Articles of Organization

• States require LLCs to file articles of organization, which contain key information about the new company, including the name, place and type of business, registered agent (contact person) and members. Prior to opening an account, brokerage firms require a copy of this document, which also details whether the LLC can legally purchase stocks on margin and if it can engage in options trading.
  
  

LLC Agreement

• Akin to corporate bylaws, the LLC agreement provides the company framework and how members choose to run the business according to their own needs and preferences. It also details each member's ownership stake in the business, allocation of profits and losses, individual responsibilities and contingencies such as if a member leaves the LLC. In combination with the articles of organization, brokerages require this document, which must also detail margin and options trading capability if the LLC chooses to pursue those investment strategies.
  
  

Trading Procedure

• An LLC may buy and sell stocks in the same way as an individual. This can be accomplished online, by automated phone system or through placing orders directly with a brokerage representative. Once the account is set up with appropriate trading permissions and access, LLCs are unrestricted in buying securities. Stocks are registered in the company name, with the LLC as the owner of record.
  
  

Tax Consequences

• According to the Internal Revenue Service, the federal government does not classify an LLC as a separate entity as it does a corporation. For tax purposes, it must file returns as a partnership, corporation or sole proprietorship. Just as profits and losses pass through to each member's tax return, all trading activity is similarly allocated.