18 Jul
2013
18 Jul
'13
10:43 a.m.
Hey all,
I talked to Danny O'Brien (Noisebridge's financial functionary)
yesterday about the sudoroom legal status. I know this has been an
ongoing discussion so I'm going to summarize the options we've already
looked into and present the new information Danny has brought to my
attention.
*Why do we need a legal status?*
Over the past few months we've found various challenges to our normal
operations since we don't have a legal status. We aren't able to sign
up for services like Stripe without having a federal tax id. In
addition, since we are formally under one person's name, he is liable if
anything happens at sudoroom. Also, we aren't able to sign up for most
banks -- only the Community Bank of the Bay will actually give us a bank
account with our status as a DBA. And as we've seen, Community Bank of
the Bay is not the most web-savvy organization, and so it's hard for us
to actually check our balances.
*What we've looked at*
Our eventual goal has been to get 501(c)3 status for sudoroom. This is
a status that would allow us to accept tax-deductible donations and be
incorporated formally as a nonprofit. A lot of Hacker Spaces go this
route, and it seems like a reasonable long-term goal. One of the
problems we've been warned of is that it takes a long time to actually
be granted 501(c)3 status - upwards of 2 years, which can as I
understand be expedited to 10 months.
Because of this delay, we've looked into some other options -- namely
being umbrella'd under another organization's 501(c)3 status. This
would involve 10% of our revenue going to said umbrella organization to
cover costs of the books. I've been in contact with Danny at
Noisebridge and Jenny has been in contact with (Steve?) at the School
Factory and discussing if this is a possibility. It is certainly one
way to go, but as for Noisebridge they've only umbrella'd Noisetor, and
they didn't need a separate account for that.
*What I've learned recently*
Danny mentioned that his partner is looking into nonprofit status for a
new feminist hacker space in SF, and has investigated these options as
well as others. In order to have a certain degree of autonomy, it is
probably in our interests to actually not go the umbrella route and
pursue separate legal status altogether. He also mentioned that there's
no reason why we couldn't incorporate as an LLC or other corporate
status before pursuing 501c3 status, and that even if it takes a number
of years to be granted non-profit status we can transition from an LLC
without much of a problem. There's no real disadvantage to having LLC
status in the meantime, as I understand it. The main advantage of
nonprofit status is tax deduction, but that is usually superseded on
most peoples taxes by the standard deduction. The main place where it
does make a difference is when employers do matching donations for their
employees, then it can make a difference.
*The plan*
It makes sense to me to pursue the options that would resolve our
short-term problems without impeding the path to our long-term goals.
It seems to me reasonable as a short-term goal to register as an LLC
(Jenny tells me this can be done in an afternoon and with $50 with a
drive to Sacramento), and as a longer term goal actually pursuing
nonprofit, 501c3 status.
*Disclaimer*
There may be caveats to this plan and I'm not a lawyer.
Bill
18 Jul
18 Jul
10:50 a.m.
thanks bill, very helpful!
what are the advantages to filing as an LLC?
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?
- marina
On Thu, Jul 18, 2013 at 10:43 AM, William Budington <bill(a)inputoutput.io>wrote;wrote:
Hey all,
I talked to Danny O'Brien (Noisebridge's financial functionary)
yesterday about the sudoroom legal status. I know this has been an
ongoing discussion so I'm going to summarize the options we've already
looked into and present the new information Danny has brought to my
attention.
*Why do we need a legal status?*
Over the past few months we've found various challenges to our normal
operations since we don't have a legal status. We aren't able to sign
up for services like Stripe without having a federal tax id. In
addition, since we are formally under one person's name, he is liable if
anything happens at sudoroom. Also, we aren't able to sign up for most
banks -- only the Community Bank of the Bay will actually give us a bank
account with our status as a DBA. And as we've seen, Community Bank of
the Bay is not the most web-savvy organization, and so it's hard for us
to actually check our balances.
