How to Buy Stocks on Behalf of an LLC

A limited liability company (LLC) is a popular type of business structure that provides the simplicity of a sole proprietorship or partnership but without the legal exposure. When a business is incorporated as an LLC, the owners' or partners' personal assets are generally protected from litigation or from being used to repay the company's debts.

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Clipboard with paper and glasses and the words Limited Liability Company, LLC. — Image source: Getty Images.

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LLCs are registered by the states -- usually by filing LLC articles of organization through a secretary of state's office. This is typically a short form and will establish information such as:

The name of your LLC
The LLC's business address
Names and addresses of the LLC's organizers, managers, and designated agent
The effective date of formation and the term for which the company will operate (if applicable)

You'll need to submit this form along with a filing fee and wait until the application is processed. It's also a good idea to obtain an employer identification number (EIN), which is a tax ID number specific to your LLC, from the IRS. You can do this on the IRS website -- it's fast and free.

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Next, you'll want to open a brokerage account in the name of your LLC. Most major brokerages offer this option. For example, Fidelity offers business accounts for various business structures, including LLCs, as shown in this screenshot from its business account application form.

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Fidelity Business Application — Image source: Fidelity.

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Once you've opened and funded your investment account, you can buy stocks just as you would through your personal brokerage account. Of course, thoroughly research all stocks and ensure they fit your LLC's objectives and risk tolerance before you buy.

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About the Author

Lyle Daly is a contributing Motley Fool stock market analyst covering information technology and cryptocurrency. Lyle has been a contributor at the financial services company since 2018. His work has been featured on USA Today, Yahoo Finance, MSN, Fox Business, and Nasdaq. Before joining The Motley Fool, he wrote for financial brands including Intuit.

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