Crowdfunding lets you rally individuals around a project. It can take three forms, with very different accounting, tax and legal consequences.
Donation with or without a reward
Contributors receive a product, a service or a simple thank-you. The sums received are in principle turnover, subject to VAT when the reward is a sale.
Loan
Contributors lend to the business, with or without interest. The sum is a debt, repayable according to the agreed schedule.
Equity
Contributors become shareholders. The operation takes the form of a capital increase, with its formalities.
Regulated platforms
Since the end of the transition period on 10 November 2023, platforms offering interest-bearing loans or equity to investors must be authorised as crowdfunding service providers (PSFP) under a European regulation, in France by the Autorité des marchés financiers (AMF). Donations and interest-free loans fall under the status of crowdfunding intermediary, registered with ORIAS. Before choosing a platform, check its status on the AMF or ORIAS registers.
Preparing your campaign
- Choose the form suited to the need and to the maturity of the project.
- Build a credible forecast, including platform and reward costs.
- Anticipate tax: VAT on rewards, period to which income relates.
- Organise the follow-up of contributions and commitments.
Common mistakes
- Underestimating the cost of rewards (production, shipping) to the point of making the campaign loss-making.
- Forgetting the VAT due on contributions with a reward.
- Opening your capital without a shareholders’ agreement or thought about governance.
- Mixing the funds raised with day-to-day cash, without tracking the commitments made.
Before launching the campaign
- Define the real need and the minimum amount that makes the project viable.
- Choose the platform and the form of financing that fit.
- Plan the accounting and tax treatment of the sums, before the first euro is raised.
Frequently asked questions
Are donations received taxable?
When they come with a reward, they are in principle turnover. Without a reward, their treatment depends on the situation: it needs to be analysed.
When should the sums raised be recorded?
Depending on the form and the commitments made: delivery of rewards, date the funds are made available, success conditions of the campaign.
Is crowdfunding compatible with a bank loan?
Yes, it is often complementary: a successful campaign can strengthen a bank application.
What costs should I expect?
Platforms take a commission, to which the cost of rewards and communication is added. They must be included in the forecast.
What happens if the target is not reached?
Depending on the platform, funds are returned to contributors or kept. The accounting treatment depends on these conditions.
The forecasts, cash-flow plans, dashboards, simulations, studies and analyses mentioned above are additional engagements, provided on request and quoted in advance in your engagement letter: the more frequent they are, the higher their cost.