*What we've looked at*
Our eventual goal has been to get 501(c)3 status for sudoroom. This is
a status that would allow us to accept tax-deductible donations and be
incorporated formally as a nonprofit. A lot of Hacker Spaces go this
route, and it seems like a reasonable long-term goal. One of the
problems we've been warned of is that it takes a long time to actually
be granted 501(c)3 status - upwards of 2 years, which can as I
understand be expedited to 10 months.
Because of this delay, we've looked into some other options -- namely
being umbrella'd under another organization's 501(c)3 status. This
would involve 10% of our revenue going to said umbrella organization to
cover costs of the books. I've been in contact with Danny at
Noisebridge and Jenny has been in contact with (Steve?) at the School
Factory and discussing if this is a possibility. It is certainly one
way to go, but as for Noisebridge they've only umbrella'd Noisetor, and
they didn't need a separate account for that.
*What I've learned recently*
Danny mentioned that his partner is looking into nonprofit status for a
new feminist hacker space in SF, and has investigated these options as
well as others. In order to have a certain degree of autonomy, it is
probably in our interests to actually not go the umbrella route and
pursue separate legal status altogether. He also mentioned that there's
no reason why we couldn't incorporate as an LLC or other corporate
status before pursuing 501c3 status, and that even if it takes a number
of years to be granted non-profit status we can transition from an LLC
without much of a problem. There's no real disadvantage to having LLC
status in the meantime, as I understand it. The main advantage of
nonprofit status is tax deduction, but that is usually superseded on
most peoples taxes by the standard deduction. The main place where it
does make a difference is when employers do matching donations for their
employees, then it can make a difference.
*The plan*
It makes sense to me to pursue the options that would resolve our
short-term problems without impeding the path to our long-term goals.
It seems to me reasonable as a short-term goal to register as an LLC
(Jenny tells me this can be done in an afternoon and with $50 with a
drive to Sacramento), and as a longer term goal actually pursuing
nonprofit, 501c3 status.
*Disclaimer*
There may be caveats to this plan and I'm not a lawyer.
Bill
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
http://lists.sudoroom.org/listinfo/sudo-discuss
10:57 a.m.
The advantages of LLC as I understand it is:
1) It would give us a Tax ID #
a) So we can sign up for stripe
b) so we can get off community bank of the bay
2) It's limited liability, so if someone gets injured at sudoroom and
sues it won't rest on one person's hands
Bill
On 07/18/2013 10:50 AM, Marina Kukso wrote:
thanks bill, very helpful!
what are the advantages to filing as an LLC?
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?
- marina
On Thu, Jul 18, 2013 at 10:43 AM, William Budington <bill(a)inputoutput.io>wrote;wrote:
Hey all,
I talked to Danny O'Brien (Noisebridge's financial functionary)
yesterday about the sudoroom legal status. I know this has been an
ongoing discussion so I'm going to summarize the options we've already
looked into and present the new information Danny has brought to my
attention.
*Why do we need a legal status?*
Over the past few months we've found various challenges to our normal
operations since we don't have a legal status. We aren't able to sign
up for services like Stripe without having a federal tax id. In
addition, since we are formally under one person's name, he is liable if
anything happens at sudoroom. Also, we aren't able to sign up for most
banks -- only the Community Bank of the Bay will actually give us a bank
account with our status as a DBA. And as we've seen, Community Bank of
the Bay is not the most web-savvy organization, and so it's hard for us
to actually check our balances.
*What we've looked at*
Our eventual goal has been to get 501(c)3 status for sudoroom. This is
a status that would allow us to accept tax-deductible donations and be
incorporated formally as a nonprofit. A lot of Hacker Spaces go this
route, and it seems like a reasonable long-term goal. One of the
problems we've been warned of is that it takes a long time to actually
be granted 501(c)3 status - upwards of 2 years, which can as I
understand be expedited to 10 months.
Because of this delay, we've looked into some other options -- namely
being umbrella'd under another organization's 501(c)3 status. This
would involve 10% of our revenue going to said umbrella organization to
cover costs of the books. I've been in contact with Danny at
Noisebridge and Jenny has been in contact with (Steve?) at the School
Factory and discussing if this is a possibility. It is certainly one
way to go, but as for Noisebridge they've only umbrella'd Noisetor, and
they didn't need a separate account for that.
