Starting a company to invest in stocks

[d_s123]

Hi,

I'd like to keep my income from investing activities separate from my day job income. I'm not a day trader. I make ~12 trades a year. At the same time, I'm not talking about a few thousand dollars from my investments. Let's say, annually, I end up making about 35-40% of my salary in profits from trading activities. Most of my trades are short-term. To reduce my tax burden, I would like to start a corp (I don't know which one yet - S, C, or LLC) and keep my trading activities confined to it. I will be the sole proprietor of the company. I don't plan to take money out of he company frequently; keep the profits within the company to compound the gains.

I'm on H1B and my current employer has filed for my GC.

Can I do this in my current visa status? What are the implications of it? Has anyone done it before?

Thanks,

Deepak

[Attorney_23]

If you set up a corporation that you would be running, this would almost certainly be considered unauthorized employment. It does not really matter what percentage of an H1B worker's income comes from investments -- an extremely wise (or lucky) investor may wind up making the majority of h/er income via investments. But, running a company generally qualifies as "work" under U.S. law. Passive investments, on the other hand, are not work. (Although, as you imply, day trading would likely violate this provision.)

[d_s123]

Thank you for your response.

[GcLLC]

Hi,

I'd like to keep my income from investing activities separate from my day job income. I'm not a day trader. I make ~12 trades a year. At the same time, I'm not talking about a few thousand dollars from my investments. Let's say, annually, I end up making about 35-40% of my salary in profits from trading activities. Most of my trades are short-term. To reduce my tax burden, I would like to start a corp (I don't know which one yet - S, C, or LLC) and keep my trading activities confined to it. I will be the sole proprietor of the company. I don't plan to take money out of he company frequently; keep the profits within the company to compound the gains.

I'm on H1B and my current employer has filed for my GC.

Can I do this in my current visa status? What are the implications of it? Has anyone done it before?

Thanks,

Deepak

Why would you need a company to do trading? Any reasonable expense you would incur to do trading would be tax deductible.

FYI, you cannot compound the gains by trading through a company. Either you will have to pay taxes (S & LLC) or the company will (C corp). Only way to get around this is to have an offshore investment. Generally, U.S. citizens and U.S. residents (who are present in the United States more than 180 days a year) cannot invest in offshore entities. However you can have an interest in an offshore entity that might invest in the US. These details are best discussed with a qualified attorney and a big name accounting firm.

If you are thinking about some of the other perks that come from running your own company, for that you would need a GC. Primarily, to get some benefits that you might be thinking about you would need to be an employee of your own company.

[kelvinpeterson12]

If you set a corporation that running with you,this would shows a unauthorized employment.it is not depends on your H1B visa.so be carefull dear.