Small businesses can also make their investments out of their profits to generate additional income. The best option for hectic business owners is to invest in “hands-off,” low-risk stock investments. 

Among all the businesses that operate in the US right now, 99% are small businesses, while 88% of employers in the country are owners of local companies and enterprises which help their small community. 

Now, if you are a small business owner and you want to increase those profits you have set aside to reinvest in the business, investing in the stock market is an option you should consider.

Why Consider Investing?

If you’re a small business, you might be wondering why you need to put money towards other companies’ endeavors. 

After all, you can keep investing your profits in your own business expansion. And in fact, most owners reinvest their earnings in their companies to accelerate growth.

However, as a business owner, be fully rewarded for your hard work. And investing in profitable ventures is one of the low-risk and low-capital investments that you can do. By investing in other endeavors using your business profit, you can improve your wealth without taking away from your business. 

With investing, you will not only make the business’ money work for your wealth. It will also benefit your current operation. If your funding gets short, the profits in your investment can serve as a good boost.

Can You Use Your Small Business Profit for Stocks? 

What makes stocks a good option for a business side-hustle is their flexibility. Stocks depend on the investor’s risk and reward tolerance, so you can play it safe or take the chance to bag bigger rewards. 

For business owners who are inexperienced in investing, an excellent alternative is joining investment index funds, which don’t require a lot of maintenance. 

If your small business is an S corporation, the stock purchase limit does not apply. However, your profits and dividends from your stock investment will become taxable profits. Hence, you should only partake in stock investing if, and only if, your company has backup savings and is fully geared to take on financial or economic challenges (or both). 

A business can participate in the stock market, just like a private individual. You can reap short-term profits if you’re hands-on with your investment. 

Or you can take on long-term investments, which tend to be low-risk and low-return.

Always do due diligence.  Check the stocks financial picture, and research what stock ratings agencies have to say about the companies equity.

Read more:

https://www.fool.com/knowledge-center/how-to-buy-stocks-on-behalf-of-an-llc.aspx

https://smallbusiness.chron.com/reasons-corporations-invest-securities-65618.html

Other Investments for Small Businesses

Bonds

Bonds are often overlooked. These assets are nevertheless an old and well understood asset.  Bonds typically come in several flavors, including treasuries and corporate.  The advantage of treasuries for small businesses are these assets are highly liquid and are about as safe as possible given current market conditions.  Treasury bonds are available on treasurydirect.gov.  Usually corporate bonds are available via a brokerage company like Schwab or Fidelity.

Money Market Funds

On the other hand, money market funds invest in short-term debt instruments or high-quality cash and cash equivalents. These investments are low-risk, low-reward investments. If you want an almost guaranteed cash return, this might be a better option. 

Money Market Funds are short-term, typically about 60 days or less. But since you’re investing with other investors, your minimum purchase requirement is usually small. Because of the low initial investment, you don’t need to worry about getting huge capital to profit.