*What I've learned recently*
Danny mentioned that his partner is looking into nonprofit status for a
new feminist hacker space in SF, and has investigated these options as
well as others. In order to have a certain degree of autonomy, it is
probably in our interests to actually not go the umbrella route and
pursue separate legal status altogether. He also mentioned that there's
no reason why we couldn't incorporate as an LLC or other corporate
status before pursuing 501c3 status, and that even if it takes a number
of years to be granted non-profit status we can transition from an LLC
without much of a problem. There's no real disadvantage to having LLC
status in the meantime, as I understand it. The main advantage of
nonprofit status is tax deduction, but that is usually superseded on
most peoples taxes by the standard deduction. The main place where it
does make a difference is when employers do matching donations for their
employees, then it can make a difference.
*The plan*
It makes sense to me to pursue the options that would resolve our
short-term problems without impeding the path to our long-term goals.
It seems to me reasonable as a short-term goal to register as an LLC
(Jenny tells me this can be done in an afternoon and with $50 with a
drive to Sacramento), and as a longer term goal actually pursuing
nonprofit, 501c3 status.
*Disclaimer*
There may be caveats to this plan and I'm not a lawyer.
Bill
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
http://lists.sudoroom.org/listinfo/sudo-discuss
11:05 a.m.
Does anyone know how being an LLC interacts with being umbrella-ed under
Noisebridge or another nonprofit if it is compatible at all? (So that
hypothetical surpluses would not be profits?)
On Thu, Jul 18, 2013 at 10:57 AM, William Budington <bill(a)inputoutput.io>wrote;wrote:
The advantages of LLC as I understand it is:
1) It would give us a Tax ID #
a) So we can sign up for stripe
b) so we can get off community bank of the bay
2) It's limited liability, so if someone gets injured at sudoroom and
sues it won't rest on one person's hands
Bill
On 07/18/2013 10:50 AM, Marina Kukso wrote:
thanks bill, very helpful!
what are the advantages to filing as an LLC?
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?
- marina
On Thu, Jul 18, 2013 at 10:43 AM, William Budington <bill(a)inputoutput.io
wrote:
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
http://lists.sudoroom.org/listinfo/sudo-discuss
Hey all,
I talked to Danny O'Brien (Noisebridge's financial functionary)
yesterday about the sudoroom legal status. I know this has been an
ongoing discussion so I'm going to summarize the options we've already
looked into and present the new information Danny has brought to my
attention.
*Why do we need a legal status?*
Over the past few months we've found various challenges to our normal
operations since we don't have a legal status. We aren't able to sign
up for services like Stripe without having a federal tax id. In
addition, since we are formally under one person's name, he is liable if
anything happens at sudoroom. Also, we aren't able to sign up for most
banks -- only the Community Bank of the Bay will actually give us a bank
account with our status as a DBA. And as we've seen, Community Bank of
the Bay is not the most web-savvy organization, and so it's hard for us
to actually check our balances.
*What we've looked at*
Our eventual goal has been to get 501(c)3 status for sudoroom. This is
a status that would allow us to accept tax-deductible donations and be
incorporated formally as a nonprofit. A lot of Hacker Spaces go this
route, and it seems like a reasonable long-term goal. One of the
problems we've been warned of is that it takes a long time to actually
be granted 501(c)3 status - upwards of 2 years, which can as I
understand be expedited to 10 months.
Because of this delay, we've looked into some other options -- namely
being umbrella'd under another organization's 501(c)3 status. This
would involve 10% of our revenue going to said umbrella organization to
cover costs of the books. I've been in contact with Danny at
Noisebridge and Jenny has been in contact with (Steve?) at the School
Factory and discussing if this is a possibility. It is certainly one
way to go, but as for Noisebridge they've only umbrella'd Noisetor, and
they didn't need a separate account for that.
