Equity crowdfunding is a form of crowdfunding. It’s a method through which an early stage business can raise money by selling shares to people (the “crowd”). The shares are equal to a small stake in the company – and so if it grows in value, the shareholders (crowd) will make a profit in their investment. It’s a popular method for startups to raise funds.
It is similar in structure, but there are a few key differences to keep in mind:
Whilst at one point, equity crowdfunding was reserved only for seasoned investors, today the field is more open. It typically takes place on an online equity investment platform, and you’ll likely have to prove that you have adequate investment experience, that you’re aware of the risks and, most importantly, that you have the financial means to be involved!
As with all investments, you need to be aware of the risks. Equity crowdfunding comes with its own specific set:
You will need to register for Self Assessment by the 5th October following the end of the relevant tax year. Any earnings from your shares will need to be declared to HMRC just like any other income.
Of course! We advise that you start a comprehensive spreadsheet to keep track of your taxable income and relevant expenses throughout the year in order to make your tax return more straightforward. This can be done on an Excel spreadsheet or Google sheet to keep things simple! Contact our team for more advice today!