Whether you are starting a small business or running an established company, it is vital to understand business laws and regulations. But that is easier said than done. My goal is to provide business-related legal services so that you can spend more time dealing with the actual business and less time with legal intricacies of operating your business. My services include:

Business formation

You have a new and innovative product or service and you are interested in forming a new business. You may have concerns about liability, taxes, investors and other considerations. As your small business lawyers, we will assist you in deciding whether your startup business should organize as a limited liability company (LLC), partnership, S corporation or C corporation. We will form the most appropriate business organization for your new business and register the business in all jurisdictions in which it will conduct business.

Mergers and acquisitions

If your business is fortunate to thrive and become a merger or acquisition target, we can represent you as the seller; or if you are on the other side and looking to acquire a business, we can assist with the due diligence in purchasing a business. We will review various approaches in purchasing a business through merger or acquisition. We will discuss with you various structures in purchasing the stock or purchasing the assets of an acquisition target. In either case, your business will need thoughtful and comprehensive representation in all aspects of a merger or acquisition.

Government contracting

Government contractors face numerous issues when contracting with the government. And with a hands-on approach and substantial experience, we will help you navigate those legal issues. We prepare teaming agreements, subcontracts and joint venture agreements and can handle a variety of other government contract matters. As government contract lawyers for your small business, we can assist you in applying for programs for HUBZones, service-disabled veteran-owned small businesses or women-owned businesses. If your company is facing debarment or suspension because of allegations of corruption or bribery, we can assist in your defense before the U.S. government or the World Bank.

Business transactions

Once you have an ongoing business, however organized, you will have a host of various commercial transactions. We prepare agreements with lenders, lessors, partners, customers, employees, and consultants. We provide business legal services for your company, preparing confidentiality agreements, nondisclosure agreements, licensing agreements, distribution, employment agreements, independent contractor agreements, lease agreements, and many others. We will help you understand what each part of these agreements require and make sure that these agreements provide protection to you and your business.

Corporate law

Once your startup business has been created, your company will have ongoing requirements to maintain its separate status. We will assist in guiding you on how to prepare corporate minutes or resolutions of the company to maintain the corporate form and other steps to protect the limited liability of your company. You will also have to make sure that your bylaws or operating agreement continues to reflect the needs of the business organization. We are available to assist you in addressing these issues. And once your company is ready to raise additional capital from investors, we can work with you to determine whether you are subject to securities laws or fall within one of the exemptions.

Business disputes

Few businesses are immune to business disputes. If your small business was well-advised, you have an agreement that will provide guideposts on how to resolve your business dispute. If you are unable to settle your dispute, you may have a dispute resolution mechanism such as mediation or arbitration in the agreement. An alternative dispute resolution mechanism such as arbitration or mediation generally can provide a relatively quick resolution of your business dispute. If not, then you may have to consider litigation. We handle business disputes, including pre-litigation matters, mediation, arbitration and litigation.

Anti-corruption compliance

Every company should have procedures and policies to minimize its exposure to allegations of corruption or bribery. An integrity compliance program (ICP) is essential for businesses doing work internationally for the United States government or work financed through one of the development banks. We can assist in reviewing or preparing an ICP to assure that is consistent with the anti-bribery and anti-corruption guidelines from the World Bank. If your company is facing debarment or suspension because of allegations of corruption or bribery, we can assist in your defense before the U.S. government or the World Bank.

Non-profit law

We work with organizations to obtain their tax exempt status under Section 501(c)(3) of the Internal Revenue Code. There have been recent changes to obtaining 501(c)(3) status and we have worked with organizations in submitting successful applications on the simplified track by filing a 1023-EZ and the more rigorous 1023 application for larger organizations. Nonprofits also face similar legal challenges to assure that they comply with business requirements and additional requirements to assure that they do not jeopardize their tax exempt status. As a law firm for nonprofits, we work with nonprofit organizations to guide them through these issues.

FAQ Small Business Attorney in DC

What is considered a small business?

Almost all our clients fall within the definition of small business/startup as determined by the Office of Advocacy of the U.S. Small Business Administration. Under this definition, a small business has fewer than 500 employees. Small businesses encompass about 99.9% of all business organizations in the United States.

Which industries do you serve as a small business attorney?

Most of our clients are service providers such as consulting companies, law firms, accounting and bookkeeping services, cybersecurity consultants, video production companies, and lobbyists, just to name a few. We also represent foreign and domestic manufacturers and software developers.

As a small business lawyer in DC, we represent some retail operations, such as bookstores and restaurants. We also represent numerous nonprofits with varying missions. Our government contractors clients hold various IDIQs (Indefinite Delivery, Indefinite quantity Contracts) and GSA schedules.

In which areas of the law does a small business or startup need legal assistance?

