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Business and Crowdfunding – The Effects Of The JOBS Act

Business and Crowdfunding – The Effects Of The JOBS Act

Image Credit: ell brown

The JOBS act was created by the Obama administration to legalize crowdfunding by individuals of modest income.  What this means is that they can now become micro-investors for the thousands of startups or businesses born every year. For more detailed information in a more visually appealing way, check out this infographic by Forbes.

With this new business opportunity for potential investors, all small businesses and startup companies have to learn how to market their products or services differently to appeal to these new potential investors.

According to Money Crashers, the crowdfunding provisions businesses can publicly solicit investors from fall into only two groups:

  • Group 1 – Investors that have an annual income of $100,000 or less are allowed to invest up to 5% of their income or $2,000.
  • Group 2 – Investors that have an income or net worth that is greater than $100,000 are allowed to invest up to 10% of their income.

So, if you are an entrepreneur or a small business owner, what does this mean for you? You should know that the law, even though it was signed, does not take effect until the laws and regulations have been put into place. From the day the bill was signed into law, the SEC has 270 days to create all the regulations, giving them a due date of January 1st, 2013. Here are some other things to keep in mind:

  • As a small business owner you can raise up to $1 million in investments without having to register it with the SEC.
  • If you are hoping to take advantage of crowdfunding, then you should start planning now. Look into sites like Kickstarter and learn how to participate.
  • Your small business will soon be able to look for investors without having to go through a costly SEC process.

If you need assistance with a crowdfunding strategy, give us a call. Stock Connections specializes in SEC regulations.

Image Credit: ell brown

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