How to Issue Stock

If you need to raise capital for your business, you can issue stocks to people, who receive shares of future profits in return.

Instructions

1. Determine the number of shares of stock you will issue each owner. Laws in the various states generally specify a minimum number of shares that should be issued. If you exceed that amount, you may pay higher fees to the state.

2. Know that each share is worth a proportionate amount of the company's total net worth.

3. Decide what class of shares you will offer - preferred or common. In elections, holders of common stock generally have one vote for each share they hold. They have a right, upon dissolution of the company, to a proportionate share of the assets. Preferred shareholders take certain preferences over common shareholders.

4. Hire a printer to print the stock certificates.

5. Issue certificates to the shareholders.

6. Establish a shareholder agreement, also known as a buyout agreement, dealing with issues relating to stock ownership. The agreement will cover the death or departure of shareholders, protection of proprietary information, transfer or sale of stock, and the method by which a shareholder or group of shareholders can buy out other shareholders.

7. Ensure that shareholders' spouses sign the agreement if the shareholders live in states in which community-property laws govern joint ownership of property.

8. Consider selling shares to a venture-capital firm as a means by which to raise additional capital to buy equipment, hire employees, conduct research and develop, or intensify your marketing efforts.