Should you trade/invest as a natural person or as an onshore company

[Bill D]

Let's assume you have the choice whether to trade/invest as a natural person or as a company (onshore) in your country of residence, and that the tax will be more or less the same in both cases.


For a crypto/defi/stocks/etf, investor and day trader with crypto sof.


What should you consider before making a possible mistake to incorporate(onshore company) vs staying as a natural person ?
I thought of some elements but I would love to get some other ideas/advices before mistaking


Advantages as a company :



-Salary and dividends would in the long term be a useful proof of source offunds, however I was wondering if the initial hassle of setting up the company and transferring your asset to that company, with loan/or initial contribution certificate, wouldn't be such a hassle on theshort term that it would be as big as the relief you would get in thelong term. (crypto sof) VERSUS just getting capital gains will always be a problem for some banks about a crypto sof

-if you transfer your assets to the company via a loan or contribution certificate, is it enough for banks/brokers, will you meet more hassles than if you just opened a broker/bank account as a natural persons to deposit these assets ? Or the same ?


-Also,if someone intend to have a transactional type of trading, witharbitrage (example withdraw 200keur from a platform and next daydeposit it to an other platform), I guess there doesn't exist anybank account which would provide it for a natural person, and onlycorporate bank accounts would accept that ?


-the cost of banking could be much bigger for companies, it could be 500 eur/month for some banks versus more or less free for natural persons. But can you have an account for natural person which would let you day trade and transact as a pro ?


-as company you might be able to have more leverage and access to moreproducts on some brokers


-the accountancy and mandatory audits will be for sure costly and a hassle, but on the other side will grant you access to any bank and solidify a sof and can be useful forever


Drawbacks of a company :


-thereal time data fees for trading, it can be several hundred euros amonth ?


-"limited liability" is useless for a day trader ?

-there are almost no costs that you can deduct as an investor/day trader



What other elements should one consider to know if it worths it to incorporate an onshore company as a vehicle of trading/investments, what else should be considered as crypto/stock investor/trader ? (out of the fiscal matter)

 

[Mercury]

The main issue with crypto, as a company or a person, is cashing out to‌ Fiat at reasonable cost.
If you can find banks that accept your crypto SOF then‍ a company will just add extra costs and admin burden.

For instance Mt Pelerin offers a Swiss bank account opening and cash out service for an overall negotiable fee of⁠ less than 2%.
You end up with cash (USD, EUR, CHF) in a Swiss bank⁤ easily transferable to EU, US or Asia.
Remain to know bank maintenance/transfer fees and AUM⁣ minimum threshold.

 

[Bill D]

Cashing out is just one step, the problem is once you cashout to a bank,⁤ it doesn't mean you will be able to access every brokers, because compliance will always⁣ apply to the next bank, so you would be stuck with a high fee broker⁢ which accepted your crypto platform withdrawals and not all low fees brokers. Assuming you already︀ cashed out profits and invested in stocks and tradfi.
this is a cashout solution, not a day︃ trading solution. Assuming the target is to be able to day trade, stocks on any︄ main brokers, crypto, deposit, withdraw, convert, arbitrage, at wishes : a transactional type of account,︅ is it possible to reach it as an individual, i guess not ? But it︆ might be possible as a company ?(account musnt have 2% fees obviously)
still this does not give you the freedom, as next financial intermediary would also︉ apply compliance.
Wouldn't it also limit your freedom about where you can relocate later ?︊ Some country might want to see that you had a company, audited, profitable, which distributed︋ salary and dividends, to let you incorporate there, I am thinking for example about andorra.︌ And same for the banks, they could have such requirements ?

But at the same︍ time day trading/investing through a company might carry so much more cost (broker tax on︎ real time data, etc) and hassle that it would make it worst than the problem️ it is meant to solve.
trying to compare trading as a natural person in a‌ EU onshore country VS trading throught a company in a EU onshore country, with all‍ the drawbacks and benefits each solution can give

Am I wrong to think that having⁠ had an audited onshore company with high salary+dividends for your day trading could be something⁤ useful for all your life ? (unlike having just capital gains as a natural person,⁣ for example someone with crypto investment sof)

 

[Mercury]

This is something I don't get.

