Small Business

What you need to know about small business securities compliance

Looking for funding? You may want to do a little homework first to make sure that you are within compliance. Offering your company's need for small business capital may be offering securities for sale. It just depends on how you intend to raise the capital. If you are offering securities for sale, it involves significant responsibilities for you under both federal and state securities laws. Use caution when seeking small business capital, but don't overact because you don't understand every compliance law or don't even know where to begin. Every day, thousands of entrepreneurs broadcast their need for capital in the United States alone and are not in violation of any laws. Most legitimate investors can help you with these compliance issues when you proceed with your funding search.

Who is liable for mistakes?

Ultimately, legal compliance of your funding opportunity is your own responsibility. But, if you're unsure of your obligations under these laws, there are many companies on the Invstor.com that can help with the process. You can reach out to angel investors, venture capitalists, and even securities compliance companies for free advice or professional services regarding your deal. Also, it wouln't hurt to contact a couple of entrepreneurs who have been through the process before so that you can find out what to avoid--why not make your life easier!

A word of advice--Do not attempt to short-cut the process or skip over important steps such as consulting council; as any mistake you make can lead to some fairly serious liabilities to you. Additionally, non-compliance with all securities requirements on your initial offering can "poison" your deal and impact your ability to obtain further financing from other investors later on--not a good thing!

Last but not least, you'll need to verify all of your information carefully before making anything public. Remember, it's your responsibility to make sure everything is accurate. Best of luck!