*What I've learned recently*
Danny mentioned that his partner is looking into nonprofit status for a
new feminist hacker space in SF, and has investigated these options as
well as others. In order to have a certain degree of autonomy, it is
probably in our interests to actually not go the umbrella route and
pursue separate legal status altogether. He also mentioned that there's
no reason why we couldn't incorporate as an LLC or other corporate
status before pursuing 501c3 status, and that even if it takes a number
of years to be granted non-profit status we can transition from an LLC
without much of a problem. There's no real disadvantage to having LLC
status in the meantime, as I understand it. The main advantage of
nonprofit status is tax deduction, but that is usually superseded on
most peoples taxes by the standard deduction. The main place where it
does make a difference is when employers do matching donations for their
employees, then it can make a difference.
*The plan*
It makes sense to me to pursue the options that would resolve our
short-term problems without impeding the path to our long-term goals.
It seems to me reasonable as a short-term goal to register as an LLC
(Jenny tells me this can be done in an afternoon and with $50 with a
drive to Sacramento), and as a longer term goal actually pursuing
nonprofit, 501c3 status.
*Disclaimer*
There may be caveats to this plan and I'm not a lawyer.
Bill
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
http://lists.sudoroom.org/listinfo/sudo-discuss
11:07 a.m.
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.
(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....)
See also
http://www.nolo.com/legal-encyclopedia/nonprofit-tax-exempt-status-501c3-30…
This section requires that you attach a copy of your articles of
incorporation and your
bylaws<http://www.nolo.com/legal-encyclopedia/nonprofit-formation-docume…
to
the application form. (Most nonprofits seeking 501(c)(3) status are
corporations. If your entity is an
LLC<http://www.nolo.com/legal-encyclopedia/limited-liability-company>
, unincorporated
association<http://www.nolo.com/legal-encyclopedia/five-reasons-incorpor…ml>,
or nonprofit trust, you should seek the help of a
lawyer<http://www.nolo.com/lawyers> with
experience in nonprofit tax law to complete your Form 1023 application.)
--mark B.
On Thu, Jul 18, 2013 at 10:50 AM, Marina Kukso <marina.kukso(a)gmail.com>wrote;wrote:
thanks bill, very helpful!
what are the advantages to filing as an LLC?
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?
- marina
On Thu, Jul 18, 2013 at 10:43 AM, William Budington <bill(a)inputoutput.io>wrote;wrote:
Hey all,
I talked to Danny O'Brien (Noisebridge's financial functionary)
yesterday about the sudoroom legal status. I know this has been an
ongoing discussion so I'm going to summarize the options we've already
looked into and present the new information Danny has brought to my
attention.
*Why do we need a legal status?*
Over the past few months we've found various challenges to our normal
operations since we don't have a legal status. We aren't able to sign
up for services like Stripe without having a federal tax id. In
addition, since we are formally under one person's name, he is liable if
anything happens at sudoroom. Also, we aren't able to sign up for most
banks -- only the Community Bank of the Bay will actually give us a bank
account with our status as a DBA. And as we've seen, Community Bank of
the Bay is not the most web-savvy organization, and so it's hard for us
to actually check our balances.
*What we've looked at*
Our eventual goal has been to get 501(c)3 status for sudoroom. This is
a status that would allow us to accept tax-deductible donations and be
incorporated formally as a nonprofit. A lot of Hacker Spaces go this
route, and it seems like a reasonable long-term goal. One of the
problems we've been warned of is that it takes a long time to actually
be granted 501(c)3 status - upwards of 2 years, which can as I
understand be expedited to 10 months.
Because of this delay, we've looked into some other options -- namely
being umbrella'd under another organization's 501(c)3 status. This
would involve 10% of our revenue going to said umbrella organization to
cover costs of the books. I've been in contact with Danny at
Noisebridge and Jenny has been in contact with (Steve?) at the School
Factory and discussing if this is a possibility. It is certainly one
way to go, but as for Noisebridge they've only umbrella'd Noisetor, and
they didn't need a separate account for that.
