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Crowdfunding (Regulation CF)

Regulation Crowdfunding (Reg CF) allows smaller companies to raise capital from both accredited and non-accredited investors through SEC-registered funding portals. At Barton CPA PLLC, we understand that timely financial reporting and compliance are paramount when utilizing Reg CF. Our specialized services ensure that startups and growing businesses can confidently navigate the regulatory landscape and meet all required deadlines.

1. Financial Statement Preparation & Assurance

Depending on the total amount to be raised within a 12-month period, the SEC may require financials to be reviewed or audited. We provide:

Reviewed Financial Statements for offerings between certain thresholds where an audit is not mandated.

Audited Financial Statements for higher-tier Reg CF offerings exceeding specified limits (which have historically changed over time).

Example: A startup aiming to raise $2 million through Reg CF may be required to present audited financial statements. Our team collaborates with you to ensure all records (bank statements, payroll data, expense reports) are captured accurately and in compliance with the SEC rules.

2. Reg CF Filing Support

Companies raising funds under Reg CF must file Form C with the SEC, disclosing financials, business details, and risk factors (see the SEC’s full reference at https://www.sec.gov/info/smallbus/secg/rccomplianceguide-051316.htm).

We assist in the preparation and review of financial disclosures to align with GAAP standards, offering internal controls advice to help mitigate the risk of misstatements.

3. Ongoing Compliance & Annual Updates

After the offering closes, issuers typically must file an annual report (Form C-AR) with updated financial statements. We partner with you year-round to ensure you have timely, accurate financials for each submission cycle.

Example: If your fiscal year ends on December 31, your annual report deadline might be April 30. We track these deadlines closely to ensure no late filings.

Timely Filing Emphasis

Late or inaccurate filings can lead to SEC enforcement actions, reputational damage, and potential delisting from crowdfunding portals.

Our well-defined project management approach ensures key milestones—such as interim financial reviews and final sign-offs—are completed well before the deadline, preserving investor confidence and compliance.

OUR SERVICES

Regulation A (Reg A+)

Regulation A, sometimes referred to as “Reg A+,” provides companies with an alternative to traditional IPOs, allowing them to raise up to $75 million (Tier 2) from both accredited and non-accredited investors, with fewer regulatory hurdles than a full registration. At Barton CPA PLLC, our professionals guide you through the complexities of preparing audited financial statements, ongoing disclosures, and timely reports required by the SEC.

1. Audit & Review of Financial Statements

Tier 1 offerings (up to $20 million) and Tier 2 offerings (up to $75 million) each have specific requirements for financial statement audits and ongoing reporting.

Example: A growth-stage company aiming for a Tier 2 offering will likely need audited financial statements for its Form 1-A filing. We apply PCAOB or AICPA auditing standards (depending on your unique circumstances) to ensure compliance, accuracy, and investor trust.

2. Form 1-A Preparation & Filing

The offering statement under Reg A is filed on Form 1-A (https://www.sec.gov/info/smallbus/secg/regulation-a). It includes financial statements, management discussions, and other disclosures.

We coordinate closely with legal counsel and underwriters (if any) to ensure that the financial disclosures and the discussion of results of operations align with both GAAP and SEC regulations.

3. Post-Qualification Reporting

Tier 2 issuers must file annual (Form 1-K), semiannual (Form 1-SA), and current event (Form 1-U) reports to keep investors informed.

Example: A company that completes a Tier 2 offering may have to submit audited annual financials each year. Barton CPA PLLC offers year-round support, from reviewing internal records to delivering timely audited statements.

Timely Filing Emphasis

Under Reg A, strict filing schedules must be followed to maintain “current” status and avoid halting trading on the securities. Missing a Form 1-K or 1-SA deadline can diminish investor confidence and even risk an SEC investigation.

Our firm’s approach ensures collaboration with your team to set target dates, track deliverables, and produce final audited (or reviewed) reports in advance of the regulatory due dates.

FAQs

Frequently Asked Questions: Crowdfunding

What exactly is Crowdfunding, and how does Regulation Crowdfunding (Reg-CF) work?

Crowdfunding is a method of raising small amounts of capital from a large number of people, typically via the internet.

Under Reg CF, companies can raise up to a certain limit (historically $5 million annually, though regulatory updates may adjust thresholds) from both accredited and non-accredited investors.

