Category: Business Law

When a disabled veteran opens a small business, he or she can apply for a Service-Disabled Veteran-Owned Small Business (SDVOSB) certification to conduct business with the VA. The U.S. Small Business Administration and the U.S. Department of Veterans Affairs have special programs designed for SDVOSBs that include sole source, set-aside, and subcontracting opportunities.  These opportunities can be very lucrative for an SDVOSB. According to the Small Business Administration (SBA), a minimum of three percent of federal contracting dollars should be awarded to SDVOSBs each year.

However, to qualify for federal contracts, you must first meet all eligibility requirements for certification and go through the process of obtaining the certification. Our South Carolina business and corporate law lawyers assist Service-Disabled Veterans apply for their certification so that they can take advantage of opportunities only available to SDVOSBs. We also assist with all other aspects involved in operating a small business.

Things You May Not Know About Doing Business with the VA as a Disabled Veteran

The qualification process for obtaining your SDVOSB certification can be confusing and complex. Our South Carolina corporate lawyer can help you with each step in the process of preparing and filing your request for certification. Below are some facts about the requirements and steps involved in obtaining your SDVOSB certification.

1. Your application for certification (also referred to as being “verified”) must be filed with the VAs Center for Veterans Enterprise (CVE). Upon being certified, your small business is listed on the CVE’s Vendor Information Pages database.
2. The veteran must be considered a Service Disabled Veteran (SDV) to qualify for an SDVOSB certification. In other words, the Department of Veterans Affairs or the Department of Defense must have determined the veteran has a service-connected disability.
3. At least 51 percent of the small business must be owned by an SDV. The SDV must also serve in the capacity of the highest officer for the business.
4. The North American Industry Classification System code assigned to the procurement must recognize the SDVOSB as a small business under its size requirements.
5. One or more Service-Disabled Veterans must control the daily operations and the management of the business. This requirement means that the SDV controls the long-term decisions made for the company in addition to the day-to-day administration and management of operations.

Since the federal government limits competition for some contracts to businesses that have received their certification as an SDVOSB, it is in your best interest to apply for certification so that you have access to this limited business opportunity.

Contact a South Carolina Corporate Lawyer for Help

The process for an SDV to qualify for an SDVOSB certification should be simple and quick so that the veteran can begin taking advantage of special programs for bidding on government contracts. However, because the VA thoroughly reviews all corporate documents and interprets the regulations and requirements for SDVOSB applications, many veterans who believe they qualify for certification are denied.

Contact our South Carolina small business and corporate law lawyers at Willcox, Buyck & Williams, P.A. Our lawyers can help you by preparing your application, reviewing your corporate structure and documents for compliance requirements, and appealing denials. Contact our law firm for more information.

Business owners have many important decisions to make regarding their business, such as the location, inventory purchases, labor, and advertising. However, one decision is often glossed over and not given the consideration needed to avoid costly mistakes — decisions about business insurance. Our South Carolina business formation and planning lawyers work closely with business owners to help them avoid insurance mistakes that could be detrimental to their business interests.

Five Business Insurance Mistakes to Avoid

1. 1. Failing to Read the Policy

Insurance policies can be very lengthy, especially when you include the riders and other addendums. However, regardless of how daunting the task may appear, business owners need to read the entire insurance policy from cover to cover. It is imperative that a business owner understands the insurance coverage and all exclusions. If you do not have the time or you do not wish to read your policy, your SC business attorney can review the policy and explain the terms. After an issue arises, it may be too late to realize you chose insurance coverage that does not meet your needs.

1. 1. Limits are Too Low

Many individuals make this insurance mistake, but so do business owners. Whether you are trying to save money on premiums or you are not fully aware of the insurance you need, it is always better to have more coverage than less coverage. For example, carrying a million-dollar liability insurance policy might seem excessive. However, if a young person falls and is injured on your property, the damages could total a million dollars or more if that person is permanently disabled and will not be able to work for the rest of his or her life. In many cases, once you pay for the initial premium, increases in insurance or additional coverage is not as expensive as you might assume.

