DBAs and LLCs and 501(c)3, oh my! (was Re: [Noisebridge-discuss] Meeting notes posted for Thu 7th)
rachel at xtreme.com
Fri Feb 8 19:24:39 UTC 2008
Does anyone know someone involved with managing any similar organization
here whose brain we could pick?
I used to know people running the San Francisco Pool Association, which
has nothing to do with hacking but is a member-based organization not
trying to turn a profit. I checked their website last night and
unfortunately all the current officers are people I don't know, but I'm
going to shoot them an email anyway to see if they'll talk a little bit
about how they're organized, what they like & don't like about it, and
how much it costs.
I think we have, or can get, some of this info from other hackspaces
elsewhere, but I think it would be useful to talk to other CA
Andy Isaacson wrote:
> On Fri, Feb 08, 2008 at 09:22:24AM -0800, Matt Peterson wrote:
>> An LLC appears to be the logical least-path-of-resistance at this
>> point, mostly because non-profit money tracking needs to be very
>> extensive and an unknown "thumbs up" commitment from various
>> government levels for approval. A concern also exists on setting up a
>> non-profit correctly to factor in board member insurance. This is not
>> to say a 501c3 isn't the best option, again just not the easiest for
>> the initial setup months.
> I'd just like to expand on my thinking here, since I seem to have the
> most knowledge given my shiny new Nolo press books. (Kinda scary, eh?)
> First off, if you have *ANY* willingness to help make this happen on the
> legal front, please come do legal homework with me Saturday around 4 PM
> in the mission! I don't want to be the sole resource here. Exact
> location to be announced, email for details.
> Starting out with a DBA gets us a bank account and the beginnings of an
> official group identity. (Given that we don't want to make interest on
> our bank account for tax reasons, and so we'll have several thousand
> dollars sitting there doing nothing, banks should be falling over each
> other to hold our money for us.) The costs are pretty minimal: under
> $100 in fees plus a bunch of annoying time spent waiting in line at City
> Hall. Given that we have monies we would like to start collecting --
> more specifically, I have money I want to donate towards the cause
> starting immediately -- there really isn't any reason not to do this
> There appear to be two routes to take from there:
> 1. incorporate as a California LLC, a for-profit entity.
> 2. incorporate as a California non-profit corporation.
> 2a. Shoot for 501(c)3 status.
> 2b. operate as a "fraternal organization" akin to the Shriners.
> (this is managed under other sections of 501(c).)
> I've considered and dismissed the following possibilities:
> - a different for-profit organization (C corp, S corp, partnership)
> (the llc is specifically tailored to the for-profit version of what
> we're trying to do here; if we can't go nonprofit, LLC is the really
> obvious choice.)
> - incorporating in a different state
> (several people have recommended against this. There are papers and
> fees associated with being an out-of-state corp operating in
> california, plus two sets of rules to deal with.)
> It is possible (though it may be somewhat expensive, say maybe $4k in
> legal costs) to start out as an LLC and transition to a non-profit.
> Both LLC and nonprofit have expenses associated with them; it looks like
> paperwork and fees are going to cost us a minimum of $1k per year.
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