STOCK TRADING BUSINESS SETUP

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If you're looking to establish a stock trading business by managing funds from various investors, you need to consider the right legal structure. A partnership is suggested as a viable option with fewer legal compliances, allowing up to 100 partners. Investor funds can be shown as capital contributions and current accounts, with interest paid on both, alongside profit sharing. New investors can be brought into the partnership, or you could consider operating as a broker.

Sahaj M

Sahaj M (Querist)
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21 August 2022 If a person wants to make trading in stock market his business and he gets money from different people who like to invest in his business. He further wants to invest this money in stock market through his demat A/c then which type of entity should he incorporate and what are the legal compliances if any he needs to comply?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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21 August 2022 Have partnership, less legal compliance.
Upto 100 persons you can have partners

Sahaj M

Sahaj M (Querist)
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21 August 2022 How can i show the amount that i will get from different people who are willing to invest and looking to earn a certain percent on it in a partnership firm?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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21 August 2022 Show it fixed amount as capital contribution and variable amount as current account.
Pay 12% interest on capital and current account.
Also share the profit.

Sahaj M

Sahaj M (Querist)
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21 August 2022 Whether i have to enter in partnership with my investors?.What if after some time some new members are also interested in investing then how the same can be done?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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21 August 2022 They can be included in partnership.
You can act as a broker alternatively.

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