Investing your company’s spare cash can have real benefits:
- Earn interest: Getting returns on your uninvested cash balances, which are often higher than those offered by business bank accounts;
- Diversification: If you would rather not reinvest everything into the business itself, the markets are one way to spread the risk;
- Keeping capital working: Cash sitting idle in a business account loses purchasing power to inflation, whether or not you eventually distribute it.
There is also a tax angle that gets repeated a lot online and is only true for some businesses. We cover it properly further down, because getting it wrong is expensive.
If you’re a business owner using Robinhood for personal investments, you might wonder whether you can open a business account with Robinhood.
Can you open a Robinhood business account?
The short answer is no. Robinhood does not offer business, LLC, or corporate accounts.
Robinhood is built specifically for individual retail investors. Its account types cover individual taxable accounts, retirement accounts and margin accounts, with nothing for entities.
Robinhood has expanded considerably in recent years, adding retirement products, an advanced trading platform and services for registered investment advisers. None of that extends to business brokerage accounts, and we found no mention of plans to add them in its investor communications.
Robinhood is not unusual here. Public.com does not offer business accounts either, and several brokers that do still require a paper application.
Below, we explore alternative platforms for business investments.
Alternatives for business accounts
- Interactive Brokers: Our choice. No minimum deposit, low commissions, and the widest range of financial products.
- Webull: Entity accounts for LLCs, C-corps and S-corps, with a $100,000 minimum initial deposit and $50,000 minimum equity. Best for simplicity.
- Vanguard: Geared towards long-term buy-and-hold investing rather than active trading.
- Charles Schwab: One of the largest US discount brokers, with commission-free trades on stocks, ETFs and mutual funds. Organization accounts require a $250,000 minimum relationship balance across all your Schwab accounts, not a $250,000 deposit.
Comparison
In this comparison, we’ve covered the leading US brokers offering corporate accounts. There are others that also allow you to open an LLC account, including Saxo and eToro, both of which require you to contact customer service directly.
A few practical notes on the four above. Interactive Brokers is the only one with no minimum, which makes it the realistic option for a small business with modest cash reserves. Webull’s entity accounts cannot be opened through the website: you need to contact its entity team. Schwab’s threshold is a relationship balance rather than a deposit, so existing Schwab customers may already meet it, and there are no fees to open or maintain the account.
We have also created a business brokerage account ourselves, and our choice was Interactive Brokers.
The tax question, and why it depends on your entity type
The idea that you can defer tax by investing inside your business is widely repeated and only true for some businesses. It is worth being precise, because the difference is large.
If your business is a pass-through entity, which covers single-member LLCs, LLCs taxed as partnerships, partnerships and S-corporations, there is no deferral. Profits flow through to the owners’ personal returns and are taxed there whether or not you distribute the money. Investment income earned inside the entity is taxed to you in the year it arises, exactly as if you had invested personally. The reasons to use a business account in this case are administrative rather than fiscal: keeping business capital separate from personal capital, cleaner bookkeeping, and clearer records.
If your business is a C-corporation, retained earnings are taxed at the corporate rate and not taxed again to you until distributed, so genuine deferral is possible. But two penalty taxes exist specifically to limit this:
- The accumulated earnings tax, an additional 20% on earnings retained beyond the reasonable needs of the business;
- The personal holding company tax, an additional 20% on undistributed passive income where a large share of income is passive and the company is closely held.
A corporation whose main activity becomes holding a share portfolio is exactly the profile these rules target. There is also the double taxation problem at the other end: money eventually distributed as a dividend is taxed again in your hands.
None of this means a business brokerage account is a bad idea. It means the tax case for one is specific to your entity type and circumstances, and is not the automatic win it is often presented as. Speak to a CPA before moving significant cash into a corporate investment account.
This article is information rather than tax advice.
What you need to open a business account
Requirements vary by broker, but expect to provide most of the following:
- Your EIN (employer identification number) and formation documents, such as articles of organization or incorporation;
- The operating agreement or corporate bylaws, showing who is authorised to trade on the account;
- Identification for beneficial owners, typically anyone holding 25% or more, plus a control person;
- A corporate resolution authorising the account, for corporations;
- Business bank account details for funding, since most brokers will not accept a personal account as the funding source for an entity account.
Approval takes longer than for a personal account, often several business days to a week, because of the documentation review. Some brokers still require part of the application by post.
One point often missed: SIPC coverage applies to business accounts on the same terms as individual ones, up to $500,000 including $250,000 for cash. It covers broker failure, not investment losses.
Opening a business account at IBKR
Creating a business account at Interactive Brokers is a straightforward process, though as with any broker it takes longer than a personal account because of the entity documentation.
Before starting, research Interactive Brokers’ offering for corporate accounts: the fee structure, available investment options, and any specific requirements or restrictions that may apply to your entity type and jurisdiction.
If you want to know more, our step-by-step guide explains how to create a business account at Interactive Brokers.
Bottom line
While Robinhood is one of the biggest brokers for individual investors, it does not support business, LLC, or corporate accounts, and has given no indication that it plans to.
Of the alternatives, Interactive Brokers is the most accessible for a small business thanks to its lack of a minimum, and the broadest in product range. Webull is simpler but demands $100,000 upfront and offers a narrower set of products in entity accounts than in retail ones. Schwab and Vanguard suit businesses with larger balances and a long-term, buy-and-hold approach.
Choose a platform that matches your investment goals, and settle the tax question with your accountant first, since the answer depends on whether your business is a pass-through entity or a C-corporation.
Explore the alternatives mentioned in this article, and feel free to reach out to us if you have any feedback or questions. We’re happy to help.
