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Tuesday, 18 December 2012 15:56

Lawmakers are Redefining Small Business

At least 27,400 companies are affected, and are now classified as small businesses. The JOBS Act is also responsible for some change in small business practices. Previously, private companies were required to register with the Securities and Exchange Commission when they had 500 investors, but the revision allows for 2,000 investors before registration is necessary. This change is intended to allow start-ups to raise revenue and expand more rapidly. It also creates a category called “emerging growth companies,” which applies to new publicly traded businesses for up to five years. Businesses in this category would be exempt from some of the rules that apply to larger publicly traded companies, such as disclosing the salaries of executives. These revisions to the definition of small businesses will likely create increased competition for federal contracts, 23 percent of which are set aside for small businesses.