DBAs and LLCs and 501(c)3, oh my! (was Re: [Noisebridge-discuss] Meeting notes posted for Thu 7t

[Mitch Altman]

Rachel,

Do you think it might help if you contacted people who you do know, who used to be on the board, if they can remember how they started things?

Mitch.


----------------
> Date: Fri, 8 Feb 2008 11:24:39 -0800
> From: rachel at xtreme.com
> To: noisebridge-discuss at lists.noisebridge.net
> Subject: Re: DBAs and LLCs and 501(c)3, oh my! (was Re: [Noisebridge-discuss]	Meeting notes posted for Thu	7th)
> 
> 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 
> organizations specifically.
> 
> Rachel
> 
> 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
> > now.
> > 
> > 
> > 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.
> > 
> > -andy
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