Crowdfunding taps the power of the internet and social media by helping business owners find thousands of potential investors via internet crowdfunding portals. These investors can invest various amounts of money to help fund a start-up or an expanding business.
Crowdfunding is an alternative to the traditional ways of raising capital. Businesses have the ability to appeal directly to a large audience of small investors to help them expand or fund their business needs.
Title II was created by the 2012 JOBS Act, and approved by the SEC to allow mass marketing of accredited investors (those with net income of $1 million or income of $200,000) for private security transactions. Title III allows start up businesses to raise up to $1 million on the internet in a 12 month period attracting funding from non-accredited investors. These non-accredited investors having a net worth less than $100,000 may invest no more than the greater of $2,000 or 5% of the investor’s income or net worth in all crowdfunding offerings in a 12 month period. An investor having a net worth and income greater than $100,000 may invest no more than $100,000 or 10% of the investor’s income or net worth in all crowdfunding offerings in a 12 month period.
Numerous states have adopted their own crowdfunding regulations for intrastate transactions. Massachusetts is one of the states that has adopted their own crowdfunding regulations for intrastate transactions. A company formed, and having its principal place of business, in Massachusetts can raise capital by offering debt or equity within certain limitations. The company can raise up to $2,000,000 in a 12 month period with audited financial statements and up to $1,000,000 in a 12 month period without audited financial statements. Please review the Massachusetts Crowdfunding Exemption Law for more details.
To contact a crowdfunding CPA professional, please click here.
Crowdfunding portals have certain accounting guidelines that a crowdfunding CPA specializes in. Downey & Company can assist your startup company with compliance.
All startup companies must solicit prospective investors through approved web portals. These portals will gather accounting information on the startups and process all the investment transactions from investors.
For the guide “6 Steps to Prepare for Successful Crowdfunding,” please click here.
Downey & Company can assist you with certain financial information needed in order for your business to qualify for the crowdfunding portal. Companies raising funds are required to disclose to investors company information and must publicly file annual financial statements that have, at a minimum, been reviewed by an independent accountant. In addition, we can prepare all appropriate federal and state tax returns.
Our group of crowdfunding CPA professionals have a broad range of expertise and will provide the following crowdfunding CPA services to meet each company’s unique needs:
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Budget preparation and ongoing review
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Long-range planning
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Cash flow management, forecasting, and analysis
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Implementation of sound internal control systems
Interested in finding out more? Please contact Jamie Downey at JMDowney@DowneyCoCPA.com or at 800-849-6022. Jamie can assist you in preparing for your crowdfunding experience.
Downey & Company has partnered with Indie Crowd Funder. Indie Crowd Funder provides professional content creators with the most comprehensive and exclusive online resources for their innovative and aspiring equity and reward-based crowdfunding projects. Please visit them at www.indiecrowdfunder.com.