If you transfer money from your own⁣ Swiss personal bank account, due diligence has supposedly been made by the reputable Swiss bank.⁢ When asked, you can just reply it's savings. Moreover, no issue to tell the truth:︀ It's capital gains from crypto investments. All has already been cleared by the Swiss bank.︁

Why would the next receiving financial institution ask what is the SOF? Highly regulated banks︂ do not trust each others?
If so, you would need to provide SOF supporting docs︃ on any transfer to new FI.
It's a never-ending story because money could also come︄ from other personal bank accounts transfers at multiple levels, all banks supposed to have already︅ checked your money provenance as well.

Who bears the money laundering risk? I assume it's︆ only the Swiss bank, not the next FIs?

 

[newguyhere]

At least in the︃ guidelines I have read, the bank should not assume that the sending bank has done︄ due diligence.

 

[vehzag]

Which bank is this?

 

[fanban]

I always prefer to do business, trade and invest as an business and not personal.‌ Your options to get a way cheaper in taxes is way bigger than with personal‍ activity!

 

[Mercury]

You'll have to ask Mt Pelerin.‌

 

[Frankie]

Not worth it:
1. Much harder to find banks/brokers that onboard a company vs natural‌ person. Every account opening involves getting a notarized/legalized CoI and other documents - can be‍ up to $500-1k to get these documents depending on structure complexity.
2. Pricing is higher⁠ - as you wrote, data costs for 'professional' traders are a few hundred bucks per⁤ month (per brokerage)
3. Banks will ask for higher minimums
4. Since you're the only⁣ owner, it doesn't provide you with any asset protection as the corporate veil can and⁢ will be pierced if needed
5. Yearly audits, accounting costs
6. Depending on your jurisdiction︀ your entire revenue/profit can be published online (or behind a $50 paywall, which is still︁ bad)
7. Zero CRS protection as everything is reported on your personal TIN level.

The only pro I can think of is that if you want to sell your entire︂ portfolio you can sell the shares of the company. Which will be simpler.

Of course︃ it all depends on your circumstances.

 

[Meta]

Hey friend. I'm in a similar situation.⁢ For what it's worth: I tried to be a natural person with capital gains from︀ crypto and it's a hassle. You find a bank which is okayish with that, you︁ get some papers/legal opinions, but it's a hassle. Every new professional who wants to see︂ SoF is either "ok, good" or "we don't understand crypto, aren't you a money launderer?"︃ I'm planning to switch to the "this is my company, those are my dividends" way.︄

Nah... They will all︎ want to see the documents. I guess "transfer from own name from a reputable Swiss️ bank" will attract less scrutiny "transfer from a suspicious third-party Seychelles firm". I guess if‌ it's inside one country it may be easier. But they still need some documents.

 

[Mercury]

Are you saying that when you transfer⁤ money from your bank A personal bank account to your bank B personal bank account,⁣ bank B asks systematically how did you fund bank A?

I have personal bank accounts⁢ (real banks not EMIs) in multiple countries, no bank never asked me SOF when I︀ transfer money between my accounts, though over a certain amount some banks may ask the︁ purpose of the transfer.

The day financial institutions will ask SOF for each transfer between︂ 2 personal bank accounts has not come yet, but will definitely be the trigger for︃ 100% decentralized crypto adoption.

 

[Meta]

Yep, bank B asks me for documents. I can not say "systemically" as it︁ is not for every transfer, it's more like once per bank and I don't have︂ that many accounts. But anecdotically it happened to my friends and certainly happens to me.︃
The last one was a transfer to N26 in Germany, about 100k EUR from my︄ personal account outside of EU. N26 even wanted to re-identify me. Happened that they don't︅ accept passports from my country as ID documents anymore so I am probably losing that︆ account - triggered by an "OWN FUNDS TRANSFER".
Maybe not always and not for every︇ transfer, but the checks are present.

