How to issue shares of stock Or issuing bonds

I created an S-corporation for handling managerial transactions. I have some pretty good investments going and mentioned them to some friends of mine. They were interested in participating, but, the initial investment requirements are $25,000+. (not my rules, my investors’ rules). Once invested, though, I can increase by as little as $1000 increments. I was thinking, that I could sell some of the shares from my S-corporation to my friends and pay them out quarterly dividends that would make it worth it for both me and them. So, how does one go about selling shares from an S-corporation that I own? Thanks.


  1. be careful you don’t make a “public offering.” this will get you in SERIOUS trouble with the SEC.

  2. you should also realize that business and friends don’t mix well. usually one or the other goes away. just my experience.

  3. you need to see what kind of agreement exists between the S-corp members. the selling of a partial ownership interest may not be allowed. other members may hold a right of first refusal, etc.

  4. if it’s allowed by the written documents, or there are no written documents (not smart, but common) then you should sit down with a CPA to discuss options. it can be done, but too much to cover here. S-corp rules regarding membership interests can get complicated.

  5. get everything in writing.

Another idea I became aware of the other day. In my college accounting class we discussed raising capital for businesses. They mentioned the issuing of share, then they talked about issuing bonds. That was something that I wasn’t aware of prior, but could possibly work just as well as shares of stock. Does anybody have any thoughts/recommendations on one or the other? Thanks.


the corporation would have to issue bonds under the direction of the officers or directors. this may or may not be easier than selling a portion of your stock ownership. If the other owners don’t want you to sell part of your ownership%, it seems unlikely that they would want to issue bonds.

a bond is nothing more than a loan. the corporation can borrow money at will without having to “issue bonds.”