Have you ever thought about crowdfunding your startup?
How much do you know about crowdfunding?
Is it even legal in Australia?
I’m glad you’re asking these questions because that’s exactly the topic we’re going to focus on in today’s 2 Minute Accountant episode.
Over the past several years, something amazing has happened. People started noticing the power of “we”. The power of people coming together to make a major difference.
That’s crowdfunding in a nutshell.
For example, I recently heard about a little child overseas who fell into a pool and needed major medical attention. Long story short, his family put together a crowdfunding program and were able to raise enough money to bring their child back to Australia.
Crowdfunding is a powerful resource for helping people.
How does crowdfunding work for a business?
Raising money in Australia is covered by the Corporations Act or the Commonwealth Act 2001. It includes rules and regulations on how you can ask people to place money into your business.
Generally, you need a prospectus, rules, regulations and financial services licenses in order to raise money for your business.
If you’re a small business, there are a few exemptions under the Corporations Act for small companies.
For example, you can raise $2 million, approach 20 people over a 12-month period. This exempts you from following the rules for big companies.
How can crowdfunding help Australian entrepreneurs?
Crowdfunding hasn’t been legal in Australia up until this year when the Government introduced specific legislation allowing start-up Australian businesses to raise funds through crowdfunding.
I’m not a law expert, but I believe you can raise up to $5 million through crowdfunding if you’re a public company.
What is a public company?
A public company can be listed or non-listed and it needs to have 50 or more shareholders.
There are all sorts of rules and regulations you have to go through, but crowdfunding is now authorised by the Australian Government for a limited public company.
There are also future plans about doing this for a proprietary limited company (Pty Ltd). So, stay tuned!
Crowdfunding can be an extremely exciting opportunity for all new entrepreneurs, start-ups or business owners who want to take their business to the next level.
You might also be interested in: 5 Effective Ways To Instantly Increase Your Sales
Is crowdfunding a good idea for your business?
I can assist you in making the right decisions when it comes to your business. Whether you have questions about crowdfunding, a company set up, business structure or registration, I am here to help you. Let’s get in touch now.