*What I've learned recently*
Danny mentioned that his partner is looking into nonprofit status for a
new feminist hacker space in SF, and has investigated these options as
well as others. In order to have a certain degree of autonomy, it is
probably in our interests to actually not go the umbrella route and
pursue separate legal status altogether. He also mentioned that there's
no reason why we couldn't incorporate as an LLC or other corporate
status before pursuing 501c3 status, and that even if it takes a number
of years to be granted non-profit status we can transition from an LLC
without much of a problem. There's no real disadvantage to having LLC
status in the meantime, as I understand it. The main advantage of
nonprofit status is tax deduction, but that is usually superseded on
most peoples taxes by the standard deduction. The main place where it
does make a difference is when employers do matching donations for their
employees, then it can make a difference.
*The plan*
It makes sense to me to pursue the options that would resolve our
short-term problems without impeding the path to our long-term goals.
It seems to me reasonable as a short-term goal to register as an LLC
(Jenny tells me this can be done in an afternoon and with $50 with a
drive to Sacramento), and as a longer term goal actually pursuing
nonprofit, 501c3 status.
*Disclaimer*
There may be caveats to this plan and I'm not a lawyer.
Bill
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
http://lists.sudoroom.org/listinfo/sudo-discuss
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
http://lists.sudoroom.org/listinfo/sudo-discuss
11:29 a.m.
I'm a founding member of both Noisebridge and Ace Monster Toys, and have
been through the incorporation and 501(c)(3) process with both. I just
want to clarify that incorporation and federal tax exemption are two
separate designations. Incorporation, either as an LLC or a full
corporation, is something you do at the state level, so the state can
identify, tax, and regulate you. The 501(c)(3) is an IRS designation,
which gives you the ability to accept tax deductible donations. You do
have to be incorporated in order to apply for 501(c)(3) status. I don't
think an LLC is eligible as it's a for-profit type of incorporation; I
think you have to be a California Non-Profit Corporation before the IRS
will grant 501(c)(3) status, but this should be verified.
Also, once incorporated, the 501(c)(3) can be applied for immediately.
It did take both Noisebridge and Ace longer than 10 months to receive
approval. At Noisebridge it was because the IRS was apparently baffled
at the concept of a hackerspace and had a lot of follow-on questions. I
think Ace just took a while to file, but also it took over a year for
the IRS to respond. It's an annoying, tedious, and time-consuming
process but not really that hard.
Cheers,
Rachel McConnell
On 7/18/13 11:07 AM, mark burdett wrote:
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.
(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....)
See also
http://www.nolo.com/legal-encyclopedia/nonprofit-tax-exempt-status-501c3-30…
This section requires that you attach a copy of your articles of
incorporation and your bylaws
<http://www.nolo.com/legal-encyclopedia/nonprofit-formation-documents-articles-incorporation-bylaws-minutes-30311.html>
to
the application form. (Most nonprofits seeking 501(c)(3) status are
corporations. If your entity is an LLC
<http://www.nolo.com/legal-encyclopedia/limited-liability-company>,
unincorporated association
<http://www.nolo.com/legal-encyclopedia/five-reasons-incorporate-nonprofit-association-30266.html>,
or nonprofit trust, you should seek the help of a lawyer
<http://www.nolo.com/lawyers> with experience in nonprofit tax law to
complete your Form 1023 application.)
--mark B.
On Thu, Jul 18, 2013 at 10:50 AM, Marina Kukso <marina.kukso(a)gmail.com
<mailto:marina.kukso@gmail.com>> wrote:
thanks bill, very helpful!
what are the advantages to filing as an LLC?
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?
- marina
On Thu, Jul 18, 2013 at 10:43 AM, William Budington
<bill(a)inputoutput.io <mailto:bill@inputoutput.io>> wrote:
Hey all,
I talked to Danny O'Brien (Noisebridge's financial functionary)
yesterday about the sudoroom legal status. I know this has been an
ongoing discussion so I'm going to summarize the options we've
already
looked into and present the new information Danny has brought to my
attention.
