Limited Liability Companies For Dummies, 4th Edition

Chapter 10

Using Your LLC to Attract Investors

IN THIS CHAPTER

Taking advantage of what makes LLCs attractive to investors

Getting around securities laws (legally) with SEC registration exemptions

Navigating tricky state laws

If you’re an entrepreneur, then raising capital will likely be one of the most important tasks you’ll face when starting a company. It can be as simple as asking friends and family members to pull up their couch cushions and donate some extra change or as complex as raising millions in private equity or venture capital. But before you start raising capital, it is important to understand any securities laws that may come into play. In this chapter, I’ll teach you what you need to know to stay on the right side of the law. Once you know you are in the clear, Chapter 11 will delve into the nitty-gritty of issuing the membership in exchange for cash.

No matter how much you’re raising or how you’re doing it, you will have some guidelines and possible hurdles that you’ll encounter along the way, namely from the Securities and Exchange Commission (SEC) — a government agency endowed with the task of keeping the little guys from being swindled out of their life savings. ...