These offerings must be conducted through an SEC-registered funding portal or broker-dealer.

Which companies are eligible to use Reg CF?

Generally, U.S.-based companies can use Reg CF if they meet certain criteria (e.g., not already public reporting, not disqualified, etc.).

Ineligible businesses often include foreign companies, blank-check companies, and certain “bad actor” entities with regulatory violations.

Example: A small manufacturing startup located in the U.S. with no previous securities violations can be eligible to raise capital via Reg CF.

What disclosures and forms are required?

Companies must file Form C with the SEC, containing details about the offering, business operations, risk factors, and financial statements (which may be certified, reviewed, or audited, depending on offering size).

Once the offering closes, Form C-U updates the total amount actually raised.

An annual report (Form C-AR) is also required to keep investors informed about financial and operational progress.

Do I need reviewed or audited financial statements for my Reg CF offering?

It depends on how much you intend to raise during a 12-month period:

  • Lower-tier offerings may only need financial statements “certified” by the company’s principal executive officer.
  • Mid-range offerings often require reviewed financial statements, conducted in accordance with AICPA SSARS.
  • Higher-tier offerings typically demand audited financials, aligned with GAAP and performed by an independent public accountant.

Example: If a company plans to raise $2 million, it likely needs audited statements. If raising $200,000, a review or certified statements might suffice.

Can anyone invest in a Reg CF campaign?

Audits provide the opportunity for a second set of eyes (usually those of a certified professional accountant) looking over your business’s accounts. An annual audit of your business may be a requirement of your business’s investors and lenders as a condition of putting their money in the business.

The audit requirements are different, depending on whether your business is public or private:

  • Public: Businesses whose ownership and debt securities (stock shares and bonds) are traded in public markets in the United States are required to have annual audits by an independent CPA firm. (The federal securities laws of 1933 and 1934 require audits.)
  • Private: Although federal law doesn’t require audits for private businesses, banks and other lenders to private businesses may insist on audited financial statements.

What happens if I don’t reach my funding goal?

Reg CF offerings typically have a “minimum” or “target” funding goal. If the company fails to reach this threshold by the closing date, all investor funds are returned without interest, and the offering is canceled.

Example: If your target is $100,000 but you only raise $60,000, the offering is void, and no securities are issued.

What ongoing reporting obligations do I have after a successful Reg CF raise?

You must file an annual report (Form C-AR) with updated financial statements within 120 days of each fiscal year-end.

The company may also be required to provide additional disclosures if there are material changes to its operations or financial status.

Example: If a company’s fiscal year ends December 31, it must submit Form C-AR by April 30 each year.

Can I advertise or promote my Reg CF offering outside of the funding portal?

Yes, but with restrictions. You can publish a “tombstone ad” or offering notice that includes basic info (e.g., company name, offering terms, link to the portal) but no direct solicitation to buy securities outside the portal.

Any promotional activity must direct potential investors to the registered funding portal or broker-dealer hosting the offering.

What are typical costs associated with launching a Reg CF offering?

Professional Fees: CPAs (for reviews/audits), attorneys (for regulatory compliance), and marketing experts.

Portal Fees: Funding portals often charge a percentage of the total capital raised or a flat fee.

Ongoing Compliance Costs: Annual reporting (Form C-AR), additional accounting/audit fees, etc.

Example: A $500,000 campaign might see combined professional and portal fees ranging from 5%–10% of the amount raised, depending on complexity.

How do I exit the Reg CF reporting regime?

Certain conditions allow a company to terminate ongoing reporting, such as:

  • Fewer than 300 record holders after filing an annual report.
  • The company has filed at least one annual report and has total assets no more than $10 million.
  • Registration of securities under Section 12(g) of the Exchange Act, essentially going public on a larger scale.

Example: A startup completes a Reg CF round and remains small in shareholder count and assets. After at least one annual report, it may be eligible to cease ongoing disclosures.

HOW IT WORKS

Easy Step Process

1

Consultation

Contact us today to set up a free consultation to discuss your needs.

2

Service Process

Together we will agree on a plan and approach and scheduled delivery date.

3

Delivery

Deliverables will be discussed with you and will obtain your approval before final issuance.

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