Businessman in a conference room

Methods of Generating Investment in Your Business

Starting a business or even sustaining one requires a substantial financial undertaking. This, in most cases, is an overwhelming mission for even seemingly wealthy business owners. It becomes inevitable to get investors who can inject the much-needed capital into your business to guarantee its growth. This might sound to some people like a foolproof undertaking of telling investors what they stand to gain in your business and waiting for them to put up their money.

Without a company offering legal services in Townsville, however, to guide your contracts with the investors coming in, you might lose your company. Many business owners have also had their ideas, and initial business vision washed down and sometimes been forced out of their companies by unscrupulous investors. Without a well-laid out contract, they have little or no legal recourse in these instances. Here are some of the investment opportunities a business attorney might recommend to raise the needed capital for your company.

Creating Partnerships

You can opt to form partnerships with interested investors to spread your capital base. The partnership agreement drafted under a lawyer’s guidance will spell the responsibilities and rights between you and your partners. Partnerships will support a fluid governing structure and simplify the investors’ tax burdens. You can also opt for an LLC {limited liability Company} and make the investors its members. This option offers liability protection to all members though the generated profits might be liable to self-employment taxes.

Selling Stock

Businessman checking stocksC corporations can also be used for the sale of transferable shares to prospective investors. These are more or less like partnerships in taxation such that the taxes will be passed to individuals. C-corps offer preferred or common stock to investors. Both options give your investors annual returns before the distribution of profits to shareholders. If you envision going public in the future, the C-corp marks your first step towards issuing an IPO of your stock.

Attract Venture Capitalists

These are institutional investors whose trained finance agents look for businesses with growth potential. Venture capitalists look for preferred stock such as that offered by C-corps and will typically demand representation on your board in exchange for the money they will invest. Though this can also happen through an LLC, venture capitalists prefer C-corps to avoid taxation as pass-through entities.

Get an Angel Investor

This investor, unlike a venture capitalist, looks for small businesses that meet a specific interest like research and development or charity and inject some capital into them. The primary benefit of an angel investor is that he/she will have a long-term view of your venture and thus come with advice to boost your growth. The investor will, however, have a say in various elements of your business’ operations and receive a fraction of the proceeds if you sell it.

Opening a business might not seem like such a challenge for you. Keeping your doors open will, however, be no ordinary accomplishment without the right investment methods to maximise the capital in it. The above opportunities should be skilfully handled by the best attorney to guarantee they do not ruin your company and edge you out of it.