Entrepreneurs can now raise money for their projects online thanks to websites like kickstarter.com, indiegogo, com and others. Reward-based crowdfunding is very popular, in that supporters get a reward based on the level of their contribution. It can be anything from a Thank You, to a T-shirt, to a prototype of the item.
If you would like to seek funding for your project this way, there are a number of things you want to check out. Among them are possible federal and state tax consequences. There is no fun getting a tax bill when you least expect one, so plan to keep meticulous financial records. And, of course, make sure your offering details are clear and concise. Hint: the websites offer lots of practical tips and guidelines.
If you’re thinking this is something you’d like to do, a good place to start is by subscribing to some of the sites and studying the various campaigns. You’ll soon have a pretty good idea of what this crowdfunding thing is all about. Hint: It’s not a small deal. These sites are raising hundreds of millions of dollars from interested supporters!
So, there you have it. In addition to the classic friends and family approach that underscore so many startups, here is a new, proven way to launch your dream. Good luck!
Martin Kahn, Certified SCORE
visit us at: www.scoresouthflorida.net