<div dir="ltr">I'd say talk to a lawyer about this first, because the typical 501(c)3 is a corporation - the usual route is incorporating and then awaiting tax exempt status for the corporation.<div><br>
<div><div>(On the other hand, an LLC could make sense if sudoroom wants to keep around a non-501(c)3 entity that doesn't have all the restrictions of a tax exempt org... I know some enterprising (literally) artists who have created both LLCs and non-profit orgs so they can get grants and also operate as a business....)</div>
<div><br></div><div>See also <a href="http://www.nolo.com/legal-encyclopedia/nonprofit-tax-exempt-status-501c3-30124.html" target="_blank">http://www.nolo.com/legal-encyclopedia/nonprofit-tax-exempt-status-501c3-30124.html</a><br>
</div><div><span style="font-family:Arial,Helvetica,sans-serif;font-size:12px;line-height:19px"><br></span></div><div><span style="font-family:Arial,Helvetica,sans-serif;font-size:12px;line-height:19px">This section requires that you attach a copy of </span><a href="http://www.nolo.com/legal-encyclopedia/nonprofit-formation-documents-articles-incorporation-bylaws-minutes-30311.html" style="margin:0px;padding:0px;border:0px;font-size:12px;font-family:Arial,Helvetica,sans-serif;vertical-align:baseline;color:rgb(0,102,153);line-height:19px" target="_blank">your articles of incorporation and your bylaws</a><span style="font-family:Arial,Helvetica,sans-serif;font-size:12px;line-height:19px"> to the application form. (Most nonprofits seeking 501(c)(3) status are corporations. If your entity is an </span><a href="http://www.nolo.com/legal-encyclopedia/limited-liability-company" style="margin:0px;padding:0px;border:0px;font-size:12px;font-family:Arial,Helvetica,sans-serif;vertical-align:baseline;color:rgb(0,102,153);line-height:19px" target="_blank">LLC</a><span style="font-family:Arial,Helvetica,sans-serif;font-size:12px;line-height:19px">, </span><a href="http://www.nolo.com/legal-encyclopedia/five-reasons-incorporate-nonprofit-association-30266.html" style="margin:0px;padding:0px;border:0px;font-size:12px;font-family:Arial,Helvetica,sans-serif;vertical-align:baseline;color:rgb(0,102,153);line-height:19px" target="_blank">unincorporated association</a><span style="font-family:Arial,Helvetica,sans-serif;font-size:12px;line-height:19px">, or nonprofit trust, you should </span><a href="http://www.nolo.com/lawyers" style="margin:0px;padding:0px;border:0px;font-size:12px;font-family:Arial,Helvetica,sans-serif;vertical-align:baseline;color:rgb(0,102,153);line-height:19px" target="_blank">seek the help of a lawyer</a><span style="font-family:Arial,Helvetica,sans-serif;font-size:12px;line-height:19px"> with experience in nonprofit tax law to complete your Form 1023 application.)</span><br>
</div><div><br></div><div>--mark B.</div></div></div><div class="gmail_extra"><br><div class="gmail_quote">On Thu, Jul 18, 2013 at 10:50 AM, Marina Kukso <span dir="ltr"><<a href="mailto:marina.kukso@gmail.com" target="_blank">marina.kukso@gmail.com</a>></span> wrote:<br>
<blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex"><div dir="ltr"><div>thanks bill, very helpful!<br><br>what are the advantages to filing as an LLC?<br><br></div>also, i think that jenny recently had a call with james from the school factory - jenny, could you possibly share some of what you both discussed?<span><font color="#888888"><br>
<br>- marina<br></font></span></div><div><div><div class="gmail_extra"><br><br><div class="gmail_quote">On Thu, Jul 18, 2013 at 10:43 AM, William Budington <span dir="ltr"><<a href="mailto:bill@inputoutput.io" target="_blank">bill@inputoutput.io</a>></span> wrote:<br>
<blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">Hey all,<br>
<br>
I talked to Danny O'Brien (Noisebridge's financial functionary)<br>
yesterday about the sudoroom legal status. I know this has been an<br>
ongoing discussion so I'm going to summarize the options we've already<br>
looked into and present the new information Danny has brought to my<br>
attention.<br>
<br>
*Why do we need a legal status?*<br>
Over the past few months we've found various challenges to our normal<br>
operations since we don't have a legal status. We aren't able to sign<br>
up for services like Stripe without having a federal tax id. In<br>
addition, since we are formally under one person's name, he is liable if<br>
anything happens at sudoroom. Also, we aren't able to sign up for most<br>
banks -- only the Community Bank of the Bay will actually give us a bank<br>
account with our status as a DBA. And as we've seen, Community Bank of<br>
the Bay is not the most web-savvy organization, and so it's hard for us<br>
to actually check our balances.<br>
<br>
*What we've looked at*<br>
Our eventual goal has been to get 501(c)3 status for sudoroom. This is<br>
a status that would allow us to accept tax-deductible donations and be<br>
incorporated formally as a nonprofit. A lot of Hacker Spaces go this<br>
route, and it seems like a reasonable long-term goal. One of the<br>
problems we've been warned of is that it takes a long time to actually<br>
be granted 501(c)3 status - upwards of 2 years, which can as I<br>
understand be expedited to 10 months.<br>
<br>
Because of this delay, we've looked into some other options -- namely<br>
being umbrella'd under another organization's 501(c)3 status. This<br>
would involve 10% of our revenue going to said umbrella organization to<br>
cover costs of the books. I've been in contact with Danny at<br>
Noisebridge and Jenny has been in contact with (Steve?) at the School<br>
Factory and discussing if this is a possibility. It is certainly one<br>
way to go, but as for Noisebridge they've only umbrella'd Noisetor, and<br>
they didn't need a separate account for that.<br>
<br>
*What I've learned recently*<br>
Danny mentioned that his partner is looking into nonprofit status for a<br>
new feminist hacker space in SF, and has investigated these options as<br>
well as others. In order to have a certain degree of autonomy, it is<br>
probably in our interests to actually not go the umbrella route and<br>
pursue separate legal status altogether. He also mentioned that there's<br>
no reason why we couldn't incorporate as an LLC or other corporate<br>
status before pursuing 501c3 status, and that even if it takes a number<br>
of years to be granted non-profit status we can transition from an LLC<br>
without much of a problem. There's no real disadvantage to having LLC<br>
status in the meantime, as I understand it. The main advantage of<br>
nonprofit status is tax deduction, but that is usually superseded on<br>
most peoples taxes by the standard deduction. The main place where it<br>
does make a difference is when employers do matching donations for their<br>
employees, then it can make a difference.<br>
<br>
*The plan*<br>
It makes sense to me to pursue the options that would resolve our<br>
short-term problems without impeding the path to our long-term goals.<br>
It seems to me reasonable as a short-term goal to register as an LLC<br>
(Jenny tells me this can be done in an afternoon and with $50 with a<br>
drive to Sacramento), and as a longer term goal actually pursuing<br>
nonprofit, 501c3 status.<br>
<br>
*Disclaimer*<br>
There may be caveats to this plan and I'm not a lawyer.<br>
<br>
<br>
Bill<br>
<br>
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