question about selling stock

**ahwoogah** · 12-26-2007 06:09 PM

I got a question, me and my dad was talking about my company getting incorporated and the question came about raising capitol and thought about selling stock to raise capitol. Now im thinking is this a good idea to expand and raise capitol to fund what im trying to do? or would this make my company publicly owned?

**rogercbryan** · 12-26-2007 07:55 PM

Wow.. this can become a complicated issue. Let me say that this is not legal advice.

You can incorporate your company fairly easily. You can call a local lawyer or you can use a service like legalzoom.com, this will cost you $500-$1000 depending on your state.

When you incorporate you will issue stock. If you are a sole proprietor then you will issue the stock to yourself and/or keep some in reserve. If you are a partnership then the shares will be given to each partner in some form of agreed disbursement. This is a very simplified version of how this works based on my experience.

You need to know the difference between a privately held corporation and a publicly held corporation. A privately held corporation can be of any size and has limited responsibility on disclosure. You are more likely to have a privately held corporation at this point. You can issue this stock to anyone you are interested in having as a partner. In most cases when you issue stock you are 'selling' a piece of your company. (contact a lawyer to discuss this better)

To become a publicly traded company (NYSE/NASDAQ) you will need to have sale in excess of $50M USD. This number may be a little low, but I haven't read about too many successful IPO's with sales under this amount. There are other obscure exchanges with different types of stock issues. I'm not an expert in this field.

I always recommend to my consulting clients to incorporate any business venture. There are certain liability benefits to incorporating. There is also an element of professionalism that comes with being a corporation.

How much are you looking to raise? You may be better going to the bank and trying to get a loan so that you can keep ownership of your idea. If you are not capable of getting the loan you may want to look towards partners/investors. In any case make sure you have a solid business plan and that you know exactly what you are looking for before soliciting for any type of money.

*Non of this posting is to be considered legal advice. This is just my knowledge and experience. Good Luck!

**akula** · 12-26-2007 08:11 PM

why would you even advise someone who can't spell capital

**ahwoogah** · 12-26-2007 08:18 PM

Originally Posted by akula

why would you even advise someone who can't spell capital

typo oops lol didnt proof read

**rogercbryan** · 12-26-2007 08:25 PM

lol.. didn't even notice..

**Bored** · 12-26-2007 10:50 PM

He could be a foreigner, or just a <13 year old.

**harrymcwealth** · 12-27-2007 01:45 AM

It will NOT make it a public company. What you're dealing with is distribution of private equity. Also take note that there are certain restrictions when you sell stock.

**BusinessAdviser** · 12-27-2007 11:08 AM

Originally Posted by harrymcwealth

It will NOT make it a public company. What you're dealing with is distribution of private equity. Also take note that there are certain restrictions when you sell stock.

Right. Creating a corporation and distributing stock is not the same thing as "taking it public." Because this seems to be a topic with which you are unfamiliar, you should speak with an attorney to (1) gain a better understanding and (2) determine the best course of action for your situation.

**BOG** · 12-27-2007 04:26 PM

As mentioned, it's very complicated. Just borrow some money or get a bank loan.

**Gaulkin** · 12-27-2007 05:10 PM

Originally Posted by BOG

As mentioned, it's very complicated. Just borrow some money or get a bank loan.

lol.... You say this like its easier then selling stock, but its actually just as hard if not harder.

**ahwoogah** · 12-27-2007 06:40 PM

ive tried to get a bank loan didnt work out to well.

**BOG** · 12-27-2007 09:12 PM

At your level, the same people you are going to have to approach to borrow money will be the same people you're going to have to approach to ask to buy your stock.

Why bother with the stock mess? Lots of rules, regulations and tax messes that comes with selling stock.

Just ask them to borrow some money.

If you could tell us what your business idea is, maybe we can give you better advice. Maybe try the SBA or something. Lots of options out there. It just depends on your plan.