Jumpstart Our Business Startups (JOBS) Act, 10-30-13

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Ann Holtshouser, tax principal, joined the St. Louis Business Journal and a panel of experts to discuss the American Job Acts, which took effect this month.

Ann Holtshouser, tax principal, joined the St. Louis Business Journal and a panel of experts to discuss the American Job Acts, which took effect this month.

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  • 1. Jumpstart Our Business Startups (JOBS) Act October 30, 2013 Ann Holtshouser, CPA 314.983.1277 aholtshouser@bswllc.com 6 CityPlace Drive, Suite 900│ St. Louis, Missouri 63141 │ 314.983.1200 1520 S. Fifth St., Suite 309 │ St. Charles, Missouri 63303 │ 636.255.3000 2220 S. State Route 157, Ste. 300 │ Glen Carbon, Illinois 62034 │ 618.654.3100 1.888.279.2792 │ www.bswllc.com
  • 2. JOBS Act:  OBJECTIVE: The JOBS Act makes it easier for entrepreneurs to find investors & raise money to launch companies that create jobs. What Start-up companies and potential Investors “Need to Know” about the JOBS Act © 2013 All Rights Reserved Brown Smith Wallace LLC 1
  • 3. CPA Responsibilities  Help investors determine if “Accredited” or “Unaccredited”  Help businesses meet requirements to seek funding through public funding portals or “Crowdfunding” © 2013 All Rights Reserved Brown Smith Wallace LLC 2
  • 4. What kind of investor are you and what does this mean? (Title II)  Accredited Investor: (Natural person) – $1M of net worth (excluding primary residence), or – $200K income or $300K joint with spouse in two prior years and in current year  Unaccredited Investors: NOT an Accredited Investor © 2013 All Rights Reserved Brown Smith Wallace LLC 3
  • 5. What kind of investor are you and what does this mean? (Title II) (cont.)  Current - As of 9/23/13: Title II is effective allowing companies to publicly advertise (solicit) and seek funding from Accredited Investors.  Title III - Yet to finalize - SEC is working on regulations to implement Title III of the JOBS Act. It is expected to be effective in early 2014. Unaccredited investors will then be able to invest. © 2013 All Rights Reserved Brown Smith Wallace LLC 4
  • 6. Investors' steps to confirm Accreditation - Income vs. Net Worth  Businesses seeking funding through solicitation are required to take reasonable objective steps to verify investors are accredited. (SEC Rule 506(c)) ‒ Some online portals verify accreditation for businesses ‒ Other portals may require the businesses to verify accreditation © 2013 All Rights Reserved Brown Smith Wallace LLC 5
  • 7. Investors' steps to confirm Accreditation - Income vs. Net Worth (cont.)  Income - IRS Forms W-2, 1099, Schedules K-1; Form 1040; paystubs; publicly available compensation through proxy statements; third-party verification from someone such as a CPA  Net Worth - Value of assets less liabilities  Review documents dated within prior 3 months including: Bank stmts, brokerage stmts, credit card stmts, loan documents © 2013 All Rights Reserved Brown Smith Wallace LLC 6
  • 8. Investors' steps to confirm Accreditation - Income vs. Net Worth (cont.)  CPA has a general understanding of assets and liabilities from income and debt sources reported on tax returns and could provide confirmation letters or personal financial statements.  For full disclosure of liabilities, investors' must provide: 1. Consumer credit report, and 2. Written representation that all liabilities have been disclosed. © 2013 All Rights Reserved Brown Smith Wallace LLC 7
  • 9. Businesses' requirements to seek funding through funding portals – “Crowdfunding” Be prepared to WOW investors with the following:  A business plan and structure  Information regarding Founders - Background, Expertise, Education  How you intend to use funds  Milestones and indicators of success © 2013 All Rights Reserved Brown Smith Wallace LLC 8
  • 10. Way’s CPA’s can assist emerging growth companies  Accounting  Tax Planning  Consulting  Compliance © 2013 All Rights Reserved Brown Smith Wallace LLC 9
  • 11. Way’s CPA’s can assist emerging growth companies (cont.) Entity Selection Registration/Licensing – Federal, State, County, City Establishing “Books” of Record Software Selection Outsourced Accounting Function Pay Bills Financial Statement Preparation Tax Planning Tax Return Preparation Credits – Enterprise Zone, Work Opportunity, Missouri Works Program Eligibility  Outsourced CFO  Information Technology Security           © 2013 All Rights Reserved Brown Smith Wallace LLC 10
  • 12. Businesses' requirements to seek funding through funding portals: “Crowdfunding” – Unaccredited Investors  Maximum offering is $1,000,000 in a 12 month period  Basic Financial Information (Early 2014) – Offerings < $100,000 = Compiled F/S – Offerings $100,000 to $500,000 = Reviewed F/S – Offerings > $500,000 = Audited F/S  Funding Limits (Early 2014) – Greater of $2,000 or 5% of income or net worth for people earning or worth up to $100,000 – Lesser of $100,000 or 10% of income or net worth for people earning or net worth $100,000 or more © 2013 All Rights Reserved Brown Smith Wallace LLC 11
  • 13. Potential Penalties One year penalty from “crowdfunding” for not adhering to these rules! © 2013 All Rights Reserved Brown Smith Wallace LLC 12
  • 14. Other Current Tax Benefits of the JOBS Act  Veteran's Credit – (extended thru 2013) ‒ Returning Heroes Tax Credit - up to $5,600 tax credit to hire long-term unemployed veterans ‒ Wounded Warrior Tax Credit - up to $9,600 tax credit for hiring long-term unemployed veterans with serviceconnected disabilities.  Bonus Depreciation - The JOBS Act extended 50% bonus depreciation rules through 2012. (extended thru 2013) © 2013 All Rights Reserved Brown Smith Wallace LLC 13