Legal Question in Business Law in California

Re: raise money for business

Unfortunately for you, the laws on raising money for your business by selling stock to the public are very complicated and you would not be able to do this easily or without lots of legal fees. What you need is an "angel," a friend or relative willing to invest in your business. Try googling for "venture capital".

Re: raise money for business

You bet there are laws about selling stock! Starting with the (Federal) Securities Act of 1933, selling stock or securities of any kind has been one of the most heavily legislated and regulated of all human activities. Further, the penalties for even technical violations of these laws are both civil and criminal. The Federal system of laws is duplicated on the state level too, so you have to observe the laws of every state in which you offer shares. The Initernet puts you into all 50 automatically. There are ways to avoid breaking the laws of all 50 states and a bunch of foreign countries, but you need good legal advice on avoidance or compliance.

It has been said that there are three kinds of stock offerings: registered, exempt and illegal. Since you can't afford to do a registered offering for a lightly-funded startup, you need to find an exemption from registration and make sure your proposed offering fits.

There are several pretty good paperback books on how to do a so-called "direct public offering" via the Internet. One starting point would be to acquire at least two of these and read them thoroughly before asking for a dime from the public. Each of the books has flaws, biases and omissions; that's why you need to study at least two of them.

You'll still need legal assistance.

It's much safer, but still regulated, to accept equity capital contributions or get loans from insiders, such as co-promoters, relatives or professional investors, as Mr. Stone suggests.

Re: raise money for business

Duh! Federal and state laws vigorously regulate all aspects of corporate and securities laws, which is what you are talking about. Violations carry financial and jail time penalties. Suggest you employ competent counsel to advise you on how to comply with the laws. Feel free to contact me if interested in doing it right, or at lease seeing IF it can be done legally.