Anytime you sell shares of stock in a corporation or membership interests in an LLC, you are subject to state and federal securities laws. The courts interpret the word security very broadly to mean, in addition to the sale of stock, almost any investment arrangement where a person invests money to recognize a profit or return through the efforts or skill of another.
If you intend to sell a security, the securities laws require that the securities be registered with the Federal Securities and Exchange Commission or that there be some form of exemption from registration. For smaller businesses, registration is usually too costly and unrealistic. Therefore, it is crucial to ensure the securities offered fit the requirements for an exemption. This is a complicated area and will probably require you to get some help from an experienced securities lawyer. Failure to comply with the requirements can be costly and sometimes subject you to criminal penalties as well.
The Securities and Exchange Commission website has some good basic information for small businesses. For more information on the Securities & Exchange Commission visit https://www.sec.gov/
You can also get help from your state securities regulator. However, the regulators go by different names, making them difficult to locate. They are usually a part of the state corporate agency, state finance department, or a similar agency.
For more information on state securities departments, visit:
http://www.nasaa.org
http://www.consumeraction.gov