1. 1. Failing to Purchase Business Interruption Insurance Coverage

Whether it is a natural disaster or other unexpected problem, an interruption to your business can be extremely costly. Purchasing business interruption insurance coverage can provide income to cover overhead and expenses while you take the necessary steps to reopen your business.

1. 1. Failing to Purchase the Correct Insurance Coverage

Insurance policies provide a variety of diverse types of coverage, which makes choosing an insurance policy an extremely crucial decision for business owners. For example, a business owner who purchases liability insurance, but fails to purchase casualty insurance may realize too late that his insurance policy does not cover his losses from unexpected events. Liability insurance only covers losses that other parties suffer because of claims against the business. Business owners need to discuss the distinct types of business insurance coverages with their insurance agents and SC business attorneys.

1. 1. Failing to Understand Duties to Indemnify or Defend

Another important consideration when purchasing insurance is whether the insurance company will defend you if you are sued and whether the insurance company will pay a judgment against you. Some policies may limit coverage or place exclusions on the coverage of these two issues. It is very important to understand what the company’s duties and responsibilities are in the event of claims, lawsuits, and judgments.

Consult With a South Carolina Business Attorney

If you have questions about business insurance, contact our experienced business law attorneys to discuss your options and insurance needs before you purchase an insurance policy. Schedule a consult with a business lawyer at Willcox, Buyck & Williams, P.A. today to discuss the insurance options that are most necessary for your company.

Top 7 Frequently Asked Questions About Starting a Business

Starting a business is usually an exciting time for entrepreneurs. The ability for people to work towards a dream or passion on their own accord is an attractive way to make money and raise a public profile. However, starting a business can be difficult and risky. Working on a business is usually highly stressful work that can produce little fruit until the entity takes off, and it can sometimes seem like hard work was for nothing if the venture ultimately fails. Working with a skilled business formations and planning lawyer can take a lot of stress out of the process.

Those looking to start a business usually reach out to mentors or industry leaders in order to discuss ideas or inquire about the strategies and advice other entrepreneurs relied on as they launched their business ventures. Some of the most frequently asked questions about starting a business include:

1. What Should My Entity Choice Be? The type of structure a company is formed under can have significant ramifications once it is time to pay taxes, especially considering some of the changes under the new Tax Cuts and Jobs Act. LLCs are usually a popular choice but can be overly complicated for new people to set up, while a partnership can open up business owners to a host of liability problems.
2. What about NDAs or Non-Competes? Business owners who believe they have a good idea are usually inclined to have those involved sign a non-disclosure agreement, or even a non-compete agreement depending on the industry. These types of agreements can lead to problems because they can sometimes scare off potential investors.
3. Do I Need A Business Plan? Many businesses rely on a concrete plan to detail their goals for a product or service. However, too strict of a business plan can hinder a company if it want to innovate or deviate to pursue a different path.
4. How Do I Get Money? Businesses need money to survive, and trying to find funding resources can be very difficult. The vast majority of businesses start out small, with expenses paid for through credit cards, personal funds, or money from friends and family. Angel investors, bank loans, and crowdfunding sites are other ways businesses can attract funding.
5. What Kinds of Records Do I Need to Keep? Keeping detailed records of finances, taxes, stockholder minutes, and bank account information can make life much easier for tax reporting and general operational tracking.
6. How Should Equity Be Distributed? Business owners should work out questions about equity among themselves, and with any other co-founders, in order to prevent problems down the road if someone wants to cash out with their share.
7. What Are Some of the Biggest Mistakes Business Owners Make? Many of the same business mistakes echo across different industries. More common mistakes include not starting with enough money, underestimating marketing, and a failure to adapt to changing markets.

