Funded Account: What It Is and How It Works

In the trading world, access to capital is one of the biggest challenges for those who want to operate on a large scale. A funded account emerges as an attractive alternative: it allows a trader to operate with capital provided by a funding company, in exchange for following certain rules and sharing a percentage of the profits.

For entrepreneurs and investors planning to establish their company in the United States, this model not only opens opportunities as a trader but can also become a profitable business structure if set up professionally.

What Is a Funded Account?

A funded account is a financial arrangement in which a trader operates with money provided by a specialized company known as a funding firm. The trader does not risk their own capital (or does so in minimal proportion) but must follow clear risk management rules and meet profitability targets.

In essence, it’s an agreement: the trader demonstrates their skills through a preliminary evaluation, and if successful, gains access to significantly more capital than they could use with personal funds. In return, the funding company retains a percentage of the generated profits.

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Key Features of a Funded Account

Access to external capital
The trader operates with third-party funds, increasing their investment capacity.

Risk management rules
Limits on daily loss, maximum total loss, and minimum profit targets.

Preliminary evaluation
Before receiving a real account, the trader must pass simulation or demo account tests.

Profit split
Earnings are shared between the company and the trader, often with percentages favoring the trader to encourage profitability.

Market flexibility
Depending on the company, it may be possible to trade Forex, futures, stocks, cryptocurrencies, or other assets.

How the Funding Process Works

The process to obtain a funded account generally follows similar steps:

Selecting the funding company
The trader chooses a provider with suitable conditions regarding initial capital, rules, markets, and fees.

Evaluation phase
Usually conducted in two stages: a demo account to demonstrate consistency and risk management, and a verification account to confirm results.

Allocation of real capital
Once the evaluation is passed, a funded account is assigned with the agreed capital.

Trading under established rules
The trader must comply with the risk and performance parameters to keep the account active.

Profit distribution
Profits are split as stipulated in the agreement.

Funded Accounts vs. Traditional Trading Accounts

FeatureFunded AccountTraditional AccountInitial capitalProvided by the funding companyProvided by the traderPersonal riskReducedTotalTrading rulesStrict and predefinedMore freedomScalabilityBased on performanceLimited by own capitalMain objectiveSustained profitability and risk controlProfitability per own strategy

Advantages of a Funded Account

• Greater trading capacity without a large initial investment.
• Reduced personal risk, as losses are not from personal capital.
• Opportunity to scale earnings with consistent performance.
• Professional growth thanks to the discipline imposed by rules.

Risks and Disadvantages

• Evaluation costs: Tests to access a funded account usually have fees that are lost if not passed.
• Performance pressure: The need to meet profit goals can impact decision-making.
• Operational restrictions: Some firms limit strategies or trading hours.

Popular Funded Account Companies in the U.S.

• FTMO: Known for its structured evaluation process and profit splits up to 90% for the trader.
• TopstepTrader: Specializes in futures with progressive training and evaluation programs.
• FundedNext: Allows profit participation from early evaluation stages.
• Darwinex Zero: Hybrid model with educational focus and external investment attraction.

Tax Considerations for Traders in the United States

If you operate a funded account under a company registered in the U.S., your earnings are considered income and therefore subject to taxes. Taxation will depend on whether you operate as an individual, independent contractor, or through a legal entity such as an LLC or Corporation.

Many international traders choose to form a U.S. company to operate funded accounts, optimizing their tax structure and projecting greater professionalism to funding companies.

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Creating a U.S. Company to Operate a Funded Account

Operating under a business structure offers several advantages:

• Legal and tax separation between personal assets and trading activity.
• Access to U.S. business bank accounts.
• Greater credibility with funding companies and potential investors.
• Tax filing options based on the chosen entity type (LLC or Corporation).

At Openbiz, we help entrepreneurs and international traders set up companies in the United States, obtain their EIN (Employer Identification Number), and open bank accounts—facilitating relationships with funding companies and clients.

FAQs About Funded Accounts

1. Do I need prior experience to get a funded account?
Yes. Funding companies look for traders with proven strategies and solid risk management.

2. What percentage of profits does the trader keep?
It depends on the company but can range from 70% to 90%.

3. Can I trade any market with a funded account?
Not always. Each firm defines the permitted instruments and trading hours.

4. Do I need to live in the U.S. to operate a funded account?
No. You can trade from abroad, although forming a U.S. company may provide tax and operational benefits.

If you’re looking to access third-party capital to boost your trades and leverage the world’s largest financial market, a funded account could be the ideal path. And if you want to do it professionally and securely, Openbiz will assist you in creating your U.S. company, ensuring you have the optimal legal and tax structure to operate, scale, and consolidate your success in trading.

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