Exchange trading from a legal entity: pros and cons
Not all traders know that trading on the stock exchange can be done either by an individual or a legal entity, firm or company.
That is, you carry out all operations on the stock exchange not on your own behalf, but on behalf of the company for which your personal account will be registered.
If everything is clear about trading from an individual, then when using a company account, a lot of questions arise, the main one of which is what is this for and do I need it?
Therefore, before starting the registration process, you should understand the main advantages and disadvantages of speculative trading of exchange assets through a legal entity.
Advantages of stock trading through a legal entity offshore:
No taxes - in most offshore zones there is no taxation at all if the company operates outside its place of registration:
Anonymity – if desired, you can hide the true owner of the company; when signing contracts, only the name of the director will appear.
Foreign bank account – you will have a corporate account in a foreign bank, which will allow you to freely manage the profits received from trading.
Obtaining visas – to those countries where the offshore company was opened, and in some cases the opportunity to obtain a residence permit.
Well, we can’t help but mention the disadvantages of trading through a company:
Regular payments - in addition to the cost of opening the company itself and the account (around 1000-1500 dollars), you will also have to regularly pay about 1000 dollars a year:
Whether you trade or not, the required payment amount for the maintenance of the company and current account does not change.
Reporting - many offshore jurisdictions have recently begun to require reporting even in cases where no activity was carried out. And this costs your own time or costs for an accountant.
Taxation – with offshore companies it’s not that simple; if you earn and spend on behalf of a company, you don’t pay taxes.
But if you have a desire to buy a house or car in your own name, then you will need to first transfer money from a 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, after the advent of cryptocurrencies, and in particular stablecoins, the usefulness of using a legal entity in exchange trading has noticeably decreased. With the help of cryptocurrency, it is much easier to anonymously withdraw money and then optimize your taxation yourself.
And when using offshore companies, a lot of problems have recently arisen - banks are closing accounts, inspections are initiated, and additional fees are introduced.
The only exception may be the moment when you want to buy real currency on a foreign exchange exchange for the needs of your enterprise. Then you really need to have direct access to the exchange, and be prepared to meet the requirements to be a candidate for trading.