What Small Business Should Know About the JOBS Act

The JOBS Act increases opportunities for equity investment. Though crowdfunding was not previously illegal, it had limitations. The JOBS Act removes those limitations. Most importantly, the JOBS Act allows small businesses to crowdfund equity investments, which should draw more investors into the trend.

The JOBS Act also eases rules on public disclosures. Previously, private companies with over 500 shareholders and $10 million in assets were required to comply with SEC public disclosure rules. Startups often felt forced to file an IPO. The JOBS Act increases that number to 2,000 shareholders, which should give companies the ability to seek more funding and time to plan for an IPO.

Going public is easier under the JOBS Act. The JOBS Act creates "emerging growth companies" -- those businesses with less than $1 billion in revenue. Emerging growth companies that wish to go public are exempt from some Dodd-Frank rules, and have fewer financial reporting requirements when filing an IPO.