There are two main brokerage account types: cash accounts and margin accounts.
A cash account only allows an investor to purchase securities up to the amount of the cash held in the account.
As a sole-proprietorship, all of the money is pretty much considered yours right from the get go. Being entities completely separate from yourself, the IRS requires you and your Corporation to keep all income and expenses separate.
Corporations are superior entities, for sure, but along with the refinement comes restrictions.
But corporations first pay corporate taxes on the company profit then, when that profit is distributed to the shareholders in the form of Dividends, the shareholders are then also taxed.
This is especially bad if the dividend causes the corporation to go bankrupt or even just makes it so it is unable to pay debts. A reward that, preferably, after taxes, will be substantial.When you start a corporation, there's a good chance that it isn't for the hours or labor, sweat, tears and stress of it all. In order for this to happen, you will oftentimes have to take money out of your corporation in varying forms.It doesn't matter how good your intentions or foolproof your paperwork, the IRS is allowed to disallow any transaction they like.So, unless you plan on keeping the profits in the company, they will be taxed twice as they flow through to the shareholders.Leaving money in the corporation can be a good short-term plan, but unless that money is spent, you could be facing an Accumulated Earnings Tax, which is approximately 39.6% in addition to the regular corporate tax already applied.