How to Start Investment Management Companies
Investment management companies are an incredibly important part of our national economy. They help direct where money and private investments are spent, which companies receive investment capital, and assist their clients in investing their personal money. If you want to start an investment management company, begin by following the steps below.
- Determine the types of investment that your company will focus on. Some investment companies focus on a specific type of stock, and others invest in a wide range of stocks. Determine your company's niche. Most investment management companies focus on stocks and bonds. Some companies also include foreign currency exchange commodity futures. Spend some time thinking about what your company's focus will be.
- Organize your company. The organization strategy you choose will vary greatly based on the size of your investment management company. If you will be a sole proprietor, then you will run your company as an owner/operator business. However, if you wish to start a larger company, you should consider hiring a few employees and dividing your company into departments to help efficiently run your organization. Set up a department for administrative functions, as well as a department for stock management and a separate one for bond management. As your company grows, you will likely need to add a human resources department and accounting department.
- Form your legal entity. You must legally form and register your company in order to obtain your federal tax identification and registration information. There are several options you can take when forming your company's entity. Most investment companies are formed as corporations, either C Corporations or S Corporations. You can also choose to organize as a Limited Partnership (LP) or Limited Liability Company (LLC). Consult with an accountant to learn about the tax ramifications of the different types of entity registrations.
- Register your company. You will need to register your investment management company with the US Securities and Exchange Commission. Depending on the types of investments you decide to manage, you might also need to register with additional federal agencies. Consult with your accountant and a securities attorney to ensure that your investment management company is properly registered.
- Network and find your investors. Your company will serve both private and business investors. Follow all of the appropriate investor regulations and SEC disclosure requirements.