- Issue stock (or certificates of partial ownership in his company) to people who may be interested in helping their venture out in return for a proportional share of the profits that the company might generate.
- Borrow money that will need to be paid back with interest. So, what are the advantages of selling stock?
Why Do Corporations Issue Stock?
Advantages of issuing stock:
- A Company can raise more capital than it could borrow.
- A Company does not have to make periodic interest payments to creditors.
- A Company does not have to make principal payments.
Disadvantages of Issuing Stock:
- The principal owners have to share their ownership with other shareholders.
- Shareholders have a voice in policies that affect the company operations.