Discover how a Business Investment Account can help your company grow idle cash, beat inflation, and invest smartly for the future.
Have you ever looked at the money in your business bank account and thought, “There must be a better way to use this money”? I really have. I used to run a tiny digital marketing business a few years ago. We had some good money saved up in a regular checking account that wasn’t making us any money. It bothered me.
That was the point when everything changed for me. I started looking for smarter ways for businesses to manage their money and found something called a business investment account. I also began exploring different types of business models to understand which structures made the most of financial tools like this. If you’re in the same situation and don’t know what to do with your extra money, keep reading. I wish I had this guide back then. The potential benefits are immense, whether you name it a business account investment tool, a small business investment account, or just a mechanism to invest a business’s hard-earned money.
Article Breakdown
What Is an Account for Business Investments?
Let’s get started with the basics.
A business investment account is a type of bank account that firms can use to invest their extra money. It’s like a personal investment account, except for businesses. You can invest your business profits in things like mutual funds, ETFs, equities, bonds, and other assets instead of just letting them sit in a checking account. All of these things will be owned by the firm.
These accounts are part of a larger group of investment accounts for businesses or investment business accounts. They give businesses an organized way to invest in their future without interrupting their regular activities.
A business investment account can give you better returns than a savings account, which usually has low interest rates (less than 1%). Of course, more returns mean more risk. But we’ll speak about how to deal with that.
Why should you open a business investment account?
It was like flipping a switch when I saw the possibilities.
We had about $25,000 in a company savings account that we weren’t using for anything else. We started to see returns that made a difference—enough to pay some of our monthly software costs—after we moved some of it into a short-term bond fund through a business investing account. It seemed like our money was finally working for us.
Here are some reasons why you might wish to do the same:
- Get more money to spend
Your working capital can help you. Your money doesn’t have to sit idle. You can use it for taxes, emergency expenditures, or future investments. This is where a business investing account comes in helpful.
- Get ahead of inflation
Inflation makes money in a bank account worth less over time. An investing account can help you keep your buying power and reach your long-term business and investment goals.
- Make money from more than one source
Customers don’t have to give you every dollar. Investing strategically can help you make more money. Business investment accounts might assist you change part of your plan from merely selling to smart saving.
- Get ready for long-term goals
Investing can help you build up your savings so you can make greater business moves, like buying property, launching a new product, or expanding. This is a technique to help your business grow without going into debt.
Different kinds of business investment accounts
Here are the most common types of business investing accounts, based on your goals and how much risk you can handle. These are various types of investment business instruments that are meant to balance safety and return:
A business brokerage account
- Provides the most options
- Put money into stocks, ETFs, mutual funds, REITs, and other things.
- Best for companies that know a lot about markets
Because it is so flexible, a lot of people think this is the greatest business brokerage account. If you’re looking at different providers, check out the Fidelity business account to see what else is out there.
Funds for Money Markets
- More interest than savings accounts
- Less danger, but not as much profit
- Good for holding for a short time
Business savings accounts with high interest rates
- Not an investment in the strictest sense, but worth mentioning
- Better interest than regular savings accounts.
- Limited by FDIC limits.
Business CDs (Certificates of Deposit)
- A set interest rate for a set amount of time (for example, 6 months or 1 year)
- Low risk and returns that are easy to guess
- Less liquid:
Treasury Bills and Bonds
- Very safe and backed by the government
- Good for businesses that don’t want to take risks
- Generally lesser yield, but very stable
These are all examples of different ways to invest in a firm.
How to Pick the Best Business Investment Account
I didn’t know where to start when I first started looking into this.
- Know how much risk
you can handle Are you okay with the ups and downs of the market, or do you want something safer? I started out with bonds and money markets, which are safer, before looking into ETFs.
- Know how much cash you need
Can you afford to keep money locked up for six months or a year? Or do you need it right away?
- Think about what you want to achieve.
Are you saving for a big investment in the future, or are you just attempting to build up your savings faster? A small company investing account could help you reach smaller goals, like getting better equipment.
- Look at the fees and minimums
Some accounts have high fees or require a large minimum deposit. Look at the small print. Before you sign up for a Fidelity business account, be sure you know the minimum amount you need to open one.
