Every business owner’s goal is for their company to reach its full potential, which requires growth. You need to stay ahead of the curve and keep up with the ever-changing marketplace to not only stay in business but to profit and thrive.
As your business expands, it’s inevitable (at some point), that your profits will exceed your expenses. Then, you’ll have the means to diversify your revenue, generate additional passive income, and grow your capital. This is all possible with investing.
But where should you invest your business’s profits?
For large and small businesses alike, you have a powerful tool in the financial markets. By opening a business brokerage account, you’ll have the flexibility to raise funds, expand and reach your business’s financial goals, and withdraw money at any time.
In this post, I’ll share the seven best business brokerage accounts, looking into the brokerage services offered, fees, account features, and customer service for each, so you can make a decision that’s best for your business.
5 Best Business Brokerage Accounts for 2023
1. Charles Schwab
- Account name: Schwab Organization Account
- Products available: Stocks, bonds, mutual funds, ETFs, CDs, cash, and cash equivalents
- Account minimum: $250,000 (Can be spread across all of your Schwab accounts)
- Regulations: FINRA, SEC, CFTC, SFC
- Available countries: USA; however, other countries are supported (contact directly for more details)
For over 50 years, Charles Schwab has been one of the most prominent financial institutions for banking, investing, retirement planning, and lending. They are publicly traded on the New York Stock Exchange (NYSE) and are an ideal platform for long-term investors. In 2020, Schwab acquired TD Ameritrade, with plans for TD Ameritrade accounts to be officially switched over in September 2023.
For businesses, Charles Schwab offers a Schwab Organization Account, offering commission-free (or $0 fee) trades on stocks, ETFs, and mutual funds, as well as the flexibility to manage your own account, utilize a robo-advisor, or tap into Schwab’s experts for guidance and insight. Plus, there are no monthly service charges or fees to open or maintain accounts.
Organization accounts are available to corporations, sole proprietorships, partnerships, LLCs, and unincorporated associations. There is a $250,000 minimum relationship balance, which is the total assets across all of your Schwab accounts (including the Organization account).
Applications are available for download on Charles Schwab’s website—be prepared for an arduous registration process. On the plus side, Schwab’s customer service is available 24/7 through the website and mobile app.
2. Interactive Brokers
- Account name: Small Business Account
- Products available: Stocks, ETFs, options, futures, cryptocurrencies, Forex, commodities, currencies, bonds, foreign equities, and funds
- Account minimum: $0
- Regulations: FINRA, SIPC, SEC, CFTC, IIROC, FCA, CBI, AFSL, SFC, SEBI, MAS, MNB
- Available countries: Worldwide
Interactive Brokers is a widely respected brokerage firm serving investors since 1993. Many investors find Interactive Brokers appealing as it has some of the lowest rates, commission-free trading, and zero transaction fees when you invest in mutual funds.
Interactive Brokers offers its services to businesses worldwide. If you’ve got a corporation, partnership, limited liability corporation, or unincorporated legal entity, you can open a Small Business brokerage account with Interactive Brokers.
Their IB SmartRouting feature can help you get the best price for stocks, options, and combinations by looking for the best deal across different exchanges and dark pools (or anonymous, private exchanges).
Though it has some great analytical tools and educational resources for beginning investors, the learning curve for this comprehensive trading platform may be overwhelming. However, with Interactive Brokers, you’re likely to see fewer fees and better tools than other brokers.
- Account name: Organization account
- Products available: Stocks, ETFs, mutual funds, CDs, options, and bonds
- Account minimum: $3,000
- Regulations: FINRA, SEC
- Available countries: US and UK
Founded in 1975, Vanguard is the largest provider of mutual funds and the second-largest provider of exchange-traded funds in the world. Boasting over 30 million clients, Vanguard offers brokerage services, financial planning, educational resources and services, asset management, and trust services to its clients.
Vanguard offers an organization account, or business brokerage account, to the following types of businesses (as long as they are legally established entities):
- Limited liability companies (LLCs)
- Professional associations
- Sole proprietorships
- Unincorporated enterprises
With Vanguard’s Organization Account, you can access various financial products, including stocks, ETFs, mutual funds, CDs, and bonds. Trading fees are waived on ETFs, stocks, and Vanguard mutual funds, and according to its website, expense rations are 83% lower than the industry standard.
To purchase most Vanguard mutual funds, you’ll need an initial investment minimum of $3,000, although some initial investment requirements can range anywhere from $1,000 to $10,000. Additionally, you can purchase ETFs at the market price of a single share, but that cost can vary over the course of the trading day.
4. Fidelity Investments
- Account: Fidelity Account for Business
- Products available: Stocks, bonds, ETFs, mutual funds, and options
- Account minimum: $0
- Regulations: SEC, SIPC, FCA, FIL
- Available countries: US and UK, but can support other countries
With 75 years under its belt, Fidelity has provided financial services to over 40 million customers and has established itself as one of the best in the industry.
