Companies issue stock as a way to finance business operations. Issuing stock provides financing for the company in a major way while protecting founders from legal liability. However, issuing stock means giving up full ownership and control of the company, requiring financial disclosures, and needing shareholder approval for major decisions. Founders can even be terminated from the business they started.

1. Why Companies Issue
Stock?
Pros and Cons

2. If you were to ever start a business, then you would
structure your business as a:
• Sole Proprietorship
• Corporation
• LLC or Limited Liability Company
There are other types of business structures and
variations of these three.
We will focus on corporate structure because stock is
issued by corporations.

3. Regardless of what business structure you
choose, you will have to finance that business.
Without capital, cash, funds, MONEY….NO
BUSINESS CAN SURVIVE.

4. SO HOW CAN
YOU FINANCE
YOUR
BUSINESS
START-UP?

5. Ways to Finance (Raise Money for) a Business:
1) You could use your personal
savings.
2) You could get a loan from
your friends and family.
3) You can get a loan from the
bank.
4) You could find an angel
investor.
5) You could issue stock.

6. THERE ARE
ADVANTAGES
AND
DISADVANTAGES
OF ISSUING
STOCK

7. Advantages of Companies Issuing Stock
1. The operation will be
financed, usually in a
big way.
2. The company
founders will not be
personally liable for
any legal claims or
misfortunes that take
place operating the
business.

8. Disadvantages of Companies Issuing Stock
1. Once you incorporate your business and your stock
is publicly traded, your business will have to
disclose all financial and business operating
statements.
2. You give up full control or ownership interest in the
start-up/business.
3. Since you give up full control or ownership interest
you can be terminated from the very business you
started.
4. Major business decisions will have to be approved
by shareholders.

9. In Summary
Companies issue stock to finance business
operations.
When stock is issued the founders give up
ownership interest and full control of the
company.
The founder can be terminated.
Major business decisions will have to be
approved by stockholders or shareholders.