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This article will explain how you can buy stocks on behalf of your LLC.
If you haven’t already formed an LLC, check out this article to find out how you can benefit from starting an LLC in the USA.
Running your business as an LLC is a more beneficial set-up, in comparison to being self-employed. You’ll save in tax and protect your assets.
Can you buy stocks through your LLC? Yes. An LLC is seen as a legal entity and holds the right to invest and buy stocks.
Why Would You Buy Stocks On Behalf of Your LLC?
Here are the benefits of investing in the stock market with your LLC.
Tax Savings as a Non-resident Alien
If you’re a non-resident alien (you don’t live, and aren’t a citizen of the USA) then the US is somewhat of a tax haven for you.
This is because the LLC’s profits are taxed at the personal level of its members, and the IRS doesn’t tax non-resident aliens.
So, your income is not going to be taxed.
Faster and Easier Stock Investments
Let’s say your only income is from the LLC, and you want to invest some of it in the stock market. You can pay yourself and then invest in the stock market, or you can use your LLC’s assets directly.
Paying yourself is a redundant step in this scenario if your LLC is a single-member LLC.
Even more so, if you have to exchange or wire the money from U.S Dollars to your home currency. Every time you wire or exchange money, you lose some of it to the fees.
Minimizing the Losses
The stock market can be unpredictable, that’s a fact.
Your investments can lose value really quickly. There’s nothing that can protect you against that, it’s a risk you agree to when you decide to invest in the stock market.
When you invest through your LLC you might be able to write the loss off, so, wherever you’re paying taxes – you’ll pay less.
Growing Your Business
Building a secondary income source for your LLC is a good idea, especially if it’s unstable right now.
Having additional profit that you can use to grow your business is easier than loaning money to your LLC.
Access to US Brokerages
Brokerages vary by fees, platform design, customer support, and stocks offered.
The US offers the best platforms on the market with the biggest range of stocks and investments you can access. This isn’t the case in most countries. Some places are really limited and charge high transaction fees.
How To Buy Stocks on Behalf of Your LLC
Finally, here’s how you can buy stocks on behalf of your LLC.
Step 1: Form Your LLC
If you haven’t already done so, you can register an LLC in minutes! It doesn’t matter if you’re a US citizen or not, if you’re on the beach in Costa Rica, in London, or New York. You can start an LLC in the US remotely.
Step 2: Check Your Operating Agreement
Your LLCs operating agreement must not prohibit your LLC from purchasing stock. Check the agreement, or, if you’re going to register a new LLC, make sure you have it included in your agreement.
We offer a package that includes a customized operating agreement and a 30-minute consultation. Check it out here.
If your LLC is already formed with an agreement that prohibits it from buying stock, you can change the operating agreement. The only thing is that all LLC members must agree to the changes in the operating agreement. We recommend you keep track of the official paperwork.
While you’re amending the agreement, you should also check and arrange the distribution of rights to buy stock. You have to specify who can buy stock on behalf of the LLC.
Step 3: Find a Brokerage Platform
Instead of hiring an expensive broker, use the business option on brokerage platforms. The fees will be much lower and you’ll have more control than if you went with a broker.
Since your LLC is registered in the USA, you’ll have access to US-based brokerages.
Step 4: Do Your Research
This comes as a no-brainer, whether you’re buying stocks as an individual or as an LLC, you want to do your research. Don’t rush into buying stocks without doing the research, you might lose your money that way.
If you’re completely new to stocks, we recommend this site for some education.
While it’s not something you learn overnight, getting the right education will help you make more informed decisions from the start and minimize your risk.
Step 5: Purchase Stocks
This isn’t much different to buying stocks as an individual. Follow your platform’s instructions.
If you’re unsure of something, contact the brokerage platform. Usually, they have great account managers that can help you.
It’s important you know how to use the platform so that you don’t make costly mistakes.
Step 6: Take Profits
When taking profits from your stock investments, remember to transfer them to your LLCs bank and distribute them among the members. The profits will count as a secondary income for your business.
Buying stocks on behalf of your LLC is easy and doesn’t require any additional steps. As long as your operating agreement states that the LLC can buy stocks, you’re good to go.
If you haven’t formed an LLC yet, you can hire us to do it on your behalf and create a customized operating agreement that will make it possible to purchase stock.
Click here to learn more.