JOBS Act makes business formation easier in Michigan

America is often referred to as the land of opportunity, where a person who has a good business idea can become prosperous with hard work. However, business formation can be difficult in a struggling economy. One of the most challenging aspects of being an entrepreneur is being able to find the necessary start-up capital for a new business. However, the JOBS Act can help new businesses in Michigan gain this initial capital in a variety of ways.

The premise behind JOBS is to loosen regulation on investments in small companies. This will create additional start-up capital for new businesses. The initiative was started in 2011 by the Obama Administration as a private group of corporations. The alliance, known as Startup American Partnership, is designed to provide useful resources for start-up companies through a variety of ways.

First, JOBS makes it easier for entrepreneurs to raise up to $1 million from friends and family via crowdsource funding. The initiative also alters the methods new companies can garner capital by enabling them to market their ideas to accredited investors.

The new law also increases the maximum allowable number of investors from 500 to 2,000 before a company is classified as a public corporate entity. Additionally, JOBS allows more established companies with less than $1 billion in annual sales or $700 million market capitalization to offer an initial public offering without meeting the Sarbane-Oxley disclosure requirement. This could save a company anywhere from $3 million to $5 million in cost of compliance.

With the added incentives created by JOBS, entrepreneurs may be more motivated to start new businesses. However, before initiating business formation, entrepreneurs in Michigan need to understand the proper legal process for creating a business. There are a variety of decisions to be made which can have a variety of legal ramifications, such as choosing what type of business entity to create.

Source: MLive.com, ” Startup America CEO: 4 ways the JOBS Act will help Michigan companies ,” Shandra Martinez, Aug. 24, 2012