An experienced business lawyer will be able to answer questions about starting a business and be able to advise owners about local laws and tax regulations that can help save time and money. Schedule a consult with a business lawyer at Willcox, Buyck & Williams, P.A. today to discuss the business options that are most advantageous for your company.

Going for the IPO – Is your company ready?

Taking a company public through an IPO can be a big step for continued growth. Renaissance Capital says the typical newly public company sees its share price rise by about 31% from its IPO price. Even though the prospects of public attention and an influx of money can be very tempting for business owners, it is still very important to sit down and seriously consider if your company is ready.

Theoretically, you can take a business public at any time, but launching an IPO at the wrong time can really hinder the company’s future prospects if things go wrong. If you’re considering taking your company public, talk with a business and commercial lawyer before you do. In the meantime, here’s a list of considerations to think about while deciding if your company is ready for an IPO.

1. Vision: People are not going to invest in a company if it has few growth prospects or if it has a product or service that is relatively mundane or uninteresting. Investors are also going to want to see a long-term strategy for the company and innovation plans, especially if the market is saturated with competitors.
2. Transparency: A public company is fully exposed to the world and is responsible for the fair disclosure of information via social media and other platforms. They also have to be aware that certain news might affect the price of their stock. If your company is not particularly social media savvy or comfortable with communications, it might be best to avoid an IPO for the present time.
3. Management:  Many people look at the strength of the team and board of directors while making an investment decision. A public company must have experienced leadership that is dedicated to complying with regulations on financial reports and has an interest in sticking with the company for the future. A public company also is subject to board of director requirements and must have board committees assigned to different tasks.
4. Market: Even the most promising IPO can be quickly derailed in a bad market. A market in decline usually sees a reduction in the number of IPOs because the market window closes. A company must be comfortable in projecting market trends and be prepared to modify timetables or plans if necessary, especially if economic conditions are worsening.
5. Finances: One of the trickiest tasks for a newly public company is complying with SEC regulations. Experts usually suggest hiring a specialist in investor relations and human resource professionals to manage SEC reporting and stock options for employees. It is probably best to put a company IPO on hold if you are not ready to hire an outside expert or are not willing to go along with SEC reporting requirements for public companies.

There is a lot to think about when getting a company ready for an IPO. An experienced business attorney will be able to offer guidance and advice to you and your company. Working with a lawyer will also give you the chance to ask questions about different aspects of an IPO and discuss other options, like dual tracking. For further guidance, contact Willcox, Buyck & Williams, P.A. today for a consultation.

The Tax Cuts and Job Act (TCJA) will affect every type of business in America, regardless of its organizational structure. With the dizzying number of changes in the TCJA, some people are wondering if any types of business will get more favorable treatment. As a business owner, you might want to discuss the new laws with a business organization lawyer.

Most of the significant changes will not affect large businesses. Experts anticipate small and medium-size businesses will feel the majority of the impact, for better or worse. Since every company is different, it is impossible to state whether you should change from your current organizational structure to a different one because of the TCJA. You will have to learn about the tax changes and decide how they will affect your business.

Changes That Affect Corporations

C corporations used to have graduated federal income tax rates of 15, 25, 34, and 35 percent under the old tax law, unless you owned a personal service corporation, for which the tax rate was 35 percent. Beginning January 1, 2018, corporations (including personal service corporations) will pay a 21 percent corporate tax rate. If your company is not a corporation and the 21 percent rate would be beneficial for your business, you might consider incorporating.

Corporations subject to the corporate alternative minimum tax (AMT) had to pay a 20 percent tax rate under the old rules. Beginning January 1, 2018, there is no more corporate AMT.

New Rules That Impact Pass-Through Businesses

Beginning January 1, 2018, there is a new deduction for the net taxable income passed through to owners of sole proprietorships, partnerships, certain LLCs, and S corporations. The owner gets a deduction of 20 percent of his or her qualified business income (QBI). The TCJA includes numerous restrictions and limitations for the QBI deduction, including higher income levels. Special rules apply to owners of service businesses, such as doctors, lawyers, accountants, and other professional practices, which reduce the value of this deduction for income that is more than $157,500 for an individual taxpayer or $315,000 for a joint return.

