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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16544
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I am considering starting a sole proprietorship company for

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I am considering starting a sole proprietorship company for investing services, considering that I'll be my main "client" at least at the beginning. The idea is:

1/ deduct all the expenses linked to my investing activities (computer, internet, some membership fees, transaction fees, financial advisor fees, etc.) from the income resulting from this activity considering them as business expenses.

2/ grow this activity as a business (getting other clients than myself).

I want to know if this is something I can legally do.

Additional information: I am a French national, permanent resident of the USA (legal work and residence), living in Florida.

Megan C :

Thank you for your question, and thanks for using JustAnswer.com.

Megan C :

You could not create an investment management firm and have yourself as your only client.

Megan C :

You could only deduct fees and expenses related to your generating income (revenue) from outside clients.

Customer:

Do you mean that even if I have other clients, I have to keep separated my personal investments and my outside clients investments and will never be able to manage both of them in the same way?

Megan C :

You can manage both in the same way, but you would be creating taxable income for yourself. You would have to pay yourself, and then you would be paying self employment taxes on that revenue.

Megan C :

You would have to pay yourself the same fees as you charge anyone else

Customer:

So you are saying it is legal if I consider myself as 3 different people from a taxable point of view: 1/ the administrator of the company 2/ the owner of the company and 3/ a customer of the company, each person being treated separately (paying relevant fees, taxes, etc.). Am I right?

Megan C :

Yes that would be correct

Customer:

good, thank you :)

Megan C :

But I don't think it's smart, because you are creating yourself taxable income.

Megan C :

that would increase your self employment taxes

Customer:

ok, thank you!

Megan C :

Is there anything else you need?

Megan C :

If not, please rate as "excellent" so that I may receive credit for assisting you today

Customer:

I'm good, thanks. I will

Megan C and other Finance Specialists are ready to help you
Thanks, Damien for your positive rating. Please come back and visit me any time you have a question that needs answered. It was a pleasure working with you today.