The law requires that you disclose financial statements to raise under Reg CF. Specifically, you’ll need two fiscal years of GAAP (Generally Accepted Accounting Principles) financials, which include:

• Cover page
• Balance Sheet
• Income Statement
• Statement of Cash Flows
• Statement of Stockholder's Equity
• Footnotes

The specific years and level (reviewed or audited, for example) of GAAP financials depend on your: 1) incorporation date and 2) raise size.

Incorporation date

The rules require financials for the last two completed fiscal years. Since we’re in 2024, that means providing 2022 and 2023 financials.

If your company was formed in the middle of 2022, you’ll need from inception - 12/31/2022, and all of 2023.

If you were formed in 2023, you’ll just need inception - 12/31/2023.

If you were formed in 2024, you’ll just need a cover page, balance sheet, and footnotes as of inception. Easy.

If your fiscal year does not end on 12/31, this might all be different.

Raise size

Your maximum raise amount is determined by the level of your financials: compiled, reviewed, or audited. The last two require a CPA.

• Up to $124,000: You will need compiled GAAP financials. Here's an example. You do not necessarily need a CPA to do this.
• Up to $1,235,000: You will need CPA-reviewed financials, which include a Review Statement. Here's an example.
• Up to $5,000,000: You will need audited financials, which include an Independent Auditor's Report. Here's an example.

Exception: if you have previously sold securities through Reg CF, then you are permanently limited to only raising $618,000 in 12-months with reviewed financials. To raise more, you would need CPA-audited financials.

Some examples:

• Company A was formed on May 2, 2021. They want to raise up to $1M.
  • They’ll need ‘22 and ‘23 CPA-reviewed GAAP financials.
• Company B was formed on June 5, 2023. They want to raise up to $3M.
  • They’ll need ‘23 (inception through year-end) CPA-audited GAAP financials.
• Company C was formed on August 10, 2024. They want to raise up to $100k.
  • They’ll need compiled financials as of inception, but only the cover page, balance sheet, and footnotes.

Need a CPA?

Wefunder can introduce you to a CPA that can do this work for you quickly and affordably, though feel free to use your own CPA if you prefer. Your CPA will know whether or not they can do an independent review or audit.

Prior entity?

If there was a “predecessor” entity that existed previously, then you would need financials of the predecessor as well.

For example, if an LLC was formed in 2020, but converted to a C-Corp in 2024, they would still need 2022 and 2023 financials.

Unsure if you have a predecessor? Your lawyer will know.

How long are the financials good for?

Financials are good for 120 days after the next completed fiscal year. That means ‘22 and ‘23 financials expire April of 2025.

If you’re just using a cover page, balance sheet, and footnotes as of inception (in 2024), that also expires April 2025.

If your fiscal year end is not 12/31, this will be different.