Another CTA Update: Anybody Getting Whiplash Yet…?

The injunction from required reporting detailed in this post of December 4, which was then lifted as mentioned in this subsequent post on December 24, and as detailed in this client alert, was put back in place as described in this post from last Friday! If that’s not enough to give an entrepreneur with a small business whiplash, I’m not sure what is.

The current bottom line is that no filings are currently required under the CTA while the injunction is in place. Reportedly, the next court hearing on this matter has been scheduled for late March, so maybe enough time to get out of the neck brace…

Hot Off the Press: CTA Reinstated by Fifth Circuit Court

The injunction in my prior post on this topic has been lifted and BOIR reports are officially required again, with a slightly extended deadline. 

Read our official client alert for more details. 

Happy Holidays!

The Regulation Burden and Small Businesses

Ever since the passage of the Corporate Transparency Act (CTA) in 2021, business attorneys (and, hopefully, small business owners) have been analyzing, preparing for, complaining about, and deciphering the CTA and the required beneficial ownership reports required by it. Recently, several events have increased the emphasis on the CTA, including the fast-approaching original deadline of January 1, 2025 for companies formed prior to 2024, and the decision by a Federal Court in Texas to grant a nationwide preliminary injunction against the enforcement of the CTA. After having spent a year in the CTA trenches, I’ve seen first-hand how burdensome it can be for business owners to satisfy, and it piqued my curiosity as to the cost of complying with regulations as a small business owner in the United States.

The regulation burden in the United States – while having its merit for protecting individuals and consumers – is staggering. I recently reviewed a study conducted for the National Association of Manufacturers entitled “The Cost of Federal Regulation to the U.S. Economy, Manufacturing and Small Business.” In this study, the National Association of Manufacturers found that the cost of federal regulations to the U.S. economy totaled $3.079 trillion dollars (yes, trillion with a “T”) in 2022, with an average annual compliance cost to a U.S. firm of $277,000 dollars. For small manufacturers (as defined in the study), the cost was about $50,100 per employee to comply with these regulations.

Farewell

My first blog post, as co-editor of entreVIEW, appeared on March 18, 2011. This post is number 90. It is also my last as I’ve decided to put down my entreVIEW pen.

Over the last thirteen years, my posts mainly have been about books, with maybe a film or article thrown in for good measure. I’ve endeavored to highlight certain themes that reflect on entrepreneurial ideas and views, especially where such messages aren’t abundantly clear from the book’s topic. (My reading list has indeed been eclectic.) Looking over what I have written, I also see that, whether consciously or not, the posts allowed me to reflect on my own personal experiences over the last 42 years of practicing law, and even from earlier phases of my life.

Maybe this is the reason I’ve enjoyed writing these posts. I’m not sure anyone has read them (other than my tolerant co-editor, Dan Tenenbaum). I hope that someone out there, after skimming one or two, has been inspired to pick up a book out of curiosity, or perhaps as a palate cleanser during a feast of financial reports and profit and loss statements.

And so I bid farewell. It’s been a good run.

Hot Off the Press: Court Issues Reprieve to the CTA Compliance Deadline of January 1, 2025!

If you’re a regular reader of this blog, you know we’ve been posting about the Corporate Transparency Act (CTA) for a while. Our first post detailed what you needed to know all the way back in August of last year. A refresher, the CTA is a new federal rule that went into effect on January 1, 2024, with a compliance deadline (for companies formed prior to that date) of January 1, 2025. In our most recent CTA-related post a couple of months ago, we recommended that reporting companies might want to hold off on compliance until the fourth quarter of this year, just in case there were any changes to the CTA. Well, those changes are here!

The Latest on Equity Crowdfunding

We’re excited to share that Lathrop GPM lawyers have again worked with an entrepreneurial client to successfully launch a crowdfunding offering. This time with a company specializing in products and related services for producing non-alcoholic offerings in the craft beverage industry. As always, we are constantly amazed at the level of originality, energy, effort, and, to state the obvious, entrepreneurship that infuses these endeavors at every level!

Our latest crowdfunding client success made us realize that it’s been a while since we’ve written about Equity Crowdfunding; so I think we’re well overdue for an update! As we have written before, prior to the 2021 SEC rule changes (the “2021 Rule Changes”), crowdfunding was limited to offerings of up to only $1.07 million, and investment by the “crowd” through “special purpose vehicles” (which has the practical effect of listing potentially hundreds of “crowd” investors as a single shareholder on your cap table) was not permitted. As a result, crowdfunding at that time did not present a very attractive capital-raising mechanism for most entrepreneurs; few such offerings had been initiated and most of them had not been unsuccessful. The 2021 Rule Changes, among other things, increased the maximum raise to $5 million, and permitted the use of a special purpose vehicle, organized and operating for the sole purpose of acquiring, holding and disposing of securities issued pursuant to a crowdfunding offering, and into which all “crowd” members made their investment. Three years on, how have the 2021 Rule Changes affected the use of crowdfunding as a productive means of raising capital?

Let’s roll the tape! *

Downtown Kansas City: a Downtown’s Comeback

If you’re from the Kansas City area, you know downtown Kansas City as a bustling area full of thriving businesses, events, and citizens who both work and live within Downtown. And if you are in your late 20s like me, that is the only version of Downtown that you know. It hasn’t always been like this, however, and the revitalization of downtown Kansas City is a success story brought to fruition by the hard work and excellent foresight of City and civic leaders within the Kansas City metro area.