TCJA Changes That Can Impact Any Type of Business Structure

There are numerous new rules in the TCJA that affect businesses. A few of the highlights include:

1. You will no longer be allowed to deduct the full amount of business interest beginning January 1, 2018.
2. You are, however, more likely to be able to utilize the cash method of accounting instead of having to use the more labor-intensive inventory method of accounting.
3. Depreciation rules are more generous than in the past. Previously, you were limited to a maximum of $510,000 in depreciation deductions for qualifying property. Beginning January 1, 2018, you can deduct up to $1 million of depreciation. Another bonus is that more categories of property will qualify as eligible property.
4. Unfortunately, the TCJA slashes business entertainment deductions. Beginning January 1, 2018, there will no longer be a deduction for business-related entertainment expenses. The old tax code allowed a 50 percent deduction.
5. The TCJA has a Scrooge-like approach to business net operating losses (NOLs). Previously, NOLs were 100 percent deductible, but now, you can only deduct 80 percent of your losses, which compounds the misery of business losses.

Schedule a consult with a business organization’s lawyer at Willcox, Buyck & Williams, P.A. today to discuss the business structure is most advantageous for your company.

Business Contract Performance – When is it a Good Idea to BreacBusiness relationships and undertakings are formalized with contracts. These contracts may be written or oral, but most complex business agreements are reduced to writing for obvious reasons. Business owners agree on the terms of the contract to ensure seamless performance by all parties to the contract. However, there are times when performing the contract is detrimental to the business or simply impossible. Does this mean the business owner’s hands are tied? Not necessarily.

There are instances where it is a good idea to breach a contract. Before doing so, however, it is best to consult a South Carolina contracts lawyer to comprehensively evaluate all possible legal scenarios.

When it is a Good Idea to Breach a Contract

1. Efficient breach

   The idea behind efficient breach is that a party should be allowed to breach a contract and pay resulting damages if it would be more economical than actually performing the contract. There are times when a business owner is tempted to breach a contract because it would be more profitable or economically efficient to do so than actually performing the contract.

   If the economics of performance are unfavorable, efficient breach allows the business owner to choose the most economically feasible path while compensating the victim, essentially putting him in the position he would have been if the contract were performed.

2. Contract is illegal

   An illegal contract is unenforceable and performance may land the business owner in legal trouble. For example, a contract for the sale of illegal goods or the provision of illegal services violates the law and if performed, could give rise to criminal charges. Breaching it is definitely a good idea.

3. Contract obtained by fraud

   A contract that is obtained by duress, undue influence, lies and fraud is invalid since the party with power gains an undue advantage to force the other into an unfair or unconscionable contract. There is no true consensus or good faith, which invalidates the contract.

4. Estoppel

   If one party excuses the other from performance of a contract, the other party can rely on that excuse. The party making the excuse will be held to his word and estopped from claiming breach.

5. Lack of capacity to contract

   If any of the parties to the contract lacks capacity to contract (because they are underage, of unsound mind or for any other reason), the contract is voidable. A voidable contract, once rendered void, is legally unenforceable. Should this happen, it could cause significant losses to a business owner who had relied on it.

6. Contract contained a mistake

   If the contract contained a mutual mistake or a material unilateral mistake that the other party knew or should have known about. This will render the contract voidable.

While nobody enters into a business contract with the intention of breaching the terms, there are instances where performing the contract would ultimately cause harm to the company. In these instances, breaching the agreement may be the best option for your company and shareholders.

If you are contemplating a breach of contract, you have several legal options available. Contact Willcox, Buyck & Williams, P.A. today for a consultation.