Fidelity gives investors access to extensive resources to support their investment decisions, including educational materials, investment management tools, calculators, and excellent security features. It also provides helpful analysis features, including Real-Time Analytics, which sends real-time alerts to help you identify potential investment opportunities, and Trade Armor, which allows you to analyze and manage trades in real time.
When you open a Fidelity Account for Business, you can invest in stocks, bonds, ETFs, mutual funds, and options; however, there are restrictions on investments in futures, options on futures, commodities, or cryptocurrencies.
With a Fidelity business brokerage account, there are no annual account fees, no trading fees (for most Fidelity mutual funds), and $0 online commissions on U.S. stock trades.
- Account: Entity Account
- Products available: Stocks, ETFs
- Account minimum: $100,000
- Regulations: FINRA, SIPC, SEC
- Available countries: US and Hong Kong
While Webull entity accounts are only available to LLCs, C-Corporations, and S-Corporations, its simple, user-friendly design for online trading has made it a hit among millions of US and Hong Kong investors.
To open a Webull entity account, you must have a $100,000 minimum initial deposit and a $50,000 equity requirement.
There is 0% commission on all trades, so you can maximize your returns on your stock, ETF, or crypto investments. (However, Webull does not offer more complex investment products like forex and futures, and entity accounts are not open to options investments).
Webull offers a desktop (PC) version, in addition to mobile and web access, and 24/7 customer service availability. It also supports full extended-hours trading, allowing you to trade in the pre-market hours (4:00am-9:30am EST) and after-market hours (4:00pm-8:00pm EST).
What is a Business Brokerage Account?
A business brokerage account (sometimes referred to as an entity account) is a type of investment account that enables a business to buy, sell, and hold financial assets, such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), cryptocurrencies, futures, and more.
While business brokerage accounts are similar to individual brokerage accounts, there are some key differences, including higher minimum deposits, lower spreads (or lower trading costs), and commission fees, to name a few. You can also take advantage of certain tax benefits, more personalized customer support, and greater diversification.
There are a variety of business brokerage account models from which to choose. You’ll need to consider your business structure and financial goals in selecting the best one to suit your needs.
Once you’ve decided, your business account can be set up quickly and easily online, either through your broker’s website or mobile app. Just deposit the funds, and let them know your goals, risk tolerance, and which assets you’d like to invest in.
There are plenty of trading platforms out there that can help you get started, and I’m going to show you a few of them.
What Are the Benefits of a Business Brokerage Account?
Opening a business brokerage account can be a helpful step for entrepreneurs, as numerous benefits come along with it:
- Diversified portfolio: With a business brokerage account, you can open yourself up to investing in markets aside from your own, which not only diversifies your portfolio but spreads out your risks. For example, if you’re in the automotive industry, you could diversify by investing in tech companies or real estate.
- Better cash management: When you invest your business’s profits in a brokerage account, you can potentially earn higher returns on your money than you would if you left it in a low-interest savings account.
- Tax advantages: Depending on the type of account and your investment products, your business might be eligible for certain tax benefits, such as tax-deferred growth or tax-free withdrawals.
- Security: A business brokerage account can provide a secure place to store your profits, as many brokerages are FDIC-insured up to $250,000.
With a business brokerage account, your business can get tax benefits, have funds in a member-FDIC secured location, and better manage cash flow. It will also have access to financial advice and research tools. Ultimately, a brokerage account can help small businesses reach their financial goals and build wealth for the future.
How To Open a Business Brokerage Account
Here, I’ll walk you through the basics of opening a business brokerage account. It’ll be important to research each of your available options before selecting one and ensure you have the proper business documentation required to open an account.
I’ll give you step-by-step instructions on choosing a broker and opening your business brokerage account so you have everything you need to start making more money for your business today.
Gather the Necessary Documents
Before opening a business brokerage account, you should collect all the necessary documentation you’ll need to provide. Most brokers require an application with your legal business name, EIN (Employer Identification Number) or social security number, and contact information.
Depending on the type of business, you may also need to include an imprint of your corporate seal, articles of incorporation, business license, or operating document.
Often, the individual opening the account must provide proof that they are a company’s managing member (i.e., CEO, CFO, COO, Managing Partner, etc.). If they are not, they will need to provide the contact information and signature for an individual in one of these roles.
Consider Your Business Structure
Depending on the brokerage firm or type of account, different business structures can be eligible for a business brokerage account. However, typically, most brokerage firms will allow accounts for the following business structures:
- Corporation: A legal entity separate from its owners and shareholders, offering limited liability protection. Corporations can be either C corporations or S corporations, depending on how they’re taxed.
