When you decide to start a business, you need to get all of your ducks in a row. Financially. Mentally. And legally.

The JOBs Act has helped a lot of new businesses sprout up over the last year, and crowdfunding sites like Kickstarter have proven to be the catalyst that a lot of budding entrepreneurs needed. Crowdfunding and earlier access to funding is making it easier for people (especially young people) to start their dream of being self-employed sooner than ever before.

While all of this new business development is lubricating our economy, creating opportunities for employment, and adding to the overall landscape of innovation and creativity, it is also raising legal questions.  As I’ve touched on previously, the SEC has gone through many adjustments and set in place regulations to protect both the entrepreneur and the investor.

Here’s a list of the most recent crowdfunding regulations (thanks, Forbes!).

• The amount an issuer can raise is capped at $1 million in any 12-month period.
• The amount a person can invest in all crowdfundings over a 12-month period is capped at 10 percent of annual income or net worth (incomes of $100,000 or more) or the greater of $2,000 or five percent of annual income or net worth (incomes of less than $100,000).
• Crowdfunding must be done through a registered broker-dealer or registered “funding portal.” Broker-dealers and funding portals may not solicit investments, offer investment advice or compensate employees based on sales. Traditional investment banks have shown little interest in crowdfunding, leading to speculation that crowdfunding will be facilitated by lesser-known financial institutions with little or no retail investment track record.
• Crowdfunding requires a disclosure document to be filed with the SEC at least 21 days prior to first sale, and requires scaled financial disclosure, including audited financial statements for raises of more than $500,000.
• Unlike Regulation D Rule 506 private placements to accredited investors following the JOBS Act, crowdfunding does not allow advertising except solely to direct investors to the appropriate broker/funding portal.
• Annual reports must be filed with the SEC by a company which completes a crowdfunding round.

Law firms specializing in business law need to accommodate the new influx of startups and stay up to date on the ever-changing and developing market, and I can’t stress enough the importance of speaking to someone who knows the exact you need to take. Startups have high risk potential, so it’s important that when presenting your idea to investors or to future clients you have everything organized appropriately. Many law firms, such as Manhattan’s Cohen Schneider & O’Neill, are taking note of the new potential market opportunities. One of this firm’s main areas of focus is on entrepreneurship and startups, for which they offer a comprehensive package for those ready to venture out on their own. For example, they can help the budding entrepreneur with particulars such as: required document preparation in the appropriate jurisdiction; compliance requirements and training, drafting and executing bylaws, resolutions, and stock issuance; tax ID registration; as well as brainstorming and consultations with a legal startup team.

So, basically, although things are getting easier in the market for new businesses, you still need to lawyer up, because it’s never easy when things aren’t done by the books. Save yourself some time and lots of money and take care of the legalities before you finish designing your logo.

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Alexandra Saville (@CapitalistaBlog) is a PR & Media Outreach Manager. She has experience in the publishing and marketing worlds and started her own publishing company right out of college.

Alexandra Saville

Alexandra Saville is the Media and Writing Specialist at Law Street Media. She has experience in the publishing and marketing worlds and started her own publishing company right out of college. Her blogs, The Capitalista and Capitalista Careers, focus on the young and the entrepreneurial.

The post Have a Great Startup Idea? Find a Good Legal Team First appeared first on Law Street.

Last year, when actor Zach Braff  launched a Kickstarter campaign to raise money for his movie, Wish I Was Here, it made the headlines. Some people couldn’t wrap their heads around giving funds to a guy who is already better off than the majority of us, but Braff quickly responded that that isn’t the point behind a crowdfunding effort.

Now Braff’s campaign is in the news again. The movie premiered at Sundance over the weekend to an enthusiastic audience. Fans cheered when the credits rolled and the 46,520 Kickstarter backers were listed. Within 24 hours of the film’s debut, Focus Features acquired it for about $2.75 million. In the indie movie arena, that fee would usually be used to repay the financial backers of the project; however, that is not the case for Braff’s Kickstarter campaign.

