While lawyers and judges are the ultimate legal experts, of course, I believe that every citizen should take the time to learn a little about law for several reasons. First, it is important to know your rights, and knowing them can come in handy if anyone ever accuses you of a crime you didn't commit or threatens you legally in another other way. Second, learning about your local, state, and federal laws can help you act as a better citizen. When election time comes around, you can then truly understand ever change in law being proposed by a candidate and whether it benefits society or not. I plan to share posts about law topics explained in plain English on my new blog, so you can come back often to sharpen your legal knowledge!
If your business needs to raise cash, you might want to consider selling shares of stock. While this actually means selling portions of your business, there are ways to do this without losing the control you currently have. Before you decide to take this plunge, it's important to seek help from a corporate lawyer because there are several things you need to think about.
Reasons To Sell Stock
Selling stock is something corporations can do to raise money. This money can be used to:
Raising money from stock allows you to borrow cash, with the intent that you will repay the money. Plus, you will pay back part of your company's profits if the company makes money. Investors will research companies thoroughly before investing any money, and they will generally only invest if the future looks positive.
Another reason companies sell stock is because it offers a way to get cash without taking a loan. When your company takes a loan, you incur debt on your accounting books. You must pay the debt off by a certain date, or make payments, and you will pay interest on the money. Issuing stock is less risky because you do not have set payment dates, and you will only pay back extra money if your company makes money.
How Much To Sell
If you decide that selling stock is a good decision for your company, you will need to consult with your lawyer about how much to sell. You may only be authorized to sell a certain number of shares, and your lawyer will help you determine a starting price for the stocks.
You should keep in mind that if you may have the option of a complete sale or a partial sale. A complete sale means that you are selling your entire business. Each share of stock represents a small piece of ownership in the business. If you sell 100% of your stock to investors, you will lose control of decisions made in the business.
A partial sale, on the other hand, allows you to sell only part of your company. If you keep at least 51% of the stock, you will still have rights to make decisions and manage your company the way you want to.
Ways To Sell It
The other important thing to consider is how you will sell the stock, and there are several different options, including:
No matter which option you choose, you must handle the sale of stock legally. Knowing how to do this can be complicated though, but that is where corporate lawyers fit into the equation. A corporate lawyer knows the laws relating to the sale of stock, and your lawyer will give you advice and suggestions for this process.
Raising money by selling stock is a good idea for many companies, and you can begin this process by talking to a corporate lawyer in your city.