Creating a business or startup is a bit like being a chessmaster—to be successful, you have to be able to see the endgame even before the game begins.  As you create a business plan and develop a strategy to accumulate capital, you should also be thinking ahead to how you will move on from your successful business to your next big thing.  If you are ready to start a business or simply need to update your business plan, talking with an experienced business formation and planning lawyer can get you on the right track. In the meantime, take a look at some of the most common exit strategies.

• Sell It to Google!  (Mergers & Acquisitions)

Many startup owners hope to create such a successful and profitable company that larger, more established businesses will want access to what they’ve created.  For example, a technology startup may plan to develop a cutting-edge Virtual Reality platform that a corporation like Sony or Microsoft would want to expand its video game technologies.  For large corporations, acquiring innovation is often cheaper than developing it in-house, and for startup owners mergers can often be very profitable!

• Keep It in the Family!  (Selling Your Interest)

Other business owners plan to exit their creation by selling their interest in the business to someone else who will take over.  This could be a family member or friend, or simply another businessman who sees the value in the company and is in a position to buy it and scale it.  This is a common exit strategy for family-owned businesses.

• Go Public!  (Initial Public Offering)

Initial Public Offerings, or IPOs, were a very common exit strategy during the dot-com boom in the late 1990s and early 2000s.  An IPO is the way a privately held company becomes publically traded, offering investors the opportunity to purchase stock in the company in order to raise capital.  Recently, however, there has been a decline in the number of startups taking advantage of IPOs.  Reasons include the uncertainty associated with valuing the company’s stock as well as the duties that are owed to shareholders in a company.

• Let It Ride!  (Operate the Business)

Some business creators plan to create a company that is simply a goldmine and can stand on its own as a profitable enterprise.  If they are successful, they can maintain ownership of their creation while retaining the services of a qualified, trusted individual to run the day-to-day operation of the company.  Their successful business can then provide a steady stream of income for additional ventures.

• Shut It Down!  (Liquidations)

Some business creators don’t want to move on from their companies at all but just want to run things until they’re finished.  For these business owners, it might make sense to simply plan to liquidate their business’s assets when they decide to wrap up their enterprise.

Regardless of the type of business you’re creating, your success will depend on planning ahead, and those plans should include an exit plan.  Our firm has been helping South Carolina businesses develop business plans and exit strategies for years, and our attorneys are available to help you create a custom exit strategy to maximize the value of your business while accomplishing your other goals.  If you’d like to speak with someone about developing your exit strategy, contact Willcox, Buyck & Williams, P.A. today for a consultation.

Nonprofit corporations do some amazing work, and many are able to do it because of their nonprofit status, which comes with many benefits.  Nonprofits can be eligible for tax exemptions, and their supporters are able to make tax-deductible donations.  Creating and operating a nonprofit isn’t difficult, but there are many rules that must be followed to maintain your nonprofit status.  By using a business organization lawyer to help carefully craft your organization, you can avoid running afoul of the rules and causing trouble for yourself down the road.

What Structural Protective Measures Can I Build into My Corporation?

Most nonprofits are incorporated under Section 501(c)(3) of the Internal Revenue Code, which has list of requirements and prohibitions that must be followed to maintain tax-exempt status.  That list makes a good starting place when considering how to structure your nonprofit, including the following points:

• No Private Benefits
  The most obvious requirement for nonprofits is that they must be not for profit.  That means the organization’s “insiders,” such as its officers or members of its board of directors, are not allowed to take personal benefits from the organization (although officers are allowed to take reasonable salaries).  With that in mind, there are a variety of structural protections you can give your nonprofit to protect its status:
  1. Limit Executive Salaries
     A nonprofit’s officers and staff are allowed to be paid reasonable compensation for their services.  Treasury Regulations dictate that compensation is reasonable if the organizations board of directors (or other governing body) approved it ahead of time after considering appropriate information, and then documents the reasons for their decision.  By requiring this to happen before any compensation is paid, you can protect your nonprofit from violating this rule.
  2. Preclude Board Salaries
     Most nonprofit boards of directors are composed of members who volunteer their time.  By requiring that your directors receive no compensation for their services as directors, you can avoid the question of private benefits altogether.
  3. Have Public Books and Frequent Audits
     Finally, you can avoid many questions through transparency.  The more information you make public about what assets come into your organization and where those assets go, the less likely you are to be accused of improprieties.  Requiring your nonprofit’s treasurer or other chief financial officer to conduct and publish frequent audits can protect against potential future problems.
• No “Non-Exempt Activities”
  Tax-exempt status under Section 501(c)(3) is given on the condition that the organization only conduct operations for approved purposes, such as scientific research or charity.  You can ensure your nonprofit remains in-bounds by placing responsibility with its president or chief executive officer to keep the organization’s activities within the limits of its mission.  You can build in further protections through requirements such as having the board of directors approve any new projects and having the nonprofit’s secretary keep an explanation of how each project furthers the mission in the board’s minutes.
• No Political Campaigning
  The last major prohibition for nonprofits under Section 501(c)(3) precludes them from attempting to influence legislation or political campaigns.  Clearly that means your articles of incorporation and bylaws should explicitly forbid such activities, but there are other structural protections you can create.  For example, your bylaws can require the chief executive officer and/or the board of directors to approve any printed materials prior to publication.  And in the age of social media, it’s very important to have policies declaring who may post social media messages in the nonprofit’s name, the topics those messages may address, etc.

If you’re thinking of starting a nonprofit, you probably have questions.  Our firm’s attorneys have helped many of our clients’ organizations incorporate and seek nonprofit status, and would be happy to guide you through the process as well.  If you would like to speak with an attorney about structuring your nonprofit, contact Willcox, Buyck & Williams, P.A. today for a consultation.

With just about every court in the country facing a backlog of months to years, alternative dispute resolution is becoming an attractive way for parties to “litigate” their disputes in a more timely and private fashion. While most people have not seen the inside of a courtroom, even fewer have been involved in arbitration proceedings. This article sheds some light on what a typical business dispute arbitration process can look like. If you think that you may be required to arbitrate a contractual dispute, it is important to seek the advice of a lawyer experienced in alternative dispute resolution.

An “Informal” Process

Arbitration is often described as an “informal process” designed to allow parties to resolve their disputes in a relatively quick and private manner. This is a misnomer. Arbitration proceedings are not to be taken lightly. In many cases, the decision of the arbiter is binding, so it is best to take the process seriously.

The Players

Every arbitration will have at least two parties in opposition. These parties may be referred to as plaintiffs and defendants, although they may also be referred to as claimants and respondents. Like plaintiffs, the claimants are the individuals or groups that bring a claim. Respondents, like defendants, are the individuals or groups that respond to the claim. In most cases, each party will be represented by one or more attorneys, although this is not a requirement for individuals and some businesses.

Instead of a judge, arbitrations are heard by one or more neutral persons called arbitrators or neutrals. Often, the arbitrator is a retired judge. In the best circumstances, the arbitrator is experienced in the type of legal matter that is being heard. Both parties are involved in choosing who will be the arbitrator.

Pre-Arbitration Process

Once the parties have chosen the arbitrator, one party will initiate the arbitration process by filing a claim. This is akin to a complaint in the normal court process. The respondent will file a response. From this point, the parties engage in the discovery process. This involves scheduling depositions and exchanging demands for documents and other evidence. The arbitrator may place deadlines on this phase of the process.

During the time, both parties will determine who will serve as witnesses and whether expert testimony is required. Based on the evidence, the parties will each build their case. In many cases, the arbitrator will ask for both parties to submit briefs summarizing the factual and legal issues in the case. The parties will also be asked to submit evidence to the judge supporting their claims and defenses prior to the arbitration date. The parties may also file motions to exclude evidence, called motions in limine. The arbitrator will generally rule on these motions before testimony is heard.

