DBAs and LLCs and 501(c)3, oh my! (was Re: [Noisebridge-discuss] Meeting notes posted for Thu 7t
rachel at xtreme.com
Sat Feb 9 01:31:37 UTC 2008
Ditto. le sigh... But it must be done.
Mitch Altman wrote:
> Andy, I'd like to help out with the legal stuff. Please let me know
> where to meet at 4pm tomorrow.
> > Date: Fri, 8 Feb 2008 10:48:00 -0800
> > From: adi at hexapodia.org
> > To: matt at peterson.org
> > Subject: DBAs and LLCs and 501(c)3, oh my! (was Re:
> [Noisebridge-discuss] Meeting notes posted for Thu 7th)
> > CC: noisebridge-discuss at lists.noisebridge.net
> > 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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