Crowdfunding A Startup

A new potential source of financing for small businesses seems to be growing closer to reality. Crowdfunding, or small investments by many individuals, was part of the JOBS Act, which was enacted in April 2012. The new law will allow individual investors to invest in startups through the Internet. Although crowdfunding has been passed into law, the SEC must still set the rules and regulations for these new "exchanges". Investors in crowfunding must be accredited. For an individual, this means more than $1 million in net worth or more than $200,000 in income for two of the past three years. A recent article for small business owners explains some of the rules, drawbacks, and taxes for crowdfunding.