Re(3): Credit in lieu of profits Posted on March 7, 2011 at 12:37:21 PM by John Cones
The so-called crowdfunding sites are set up for the purpose of helping small businesses raise amounts of money in the neighborhood your considering. From a legal point of view, those contributions would be considered gifts. Another option to keep in mind is to increase your budget so that spreading the risk amongst a larger group of passive investors and thereby creating the need for a securities offering is economically feasible. A middle ground would involve using the crowdfunding sites to cover your offering expenses and then conduct a legitimate securities offering using the crowdfunding money to pay for those expenses. The offering expenses would include legal fees, copying and binding, cover art (if used), costs of creating the entity, notice filing fees and marketing costs. If you want to estimate what the offering costs for a small offering would amount to, give me a call.