Stock trading from a legal entity: pros and cons

Not all traders know that trading on the exchange can be done by both individuals and legal entities, firms, or companies.

This means you conduct all transactions on the exchange not on your own behalf, but on behalf of the company to which your personal account will be registered.

While trading as an individual is straightforward, using a company account raises a host of questions, the main one being: why is this necessary and do I need it?

Therefore, before beginning the registration process, it is necessary to understand the main advantages and disadvantages of speculative trading of exchange assets through a legal entity.

First of all, it should be noted that it makes sense to use only a foreign company registered in an offshore zone for trading; otherwise, the tax amount will be much higher than for an individual.

Advantages of stock trading through an offshore legal entity:

No taxes – in most offshore zones, there is no taxation at all if the company operates outside of its registered location:

Anonymity – if desired, the true owner of the company can be concealed; only the director's name will appear when signing contracts.

An overseas bank account – you will have a corporate account in an overseas bank, allowing you to freely manage your trading profits.

Obtaining visas – to the countries where the offshore company was opened, and in some cases the opportunity to obtain a residence permit.

And it's impossible not to mention the disadvantages of trading through a company:

Regular fees – in addition to the cost of opening the company and account (around $1,000-$1,500), you will also have to pay a regular fee of around $1,000 per year:

Whether you trade or not, the required amount of payment for company and bank account maintenance does not change.

Reporting – many offshore jurisdictions have recently begun requiring reporting even when no activity has taken place. This requires time or accountant's expense.

Taxation – with offshore companies, things aren't so simple: if you earn and spend on behalf of the company, you don't pay taxes.

But if you want to buy a house or a car in your own name, you'll first need to transfer money from your corporate account to your personal account, and only then pay for the purchase.

As a result of such an operation, you need to pay taxes; depending on the country, the payment amount can reach 20%.

In my opinion, the advent of cryptocurrencies, and stablecoins in particular, has significantly reduced the usefulness of using a legal entity in exchange trading. Cryptocurrency makes it much easier to withdraw funds anonymously and then optimize your taxation independently.

And recently, a host of problems have arisen when using offshore companies: banks are closing accounts, inspections are being initiated, and additional fees are being introduced.

The only exception might be if you want to purchase real currency on a foreign exchange for your business's needs. In that case, you'll need direct access to the exchange and be prepared to meet the trading requirements.