You’ve been a trader for a while and made a decent sum from your market activities, you’re about to make a big purchase, like buying a house or vehicle, and need to add income made from the markets in your application.Will this sort of income be accepted? Can it negatively impact your application? What can investors do to ensure that their income from market activities helps them get the loans they need? These are some of the questions this article aims to answer.

The Price of Success

Many traders start in the market as part-time investors, and sometimes these investments grow to become a large chunk (or majority) of their income.What happens when a large chunk of the money you make comes from forex trading and other retail market activities? The simplest answer is it depends.Your ability to leverage investment earnings relies on a couple of factors, including location, taxation, whether you trade on behalf of a corporation, and a handful of others.

You need to start your research today to better understand your options based on your realities.

Some banks and credit bureaus are unwilling to consider retail investment income, and it doesn’t matter what you do and how much you’ve made, it won’t impact their decision.Many jurisdictions allow traders the opportunity to include this sort of income under strict guidelines.You may also need to reach out to a financial adviser to guide you on this journey to making your money count.

Here are a couple things you can do to ensure your investment income counts.

Taxation and Reporting

One of the most significant stumbling blocks many retail investors face is the lack of reporting, which can be done either improperly or too late.This can impact how much tax they pay, the type of income this earning falls under, and the kind of returns individuals can be entitled to.

You cannot expect earnings you’ve not properly paid taxes on to be considered when you’re applying for a loan.Do yourself a favor and reach out to a tax professional for help if you need to.

Failure to properly report your earnings might not only stop you from accessing certain loans, but it can also result in severe fines or possible jail time.Tax evasion is a serious crime in most countries.Do everything you can to remain on the right side of the law.

How do you achieve your reporting and taxation goals? Through diligent documentation.

Documentation

Tax documentation no longer has to be a hassle for you as a retail market investor because most major trading platforms and exchanges now make it easier for you to directly and automatically pay what is due in a timely manner.You’ll often need to fill out a couple of tax-related forms to complete your registration and fill out more whenever you attempt to withdraw funds.However this might not be enough if you trade “massive” volumes or focus on peer-to-peer trading.

Forms like 1099, 1099-B, 1099-R, Section 1256, 2439, and many others will become a regular fixture in your activities.It’s in your best interest to consider speaking to a tax professional if you’re interested in accessing loans of significant value.

Proper documentation is not a suggestion; it’s a key tenet to successfully enjoying the dividends of investing.The documentation process might prompt you to consider the possibility of incorporating.

To Incorporate or Not

There are situations where you need to consider the possibility of incorporating your trading business activities.Doing this can further “legitimize” your earnings in the eyes of banks and lenders who want nothing to do with crypto and retail forex exchanging.

S Corp

This legal structure offers liability protection and many tax benefits.Losses and profits go through your personal tax return, removing the likelihood of double taxation.

C Corp

This structure protects personal assets but requires significantly more paperwork and often results in double taxation.

LLC

You should primarily be considering forming an LLC as a retail trader due to its liability protection.

You can often choose how to be taxed, either as a sole proprietor or S Corp, but keep in mind that LLCs are technically formed and not incorporated.If your business is sued and can’t pay debts, your personal finances are often safe from litigation.LLCs offer you the best of both worlds.

Secure Your Loans Today

The hurdles investors need to “jump through” to make the most of their earnings are unfortunate.Don’t let the extra steps stop you from accessing the loans you need.

Shop around and walk into (or schedule visits to) a couple of banks and credit unions.Explain your reality and ask what needs to happen for the earnings from your market activities to count toward your loan application.You’ll never find a one-size-fits-all reply to your loan questions online; reach out and learn more about how your service provider can assist you.