Is investment in stocks and shares considered to be a business?
I can only answer this from a UK point of view - if you are in a different country, then the answer may be different.
From a UK tax point of view, merely investing in stocks and shares is an investment activity, not a business. This means that if you make any gains, they will be subject to capital gains tax.
However, if you are actively trading in stocks and shares, then it is considered a business and you will pay income tax on any profits you make.
The problem is knowing where the border is between managing your investments and actively trading - not always an easy judgement to make, and of course the Revenue may not agree with you!
Lizmoss71, thanks for your input.. from what you have listed out in your answer, it appears to be no different from where we are, after all, we used to be a British Protectorate once upon a time... The Inland Revenue Dept. here, I believe, is also no different, and they will always try to disagree with you on capital gains, which is tax free here for the time being, if I am not wrong.
I believe, its part of business. Investment too is part of a business, and only good businessmen can do it!
So round it, it is considered as a 'Business'
I recently did some research on this myself and can offer some (non-expert) information.
The IRS has fairly stringent and specific rules about what a person has to do to have a "business" of trading.
It is not normal for an individual who invests to be considered a business. An individual must really prove that they are in the business of trading stocks.
This may include having a separate corporate structure and separate finances from your personal money and keeping your trading account in the name of your corporate entity.
The other side of this coin, is that if you are a successful independent trader, then usually setting up a corporation or LLC will save you a lot in taxes. There are even specific Accounting firms who specialize in doing taxes for individual traders.
There are links at the hub below which lead to more information on this subject, which I gathered as part of my research.
If you are doing stocks and shares in large amounts and you make enough money in dividends and stock rises to pay tax you could be see to be doing business. But the law varies from country to country. The best thing to do is ask a tax specialist in your country of origin and residence to see if investing in stock and shares is classed as a business. I think it all depends on the amounts you are making as to weather you are classed as being in business or not.
Listening to Warren Buffet, he emphasized that there is nothing complicated about investing. We do this in our daily life. Every decision is a business decision so every investment is a business and if you treat it this way, you will certainly grow your profit.
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