Most times, small businesses/startups need the services of outside general counsel. As outside general counsel for small businesses, we can handle most matters as a small business attorney that small businesses generally encounter. Usually, anything with the word agreement or contract is within our practice areas. This includes operating and shareholder agreements, which are used for small businesses and startups that are formalizing their relationships with their owners. Once a business is formed, then we prepare and review a host of other agreements, such as service agreements (which may be referred to as client agreements or consulting agreements), independent contractor agreements (which may be referred to as subcontracting agreements), employment agreements, teaming agreements, purchase and sale agreements, merger agreements, option agreements, license agreements, lease agreements, and the list goes on.

What factors should a small business and startup look for in retaining the services of a lawyer for small businesses?

With our extensive experience of working as a small business attorney in DC for decades now, background and experience should come right at the top of the list when looking for a small business lawyer. We think that accessibility and communication are essential for a successful relationship between an attorney and a client. Hourly rate is important but not as important as quality of service.

What kind of experience do you have in advising small businesses as an attorney?

Keith Rosten has not only legal experience but also business and practical experience that allows him to relate to the trials and tribulations of a small business owner. Keith has BigLaw experience before working for small and medium-sized businesses, first at his own law firm focused on small businesses and then with Berliner Corcoran & Rowe LLP.

Keith has substantial business experience. He received an MBA from the Tuck School at Dartmouth College. During his business studies, he worked on several group projects with small businesses, including a furniture manufacturer, a manufacturer of leak location precision equipment, real estate developer. After business school, Keith operated a successful real estate business in California and overcame numerous issues, such as asbestos abatement and underground storage tank remediation.

Keith worked as a legal adviser to a government contractor and was a legal adviser to a major initiative in Russia. Keith ran another small business, selling and marketing solar energy equipment. The business had an e-tailer component, hosted the largest solar energy forum online, and sold solar energy equipment to the government. Keith negotiated two GSA schedules for the business and obtained HUBZone certification for the business. Keith was also president of the Dartmouth Entrepreneurial Network – Washington, a networking organization for small businesses in the greater Washington, DC community.

Keith has also volunteered for Compass Pro Bono, working with local business professionals to conduct long-term consulting engagements for local nonprofits in fundraising, governance, and strategy.

With this breadth of legal and business experience, Keith is attuned to some of the challenges facing small businesses, which allows him to provide effective advice and guidance.

As a small business lawyer, do you take in-person meetings only?

Yes. We are located in downtown Washington DC and host many of our clients. For those clients who cannot come into our offices, we usually meet over Zoom or by telephone.

How do you charge for your services as a small business attorney?

We charge our clients based on hourly fees. We usually provide a budget of how much certain matters cost so that startups and small businesses know in advance the ballpark cost of the matter.

What if a client does not like our services?

Clients can terminate our services anytime if they don’t find it satisfactory.

Should my small business lawyer or startup lawyer be in the same state as me?

No, not always necessary and may depend on multiple factors. For example, though we are an expert small business lawyer in DC, we have also provided consultation to other cities’ clients.

Primer on Crowdfunding for Small Businesses

The startup or small business faces daunting challenges in attracting funding. Simply, startup funding isn’t simple. The Jumpstart Our Business Startups Act of 2012 (the JOBS Act) added another arrow in the quiver of those looking for funding sources for their startup or small business. Crowdfunding has been around for a while, but the JOBS Act added an entirely new dimension to crowdfunding. This blog post discusses innovations recently introduced to allow the small business to attract investment through crowdfunding.

Related article: Investors for Startups: Terms of Engagement

Before the JOBS Act, you could sell equity in your small business generally only to a small class of investors, those who qualify as “accredited investors” under the securities laws. Basically accredited investors are those who have money to lose. They must have an annual income of more than $200,000 or a net worth of more than $1 million.

The JOBS Act added an exemption to the Securities Act of 1933 to allow crowdfunding. It took a while for the Securities and Exchange Commission (SEC) to approve new rules to permit companies to offer and sell securities through crowdfunding. Late in 2015 the new crowdfunding rules were approved and when the new rules become effective, which should be in early May 2016, crowdfunding will become part of the small business funding landscape. The new crowdfunding rules are “designed to assist smaller companies with capital formation and provide investors with additional protections,” according to the SEC. Crowdfunding may not be for every small business, but you should at least familiarize yourself with the contours of the JOBS Act crowdfunding and decide whether it is an avenue that your small business may want to pursue.

Different kinds of crowdfunding

Let’s clarify what kind of crowdfunding we are talking about. Crowdfunding refers to a number of different kinds of ways to raise funding for companies. Crowdfunding has reportedly been around since 1997 and is a way for your business or organization to get funding by raising small amounts of money from a large group of people. From the perspective of the business or organization, they get money. From the perspective of the people giving the money, what they get in return for parting with their money is what all of the fuss is about.

There are have been crowdfunding platforms around for several years and it is important to distinguish between crowdfunding campaigns under those platforms and the crowdfunding now authorized under the JOBS Act. There are at least four different kinds of crowdfunding.