- Limited Liability Company (LLC): An LCC gives owners the benefit of limited liability protection like a corporation, but also the tax advantages of a partnership. The owners aren’t personally liable for business debts or obligations, and profits and losses are reported on their personal tax returns.
- Limited Partnership (LP): A business that has two types of owners—a general partner and a limited partner. The general partner is responsible for running the business and carries personal liability for its debts and obligations, whereas the limited partner has is only liable for their investment.
- Partnership: A business owned and run by two or more people, who share in all profits, losses, and liabilities.
- Sole proprietorship: A business owned and operated by one person, who has full control and is personally responsible for any debt or obligations it may have.
Remember that different brokerage firms may have different rules and regulations for business accounts based on these structures. You can contact the brokerage firm or a qualified financial advisor for more information about your particular business’s brokerage account requirements, needs, and goals.
Find the Right Brokerage Firm For You
Before you can begin searching for a brokerage, you’ll need to determine your specific goals for investing your business’s profits. Are you investing for the short-term or long? Do you have a set figure in mind that you’d like your funds to reach? (e.g. “I’d like to double our investment in ten years.”)
Further, you’ll want to consider your risk tolerance, or the level of risk you’re willing to take with your investments, and your time horizon, or how long you plan to have your funds invested.
Additionally, when looking into business brokerage firms, consider your ultimate investment objectives for opening an account. Each brokerage firm will have its own special features and rules, so the more you know about what you want going in, the easier it will be to narrow down your choices.
While researching, consider the types of investment models each firm offers, along with their pricing, customer service availability, website or mobile app usability, and financial security ratings. Read online reviews for each broker to get the real scoop from previous and current account holders and their experiences.
Ultimately, you’ll want to choose a firm that is reputable, accessible, and can provide you with the best service for your business needs.
Open and Fund Your Brokerage Account
After you choose the best broker for your business, it’s time to open your account. Typically, you’ll be required to complete an application with the business’s name, contact information, and banking details. As I mentioned above, additional documentation may be required, such as your tax ID, articles of incorporation, or your business license.
After submitting your application, it will need to be reviewed and approved, which could take a few business days. Once approved, just link your business’s bank account to your brokerage account, make an initial deposit, and begin trading on the stock market.
Manage Your Account
Now that your account is up and running, get familiar with the trading platform and its integrated tools—this is how you’ll place stock orders and manage your account.
If you’re the one making investment decisions for the account, consider how much is being invested, your level of risk tolerance, and your investment knowledge. Lower-risk investments, such as mutual funds, ETFs, bonds, and treasuries, may be better options if you have less investment knowledge and want to avoid risk. For those with more investment knowledge or higher risk tolerance, consider investing in individual stocks instead.
Some brokerages offer the option to have your business investment account managed by a professional broker who can provide advice, make investment decisions, and manage all assets on behalf of the business.
Frequently Asked Questions
How much money do I need to open a business brokerage account?
The amount of money you need to open a business brokerage account can vary depending on the broker you choose and the type of account you open. Generally, business brokerage accounts require a minimum initial deposit that can range anywhere from $0 to $100,000.
What are the tax implications associated with a business brokerage account?
Depending on the type of account you choose, your business brokerage account may be subject to capital gains tax, income tax, or both. Take the time to research and understand the different types of taxes, how they apply to your business, and how they can affect your bottom line.
Additionally, if you use the account for retirement savings, you may be eligible for tax breaks. It is important to consult a qualified tax professional to ensure you are taking full advantage of any tax benefits you may qualify for.
What are the risks involved with opening a business brokerage account?
A few risks are involved in opening a business brokerage account, with the most common being the possibility of losing the profits you invested due to market volatility. A few others could include the possibility of a cyber-attack and your data being compromised, being unable to access your needed funds in a timely manner, and the risk of running into compliance and regulatory issues.
You’ll want to be aware of these possible risks and weigh them against the advantages of having a business brokerage account. Based on your risk tolerance level, you can decide if opening an account is the right move for you.
Would it be better to invest in a retirement account?
Opening a retirement account for your business is another way to invest funds for your future. Some retirement plan options for smaller businesses include an Individual 401(k), Individual Roth 401(k), a SEP-IRA (Simplified Employee Pension), ideal for a sole proprietor, or a SIMPLE-IRA (Savings Incentive Match for Employees) for companies with 100 or fewer employees.
You should consider these retirement options if this a something you’d like to offer your employees. You could also open a traditional or Roth IRA for yourself and contribute to your own retirement that way.
Do You Need a Business Brokerage Account?
Whether your business is large or small, with this investment strategy, you can have a diversified portfolio tailored to your preferences and goals for your company.
When selecting a business brokerage account, you’ll need to consider the unique features and benefits each offers. The five business brokerage accounts listed here are solid options for your consideration, each well-known and reliable. However, the best option for you and your business will depend on your financial goals and needs.