When most of us think about owning a business, we think about it like setting up shop. Putting out an “open” sign on a bakery, or maybe working from home and selling knick-knacks online. But within a Self-Directed IRA, a business can mean a lot of things. It could mean holding a Single Member LLC within the IRA, which allows you to exercise checkbook control over the IRA. This, in turn, would open up all sorts of investment opportunities for a retirement investor. So before you go opening your business, it’s time to explore what you can and can’t do with a business inside your retirement account.

Can I Start a Business with a Self-Directed IRA?

In a word, yes, you can start a business with a Self-Directed IRA. Because Self-Directed IRAs make it possible for you to own private stock, including private businesses, you can establish a business like an LLC and set up the IRA as the Single Member of that LLC, meaning it’s the sole owner. And as you move forward with your retirement investing, you’ll likely see how advantageous this arrangement can be: you can use the checkbook of that business’s account to make easy and flexible investments within your retirement portfolios.

What Kinds of Businesses Can I Keep Within a Self-Directed IRA?

When you hold a Self-Directed IRA, there are lots of businesses you can own or partially own, if you’re willing to stretch your definition of “own.” For example, there’s no reason you can’t own public stock in big, publicly listed businesses such as Apple or Microsoft. You can even keep a traditional brokerage account in your Self-Directed IRA, making it easy to choose the stocks and funds you want to keep.

Additionally, Self-Directed IRAs make it possible for you to hold private company stock within your retirement portfolio. This opens up possibilities for investing in startups and companies that aren’t yet on any major stock exchanges. You’ll likely find this can be a rewarding approach to retirement, especially if you can get in on the ground floor of a company with a particularly bright future.

When it comes to starting companies within an IRA, you’ll have to be careful. There are some limits here. You’ll also want to make sure that you don’t perform any sort of “self-dealing,” which means transactions that offer you personal benefits. For example, using an IRA to buy out your sister’s business and turn it into one of your own? That’s one that creates an immediate personal benefit, which would disqualify it from being considered a retirement asset. You’d have to pay penalties and fees for a transaction like this, which would defeat the purpose of using the IRA.

Using a Self-Directed IRA with Checkbook Control

One of the best ways to use a business within an IRA is to use it for checkbook control. Your LLC would hold a checking account, which would revert to the control of the IRA, as the IRA owns the LLC. And because this is such a straightforward way to invest, you’d be able to make flexible, easy investments once you have this arrangement established. It’s a legitimate and powerful way to invest—but only if you have the right people in your corner to help.

That’s where a Self-Directed IRA administration firm like American IRA comes in. We can help you establish a Self-Directed IRA so you can make the kinds of smart decisions that propel you to a retirement future you can be proud of. For more information, give us a ring at 866-7500-IRA.