1. Donations. Non-profit organizations raise money from donations over an Internet platform. The donor gets a tax donation. You may have seen gofundme.com or Indiegogo.com.

2. Lending crowdfunding. Small companies raise money from loans. The company receiving the money gets debt financing and the person lending the money gets a return based on the interest rate of the loan. Take a look at LendingClub.com and FundingCircle.com for examples of lending crowdfunding.

3. Rewards crowdfunding. This kind of crowdfunding has fueled the explosion in crowdfunding and when you heard of crowdfunding, this is what most people thought of. You probably have heard of Kickstarter which has facilitated over $1.5 billion (that is billion) since 2009. The company sets a crowdfunding campaign and offers various rewards usually in the form of products to those people who give money. The company sets varying levels of rewards that correspond to pledge amounts. The company gets money and the person giving the money gets whatever reward is promised.

4. Equity crowdfunding. This is the motherlode of crowdfunding opportunities and was specifically authorized by the JOBS Act. The company gets money and the person giving the money is an investor who receives equity in the company.

Equity crowdfunding is what is specifically authorized under the JOBS Act and is the subject of this article. Remember crowdfunding is simply another method to attract funding. Equity crowdfunding changes the rules in a big way, but you need to be ready for equity crowdfunding. This primer introduces some of the restrictions on equity crowdfunding. Remember that this is entirely new territory.

In equity crowdfunding, your investors get a piece of the action and the SEC adopted rules and regulations to protect the investors from overly aggressive small businesses owners, risky investments and most of all, from the investors themselves (we are not going to argue about governmental parochialism in this blog post). There are four major requirements in equity crowdfunding: eligible companies; investment caps; eligible investors; and intermediaries.

Eligible companies are eligible; bad actors are not

The small business seeking investors is the issuer. Those who are ineligible are various “bad actors.” Bad actors include those have been convicted of a crime related to securities. If you have committed securities fraud, you may have better luck raising money from your family than in equity crowdfunding.

The issuing company does not need to file a registration statement but will still need to disclose extensive financial information, the nature of the company’s business, the securities being offered and the amount to be raised. It needs to disclose who are the officers, directors and any owners with 20% or more equity stake in the company. The company needs to file an annual report with the SEC and provide the annual report to investors.

Under the regulations, you will not need an audit at least for first time crowdfunding issuers. If you are raising less than $500,000, you are permitted to provide specific information from your company’s tax returns that have been reviewed by an accountant. If you are raising $500,000 or more up to the limit of $1 million, you can submit financial statements that have been reviewed (lower level of scrutiny than an audit) by a CPA.

Any legal entity may be an issuer but if your company is organized as a LLC, you may have some challenges particularly in terms of admitting new members and other standard requirements for LLCs. Those corporations that have elected to be treated as S corps are limited to 100 shareholders. Consequently, most of the issuing companies in equity crowdfunding will likely be C corporations. If you are preparing for crowdfunding, there are certainly implications in the form of business organization.

How much moolah do you want?

Your startup is allowed to raise as much as $1 million through crowdfunding from unaccredited investors in any 12-month period without filing a registration statement with the SEC. But unaccredited does not mean that every destitute person can throw his or her money at you. There are still limits on the financial profile of your investor. You can set a minimum and maximum amount of funding that you are trying to raise. When some startups hear this amount, they think that this is easy money. It is not and it will not be every small business that can raise any amount of money through crowdfunding. And if the startup fails to meet its target capital raise then it has to terminate the offering and return all of the money that it raised.

Investor profile: everyone gets to invest at least $2,000

The government imposes numerous restrictions on those who want to invest in small companies through crowdfunding. Investors are only allowed to invest a set amount of money in any 12-month period based on their net worth and income.

If an investor’s annual income or net worth is less than $100,000 then the investor can invest the greater of five percent of the investor’s annual income or net worth or a maximum of $2,000 in a 12-month period. If the income and net worth are equal to or more than $100,000 then the individual can invest no more than 10 percent of the lesser of the annual income or net worth.

For any investor, accredited or unaccredited, rich or poor, the maximum amount any investor can put into a business throughout online equity crowdfunding in any 12-month period is $100,000. And the investor may not resell the investor’s stock for one year after the purchase date.

Intermediaries

The small business issuer needs to go through an intermediary, either or broker regulated with the SEC or an online funding portal. These intermediaries are heavily regulated about what they must do. They must produce educational materials and disclosures. They have to enumerate the risks. They are required to qualify the investors, including by gathering questionnaires and assure that the investors meet the requirements.

Equity crowdfunding opens new avenue for raising money

Crowdfunding to allow equity purchases of your company is now a viable option. It is not for every startup or small business. There are advantages and also considerable risks for the small business and you should discuss with your startup lawyer or small business attorney. Knowing some of the constraints on crowdfunding may enable you to make an informed decision about whether crowdfunding is an avenue that you want to explore for raising funding for your small business.