Getting into the share trading industry can be an easy task if you know all about it. The only hurdle is to secure startup money. In most cases, it is easy to find a million dollar corporation and become a part of their stock trading business. It is also a good business to get into if you have some spare money lying around. But beware, share trading is highly unpredictable, so it is important to research and prepare yourself for the risks involved.
A typical share trading business involves long-term and short-term trends studies. Other activities include reading company prospectuses, producing annual reports, and seeking advice from experts. However, certain administrative practices can affect the characterisation of a share trading business. For example, failing to maintain records or lacking the relevant qualifications may result in a business being classified as a speculative one. If the trading business is a thriving one, then it can be classified as an investment business.
As for revenue account treatment, the taxpayer conducting share investments must be engaged in a trade that results in profit or loss. For example, if a trader sells shares to make a profit, the income generated from this trade will go into his revenue account. However, if the investor is a regular trader, he or she may not be able to qualify for revenue account treatment. As a result, the income derived from share trading will be taxed at lower rates than from ordinary sources.
Fred, on the other hand, was earning $180,000 per year. He had been actively involved in the share market for years. Fred spent about fifteen hours a week on share activities. The transactions he made averaging $23,000 each. Fred also had a margin account to fund his share activities. He used little risk-management techniques, but had the help of advisory institutions and brokers. He also dedicated a part of his house to his share trading business and kept records of transactions for accounting purposes.
When it comes to share trading, the rules are complicated and you need to be aware of these regulations. You may need an ABN or a registration number, depending on your activities. This is important as it relates to taxation. If you are doing a regular trade, you may not need a business registration and an ABN. You will also need to register with the ATO, so be sure to lodge the correct tax returns.
The share market is a very volatile place. Buying a share when the price is high will make you more profitable than if you sell it when it is falling. A successful share trading business requires time, discipline, and self-education. Ninety percent of share traders fail within two years. To get the best out of your trading business, follow The Business of Share Trading. Once you have a solid foundation of knowledge, you can set up a home office and make a great living by trading.