The Arbitration

Depending on the complexity of the case, arbitrations can take days, weeks or months to complete. During this time each party will have the opportunity to present witnesses and evidence to the arbitrator. Most attorneys will generally insist upon having a court reporter present to record all of the testimony. This allows them to help build their case and perfect their closing brief at the end of the arbitration.

Throughout the arbitration attorneys for each side may issue objections to certain testimony or evidence being submitted and the arbitrator will rule on those objections just like a judge would in any normal court proceeding. When both sides have presented all of their witnesses the arbitrator will ask each side to provide closing briefs and/or schedule closing arguments.

Once all briefs and arguments have been made, the arbitrator will issue a ruling. If the terms of the agreement require the arbitration to be binding then both sides must adhere to that ruling.

If you are facing a dispute that may require arbitration and would like to speak with an attorney, contact Willcox, Buyck & Williams, P.A. today for a consultation.

The State of South Carolina is actively working to improve the business climate within its borders, particularly focusing on bringing innovation to South Carolina.  Early in 2017, the South Carolina Department of Commerce published an Innovation Plan analyzing the current state of affairs and making recommendations for improving options for businesses.

In particular, the South Carolina Innovation Plan notes that many new businesses struggle to obtain sufficient capital from banks and traditional lending institutions, and instead are forced to turn to seeking venture capital through “angel grants” and other forms of direct investment.  The plan further notes that due to the scarcity of capital within South Carolina and the increasing amount of time and resources required to locate and secure it, many new businesses are looking across state lines to secure the funding they need. While you may not need a commercial lawyer right now, when you begin to seriously think about raising capital, it can’t hurt to talk to one about the ins and outs of raising capital.

Registering to Raise Capital

Both federal and South Carolina securities laws have regulations requiring businesses to register with the government before offering securities in order to raise capital.  However, these regulations were generally intended for large businesses that plan to raise large amounts of capital, and there are exemptions to the registration requirements that apply to most small and mid-sized businesses.  Because the registration process is so expensive and time-consuming, finding and using an appropriate exemption to the registration requirement is typically a good first step.

Private Placement

For some businesses, a Private Placement of Securities or Private Equity Offering can be a good solution.  Private placement is available to companies who are offering their securities for sale to a group of investors entirely within the State of South Carolina.  Typically businesses take advantage of private placement when their investors will be family and friends, “angel investors,” or South Carolina institutions.  Raising capital through a private placement does NOT require the business to register with the government, reducing the time and cost of raising capital.  Private placement also allows the business to custom-tailor investment opportunities to targeted investors, as well as maintain the confidentiality of information that could otherwise be required to be disclosed in a public offering.

Crowdfunding

“Crowdfunding,” or securing small amounts of capital from a large number of investors, is one of the hottest topics in capitalization today.  In 2013 the U.S. Securities and Exchange Commission removed its prohibition on businesses advertising the fact that they are raising capital without registering first.  However, the SEC has been slow to implement rules governing capitalization techniques like crowdfunding, causing many states to create their own regulations.  In South Carolina, qualified for-profit businesses can “crowdsource” up to $1 million annually without registering.  To qualify, a business must be formed and based within the State of South Carolina, and the securities must be marketed and sold exclusively to South Carolinians.  For the moment, that means internet advertising that could be viewed by someone outside the state is impermissible.  Notice also must be provided to the State along with a $300 filing fee.

If you’re in the process of creating a business or expanding your current business, securing sufficient capital is likely one of your biggest headaches.  Our firm specializes in helping South Carolina business owners successfully capitalize on their businesses as efficiently and cost-effectively as possible.  If you have questions about capitalization and would like to speak with one of our attorneys, contact Willcox, Buyck & Williams, P.A. today for a consultation.