Producer Stacey Sher assured backers that they will be getting everything that they were promised upfront, though not reimbursed for the donations they made. The backers allegedly seem fine with this arrangement. The production team is keeping the promised schedule of meet and greets, showings, and paraphernalia. Before anything else, Sher says that they are committed to print t-shirts for and schedule visits with the film’s supporters.

So, is this fair? Yes. They are keeping their commitments and being consistent with their word. Though not traditional, this might be the new normal. This situation is another example of how crowdfunding and new ways of garnering investments are navigated. The Security and Exchange Commission is still orchestrating the logistics and legalities of exactly where The JOBS Act, micro-financing, and crowdfunding leaves investors. What does this mean in the long run? It means that rules are changing. Traditions are evolving. It means, though, that when you venture down this slightly less traveled terrain, you have to be all that more careful about specifying your promises and making sure to proceed with honesty to completion. Sher stated that a crowdfunding effort like Braff’s “is not to be entered into without a very serious commitment to your backers, and an understanding that these people are your champions, your cheerleaders, and your market.”

Courtesy of Mathieu Marquer via Flickr.

Don’t worry, Zach! We still heart you. Thanks for the t-shirts!

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Alexandra Saville (@CapitalistaBlog) is the Media and Writing Specialist at Law Street Media. She has experience in the publishing and marketing worlds and started her own publishing company right out of college. Her blogs, The Capitalista and Capitalista Careers, focus on the young and the entrepreneurial.

Alexandra Saville

Alexandra Saville is the Media and Writing Specialist at Law Street Media. She has experience in the publishing and marketing worlds and started her own publishing company right out of college. Her blogs, The Capitalista and Capitalista Careers, focus on the young and the entrepreneurial.

The post I Helped Kickstart Zach Braff’s Movie and All I Got Is a Lousy T-Shirt appeared first on Law Street.

Last year proved to be a solid year for startups as the kinks continued to be worked out with the JOBS act. There were 237 IPO debuts in 2013 — a 62 percent increase over 2012.

What does this mean for you in 2014, though? You’re (sort of) young. You’re (relatively) new to the work force. You are (in all likelihood) certainly no where near an IPO. So, why is this important? It’s important because things like this help to close the gap between where you are today and becoming what you’ve always dreamed. In many cases this means starting out on your own. Creating a company is one of the most fun, exciting, exhausting, and exhilarating things you can do, and we’re in a time of such overwhelming creativity that there is no limit to what you can achieve.

What makes a business owner is changing. It used to mean being someone who graduated with a business degree, took out a loan, and followed certain steps. Now, with the rise in crowd-funding that we saw in 2013, the path is a lot less stringent.

That, however, doesn’t mean that you can skip those fundamental steps. Just because it’s easier than ever now — with technology and resources at our fingertips — doesn’t mean that this is a career path for the lazy. It still takes hard work. Most small companies fail within the first year and more drop off within the second. Even after that you’re never really safe. The only way to keep your company afloat is to keep swimming hard — sometimes upstream.

One of my favorite books on the topic is The E-Myth: Why Most Businesses Don’t Work and What to Do About It by Michael E. Gerber. I strongly suggest it to anyone going down the self-employment path. Anyway, one piece of his advice is to always work in the business as much as on  the business. This means, instead of just doing day-to-day work, you also have to work on the greater picture of what you want it to become. Do the networking, marketing, and social work as well. If more people did this, so many more businesses would stay, well, in business.

It’s definitely not for everyone. But I have a feeling that this year more people will discover the entrepreneur in themselves. If 2013 was any indication, 2014 should see a lot more entrepreneurs discovering their calling. Now is the time.

Maybe you’ll be next!

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Alexandra Saville (@CapitalistaBlog) is the Media and Writing Specialist at Law Street Media. She has experience in the publishing and marketing worlds and started her own publishing company right out of college. Her blogs, The Capitalistaand Capitalista Careers, focus on the young and the entrepreneurial.

Alexandra Saville

Alexandra Saville is the Media and Writing Specialist at Law Street Media. She has experience in the publishing and marketing worlds and started her own publishing company right out of college. Her blogs, The Capitalista and Capitalista Careers, focus on the young and the entrepreneurial.

The post The Year of the Entrepreneur appeared first on Law Street.