- Choose a Trustworthy School
Don’t choose a service just because they guarantee huge returns. Look for companies like Vanguard, Fidelity, Schwab, or banks that have a history of providing good business services. People trust these companies to open business investment accounts.
The best companies that provide business investment accounts
Here are several small company investment accounts that are popular and often do well:
1. Charles Schwab Business Brokerage:
- You can trade stocks and ETFs without paying a fee.
- Getting help from an advisor
- No minimum amount
2. Vanguard Accounts for Institutions
- Good for ETFs and mutual funds
- Investing for a long time at a low cost
- Great service for customers
3. Fidelity Business Investment Accounts
- Tools that make it easy to manage your account
- Options for automated investing
- Excellent resources for learning
4. Chase for Business includes both savings and investment accounts.
- Works with other Chase business tools
- Good for safe investing
5. American Express Business Savings (High-Yield)
- Insured by the FDIC
- Rates on savings that are competitive
- No fees and no minimum balance
How to Set Up a Business Investment Account
It’s not hard, but you will need to get certain papers together. Here’s a step-by-step tutorial to help you set up your first investing account for your small business:
Step 1: Prepare Your Business Documents
EIN (Employer Identification Number)
Articles of Incorporation or a Business License, and an Operating Agreement (for LLCs)
Identification issued by the government
Step 2: Pick a Provider
Choose one that fits your demands, costs, and investment choices.
Step 3: Fill Out the Application.
You can do this online or in person, depending on the provider. Get ready to write down the names of business owners and their contact information.
Step 4: Put money in the account
You can move money from your corporate checking or savings account. This first deposit makes it an official investment business account.
Step 5: Pick Your Investments
Take it slow. You may put 60% of your money in low-risk assets and 40% in moderate-risk growth assets.
Step 6: Keep an eye on things and make changes
Rebalance every three or twelve months, depending on how much money your firm is making and how the market is doing.
Example from Real Life: How I Used a Business Investment Account
After we opened our Schwab account, I put around 40% of our savings into a money market fund and 60% into a diversified ETF. We made roughly 6% over the course of 18 months, which was a lot better than the 0.01% we had before.
That extra money helped us:
- Upgrade the laptops in our office
- Pay for a local business event
- Take professional development classes
I didn’t become a millionaire right away, but I did learn more about money. It taught me how important it is to put money into a firm without using operational funds.
Things You Shouldn’t Do
Let me spare you some trouble:
- Jumping in without a plan: Understand your cash flow cycles.
- Putting everything you have at risk: Make sure you have enough cash on hand to cover at least three months of operational costs.
- Not checking fees: Some funds take away from your returns.
- Not thinking about taxes: Talk to a tax professional about capital gains and how to declare them.
- Trying to guess when the market will go up or down: You’re not running a hedge fund; you’re running a business.
Questions and answers about business investment accounts
Is it possible for any firm to open an investment account?
Yes, however the rules are different for each case. A lot of banks and brokerages operate with LLCs, corporations, and sometimes even sole owners.
Are these accounts protected by the FDIC?
Only if it’s a money market or savings account. The FDIC does not protect investment accounts.
How much do you need to start?
Some don’t have a minimum. Some people might need between $500 and $5,000. Always look.
Key Takings:
- Running a business is tough. Every decision, every dollar, matters. Opening a business investment account won’t solve all your problems, but it’s a smart move if you want your profits to stretch further. It can be your gateway to a structured, smart investment business strategy.
- I know it felt good for me to finally do something with our reserves beyond just letting them collect digital dust. So whether you’re a solo entrepreneur or running a team, consider this your sign to explore your options.
- Trust me, your future self (and your CFO, even if that’s just you) will thank you.
Additional Resources:
- How to Invest Your Business Cash – Forbes: Forbes breaks down smart, low-risk ways to invest surplus business cash, highlighting options like business investment accounts and how to balance growth with liquidity.
- Best Business Savings and Investment Accounts – NerdWallet: NerdWallet compares top business investment and savings accounts, helping small business owners find the right financial tool to grow their capital efficiently.
- How to Invest Idle Business Funds – Bankrate: Bankrate outlines strategic options for putting idle business cash to work, including investment accounts that offer better returns than standard business checking.