 

[vehzag]

Key phrase here is outside︁ Europe
In SEPA they cannot do that

 

[TheCryptoAnt]

Ditto, to the point that after the next bull run I'm going to move most⁤ of my money to tradfi and exclusively trade the BTC CME futures contract.

This way⁣ I can avoid answering questions and providing trade reports to people who can barely understand⁢ what I'm doing. The number of Google Meets I've had in the last three years︀ to explain precisely how I trade, show my screen, etc... makes me dizzy.

/rant

 

[Dreamy]

Could you be so kind as to tell⁢ us more? You mean Mt Pelerin can help me open a new Swiss bank account,︀ accept my crypto, and send fiat to my new Swiss bank account for 2% of︁ the amount? And the Swiss bank will not ask the source of origin of the︂ funds, since it will be enough for them to simply see that these funds were︃ sent from Mt Pelerin? I wonder which Swiss banks they open accounts in?

 

[Mercury]

Word.

That's my plan too.
Crypto > Personal Bank Account >⁢ Personal Brokerage Account (IBKR, Schwab International)

When questions arise about SOF, it's proceeds from Stock︀ investments.

Read the Mt Pelerin link I provided, it's well explained.
For further details feel free to contact them︆.

Note that I have no connection with them and not used their OTC/Banking opening︇ service (yet).

" ... The track record that we have built in Switzerland as a︈ regulated financial intermediary specialized in crypto services gave us over the years a solid reputation︉ among the local financial ecosystem, and we have developed relationships with most of the private︊ banks here that can be used to help crypto clients open bank accounts.
When new︋ clients contact us and express their needs for that service, we first onboard them through︌ our regular KYC process, which is entirely done in-house. We know how privacy and data︍ safety are important in the crypto world, which is why we always emphasize that point︎ and stress the fact that all our clients benefit from Swiss secrecy.

Once that initial️ KYC is done, we then schedule a meeting to start drafting the file that we‌ will use to present the client's case to the target private banks. When completed, that‍ file will include a comprehensive portrait of the client's crypto wealth, its origin and its⁠ fiscal status.

Depending on the client's profile and wealth management needs, we will suggest the⁤ most relevant bank from our network (we only deal with private banks, which are focused⁣ on wealth management). With the client's approval, we will go on and request a bank⁢ account opening.

We then take care of all the follow-up work with the bank to︀ ensure a swift process until the actual account is open and ready. Once done, we︁ proceed to the actual cash out of the funds: the client transfers the crypto to︂ our wallet in one or several transactions, which we then convert into the desired fiat︃ currency through our liquidity network.

Finally, we transfer the fiat funds directly onto the newly︄ opened private bank account, ready to be used. That whole process can be completed in︅ less than a month!
On our side, we charge for that service an all-inclusive one-off︆ fee of less than 1% of the amount transferred. That fee includes all our compliance︇ work, the preparation of the circumstantial report for the bank and the assistance with the︈ account's opening.

On the private bank's side, they usually apply an all-in-one fee (custody and︉ transactions) around 1% of the asset under management. We can usually help negotiate that fee︊ down thanks to our good relationships with banks. Of course, additional fees regarding tax consulting︋ and restructuring may apply, but in all cases we will ensure that you pay the︌ right price.
... "

 

[Amandograde]

nope, they ask very⁢ precisely every sat or shitcoins origin and how you got it while you are required︀ to drop your panties by doing so.
that company will serve only as an introducer︁ to smooth the transaction at best and discuss your life story with the bank instead︂ of you doing it directly.

 

[Mercury]

Correct.
The advantage of using an introducer is that you'll have to provide data only once⁤ and they will almost 100% guarantee (unless of course your crypto is "tainted" from illegal⁣ source) an account opening & cash out with an appropriate bank.

Begging by yourself you⁢ might have to drop your panties multiple times before you luckily end up with the︀ right bank and outcome, but I understand some may like it.

 

[Jerry1911]

Accounting yes, not necessarily audits.‌ But even accounting can be avoided in certain cases.
UK LTD tax resident elsewhere keeps this private.
Not if your company owns an active NFE subsidiary.

 

[Yrybak08]

question Is, where do we find good introducers