DBAs and LLCs and 501(c)3, oh my! (was Re: [Noisebridge-discuss] Meeting notes posted for Thu 7th)
Meredith L. Patterson
mlp at thesmartpolitenerd.com
Fri Feb 8 23:41:05 UTC 2008
Andy Isaacson wrote:
> 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!
D'oh. I'd be glad to help, but I'm in Latvia right now. Sorry. :(
> 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.)
I must have missed the part where 501(c)(3)s aren't supposed to have
interest-bearing accounts -- did someone turn that up in research
somewhere? Plenty of large, well-known nonprofits do have
interest-bearing accounts for the donations they receive; the interest
is flowed back into the operating expenses of the organisation.
> 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.
I still think a 501(c)(3) educational nonprofit is the way to go. I was
able to get in touch with my lawyer friend down in Orange County, and
though I apparently remembered wrong and he wasn't involved with the
incorporation of the science fiction club I was thinking about, he's
still willing to help out; I've not had time to follow up beyond that,
but I'll do so after this weekend (BarCamp Baltics is going on and I'm
going to be a little swamped).
> - 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.)
If there's some reason to do anything other than an LLC or a nonprofit,
then Delaware is the way to go; incorporating as a C-corp (or possibly
also an S-corp, I've only established a C-corp) will require a
registered agent in the state of incorporation, which runs me $125/year;
Delaware taxes are also pretty cheap if a company doesn't have income.
(Osogato paid less than $100 for 2006.)
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