Usually the reasons for setting up an entity are for legal protection and tax benefits. For professional day traders, however, it doesn't make as much sense to set up an LLC (or corporation) as it might if you own a business or real estate. Reason 1: Professional day traders (i.e. if you can qualify as such according to the IRS) can already write off their necessary and reasonable trading expenses anyway, without need for an entity. Reason 2: Professional day traders aren't generally subject to FICA (~15% self-employment) taxes, but if you set up an entity like an LLC, I believe that you have to start paying those (so it's like the reverse of getting Geico). Reason 3: Tons of paperwork with brokerages, extra brokerage fees, entity setup fees, and a hefty $800-$1,000 annual renewal fees to renew your LLC with the State of California. Reason 4: Apart from tax reasons (which an LLC might actually make worse), a main reason to set up an LLC is to quarantine lawsuits, so that people suing you can't get your other assets (your house, car, other businesses, real estate, etc). However, it's pretty rare when your trading business leads to you getting sued, since it's just you, a computer, and an internet connection. (I guess you could accidentally poke someone in the eye while reaching for your keyboard or something). So, few upsides, lots of downsides. A person might just be better off getting a personal liability policy (umbrella insurance) to protect against personal lawsuits ($400 a year for $2 million in coverage), and enjoy the existing day  trading tax benefits the IRS provides. Disclaimer: I'm not an attorney or an accountant, so McFly just might have his shoes untied.