For the most part, we think of investing as a personal thing. You invest your money in stocks or shares to try and get a return. But, what if you owned a small business and wanted to start investing some of your profits? No, you don’t need to become a stockbroker to do this, it’s actually very easy for any business to get started.
So, that already answers the main question for this blog post: yes, your business can make money by investing in stocks. It’s not that different from investing personally, but there are a couple of things you have to keep in mind.
On that note, here are some tips to help you set your business up for some investments, as well as a few extra tidbits on why investing in stocks can be so beneficial:
Set up a trading account
Firstly, as with personal investments, you need an account to trade with. This means you have to set one up, and it is usually called either a corporate or company account. You must set one up in your company’s name or else you can’t use the money from your business. There are loads of trading platforms you can do this on, or find a broker to take care of everything for you.
Obtain an LEI
This is where things get a bit technical, but it’s not too difficult to grasp. Essentially, regulations state that you need to have an LEI number if you want to trade stocks and shares as a limited company. This is the law, so you will end up getting into hot water if you don’t have one. It basically acts as a way of identifying your business as a legal entity on the stock market.
Once that’s done, you’re free to trade as you please. Be sure to diversify your assets and trade smart! Remember, you’re no longer handling your own money; you’re handling your business’s money as well.
What are the benefits of investing as a business?
The obvious benefit is that you can make a lot of extra money by trading in stocks and shares. However, it can also be a great way to secure some of your profits and protect them. There are plenty of stocks out there that are slow-burners and offer excellent security and long-term results. Investing in these can be an alternative to putting money away in a savings account. You generate more interest through the stocks, and there’s never usually a limit on how much you can invest. So, you can make money in the long term but secure a portion of cash at the same time.
Overall, your business should always try to identify new ways of making money. When you have a cash surplus – too much money – then the smart idea is to invest it. Tie your money up in other areas that can help you make even more! So, to answer the main questions: yes, your company can make money by investing in stocks. Yes, it’s easy to get started, and yes, you can also see additional benefits.