trading).

Thanks!

[jfoxcpacfp]

Are you asking if you can set up an LLC for investment purposes only?

[Complete_newbie]

jfoxcpacfp wrote:

Are you asking if you can set up an LLC for investment purposes only?

Click to expand...

Thanks for the reply Johanna. No I am asking if there is a retirement account (like small businesses have 401Ks and SEP IRA etc) that an LLC - whose sole purpose is just investment - can set up (this is mostly for tax advantage purpose ofcourse)? LLC made of partners and there are no employees. Reading about SEP IRAs etc leads me to believe you need employees to be eligible for IRAs and 401Ks is the same reason. Just wanted to make sure I wasn't missing anything before going for the regular taxable organization account at a brokerage.

 

 

[Donnie]

Complete_newbie wrote:

jfoxcpacfp wrote:

Are you asking if you can set up an LLC for investment purposes only?

Click to expand…

Thanks for the reply Johanna. No I am asking if there is a retirement account (like small businesses have 401Ks and SEP IRA etc) that an LLC – whose sole purpose is just investment – can set up (this is mostly for tax advantage purpose ofcourse)? LLC made of partners and there are no employees. Reading about SEP IRAs etc leads me to believe you need employees to be eligible for IRAs and 401Ks is the same reason. Just wanted to make sure I wasn’t missing anything before going for the regular taxable organization account at a brokerage.

 

 

Click to expand...

Not unless you are a professional trader, which you probably aren't.

[Complete_newbie]

Donnie wrote:

Complete_newbie wrote:

jfoxcpacfp wrote:

Are you asking if you can set up an LLC for investment purposes only?

Click to expand…

Thanks for the reply Johanna. No I am asking if there is a retirement account (like small businesses have 401Ks and SEP IRA etc) that an LLC – whose sole purpose is just investment – can set up (this is mostly for tax advantage purpose ofcourse)? LLC made of partners and there are no employees. Reading about SEP IRAs etc leads me to believe you need employees to be eligible for IRAs and 401Ks is the same reason. Just wanted to make sure I wasn’t missing anything before going for the regular taxable organization account at a brokerage.

 

 

Click to expand…

Not unless you are a professional trader, which you probably aren’t.

Click to expand...

Yep am not. Interesting so professional traders have tax protected/deferred accounts?

[Donnie]

Yes, professional trading can be considered a business by the IRS.

Traders

Special rules apply if you're a trader in securities, in the business of buying and selling securities for your own account. The law considers this to be a business, even though a trader doesn't maintain an inventory and doesn't have customers. To be engaged in business as a trader in securities, you must meet all of the following conditions:

• You must seek to profit from daily market movements in the prices of securities and not from dividends, interest, or capital appreciation;


• Your activity must be substantial; and


• You must carry on the activity with continuity and regularity.

The following facts and circumstances should be considered in determining if your activity is a securities trading business:

• Typical holding periods for securities bought and sold;


• The frequency and dollar amount of your trades during the year;


• The extent to which you pursue the activity to produce income for a livelihood; and


• The amount of time you devote to the activity.

[jfoxcpacfp]

Complete_newbie wrote:

jfoxcpacfp wrote:

Are you asking if you can set up an LLC for investment purposes only?

Click to expand…

Thanks for the reply Johanna. No I am asking if there is a retirement account (like small businesses have 401Ks and SEP IRA etc) that an LLC – whose sole purpose is just investment – can set up (this is mostly for tax advantage purpose ofcourse)? LLC made of partners and there are no employees. Reading about SEP IRAs etc leads me to believe you need employees to be eligible for IRAs and 401Ks is the same reason. Just wanted to make sure I wasn’t missing anything before going for the regular taxable organization account at a brokerage.

Click to expand...

You are correct, you need to have a business purpose and earned income for a 401k or SEP IRA. There is not much reason to set up an LLC just for investing. They are often used organized as partnerships for investment clubs, though.

[Complete_newbie]

jfoxcpacfp wrote:

Complete_newbie wrote:

jfoxcpacfp wrote:

Are you asking if you can set up an LLC for investment purposes only?

Click to expand…

Thanks for the reply Johanna. No I am asking if there is a retirement account (like small businesses have 401Ks and SEP IRA etc) that an LLC – whose sole purpose is just investment – can set up (this is mostly for tax advantage purpose ofcourse)? LLC made of partners and there are no employees. Reading about SEP IRAs etc leads me to believe you need employees to be eligible for IRAs and 401Ks is the same reason. Just wanted to make sure I wasn’t missing anything before going for the regular taxable organization account at a brokerage.

Click to expand…

You are correct, you need to have a business purpose and earned income for a 401k or SEP IRA. There is not much reason to set up an LLC just for investing. They are often used organized as partnerships for investment clubs, though.

Click to expand...

Thanks Johanna.