The Real (and Very High) Cost of Crowdfunding

social-entrepreneurs5

BY ERIK SHERMAN, Crowdfunding is all the rage. You know, OK’d by Congress, a chance to raise money online from regular folks, a chance for entrepreneurs to obtain capital without the whole “let’s go public” mania. A child of the JOBS Act of 2012, it was meant as a way to help smaller companies get the resources they needed to grow and, ultimately, create more jobs.

The playing field is leveled, or at least not so severely tilted in favor of those who already have what they need. But before you start thinking of crowdfunding as a painless way to raise capital, it’s best to realize that painless this isn’t. Although the JOBS Act was intended to lessen the regulatory burden for startups and younger companies, it isn’t going to be race day on the Autobahn.

The Real Costs

Not only are there certain requirements you must fulfill, but there are also costs you may not have figured. The SEC has estimated that a company looking to raise $100,000 or less would need two years of financial statements and its most recent tax return. Raise between $100,000 and $500,000 and a CPA must review the statements. More than $500,000, and you’re looking at full audit of your statements. Source & read more

http://www.inc.com/erik-sherman/the-high-unforeseen-cost-of-crowdfunding.html?cid=sf01001

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