Tread very carefully when playing with other people's money.
It's not clear whether your business idea involves reinvesting your investors' money (certainly done through hedge funds and other vehicles) or whether you are looking at a higher-yield return on the money you are currently "parking" before you invest it in your company. Either way, do not invest other people's money without the proper licensing.
It's one thing to play around with your own portfolio, but when you invest other people's money for profit (yours and theirs), you are closely regulated by the Securities and Exchange Commission. Running afoul of the SEC is second only in legal torture to running afoul of the IRS.
In addition, you need to have full disclosure with your investors about the guidelines for investment, as they may have risk tolerances that differ from yours . . . which, aside from the securities violations, could leave you vulnerable to fraud charges. Do not skimp on consulting with an attorney who specializes in this area.
Nina L. Kaufman is an award-winning business attorney, author and speaker. For more than 15 years, she has successfully navigated thousands of small businesses through the legal hurdles they face in starting and running their companies. Under her
AskTheBusinessLawyer.com brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and
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