*Why do we need a legal status?*
Over the past few months we've found various challenges to our
normal
operations since we don't have a legal status. We aren't able
to sign
up for services like Stripe without having a federal tax id. In
addition, since we are formally under one person's name, he is
liable if
anything happens at sudoroom. Also, we aren't able to sign up
for most
banks -- only the Community Bank of the Bay will actually give
us a bank
account with our status as a DBA. And as we've seen, Community
Bank of
the Bay is not the most web-savvy organization, and so it's hard
for us
to actually check our balances.
*What we've looked at*
Our eventual goal has been to get 501(c)3 status for sudoroom.
This is
a status that would allow us to accept tax-deductible donations
and be
incorporated formally as a nonprofit. A lot of Hacker Spaces go
this
route, and it seems like a reasonable long-term goal. One of the
problems we've been warned of is that it takes a long time to
actually
be granted 501(c)3 status - upwards of 2 years, which can as I
understand be expedited to 10 months.
Because of this delay, we've looked into some other options --
namely
being umbrella'd under another organization's 501(c)3 status. This
would involve 10% of our revenue going to said umbrella
organization to
cover costs of the books. I've been in contact with Danny at
Noisebridge and Jenny has been in contact with (Steve?) at the
School
Factory and discussing if this is a possibility. It is
certainly one
way to go, but as for Noisebridge they've only umbrella'd
Noisetor, and
they didn't need a separate account for that.
*What I've learned recently*
Danny mentioned that his partner is looking into nonprofit
status for a
new feminist hacker space in SF, and has investigated these
options as
well as others. In order to have a certain degree of autonomy,
it is
probably in our interests to actually not go the umbrella route and
pursue separate legal status altogether. He also mentioned that
there's
no reason why we couldn't incorporate as an LLC or other corporate
status before pursuing 501c3 status, and that even if it takes a
number
of years to be granted non-profit status we can transition from
an LLC
without much of a problem. There's no real disadvantage to
having LLC
status in the meantime, as I understand it. The main advantage of
nonprofit status is tax deduction, but that is usually superseded on
most peoples taxes by the standard deduction. The main place
where it
does make a difference is when employers do matching donations
for their
employees, then it can make a difference.
*The plan*
It makes sense to me to pursue the options that would resolve our
short-term problems without impeding the path to our long-term
goals.
It seems to me reasonable as a short-term goal to register as an LLC
(Jenny tells me this can be done in an afternoon and with $50 with a
drive to Sacramento), and as a longer term goal actually pursuing
nonprofit, 501c3 status.
*Disclaimer*
There may be caveats to this plan and I'm not a lawyer.
Bill
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
<mailto:sudo-discuss@lists.sudoroom.org>
http://lists.sudoroom.org/listinfo/sudo-discuss
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org <mailto:sudo-discuss@lists.sudoroom.org>
http://lists.sudoroom.org/listinfo/sudo-discuss
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
http://lists.sudoroom.org/listinfo/sudo-discuss
12:20 p.m.
Thanks, this is really helpful info. Then we probably want to look into
becoming a California Non-Profit Corp then, rather than an LLC?
On 07/18/2013 11:29 AM, Rachel McConnell wrote:
I'm a founding member of both Noisebridge and Ace
Monster Toys, and have
been through the incorporation and 501(c)(3) process with both. I just
want to clarify that incorporation and federal tax exemption are two
separate designations. Incorporation, either as an LLC or a full
corporation, is something you do at the state level, so the state can
identify, tax, and regulate you. The 501(c)(3) is an IRS designation,
which gives you the ability to accept tax deductible donations. You do
have to be incorporated in order to apply for 501(c)(3) status. I don't
think an LLC is eligible as it's a for-profit type of incorporation; I
think you have to be a California Non-Profit Corporation before the IRS
will grant 501(c)(3) status, but this should be verified.
Also, once incorporated, the 501(c)(3) can be applied for immediately.
It did take both Noisebridge and Ace longer than 10 months to receive
approval. At Noisebridge it was because the IRS was apparently baffled
at the concept of a hackerspace and had a lot of follow-on questions. I
think Ace just took a while to file, but also it took over a year for
the IRS to respond. It's an annoying, tedious, and time-consuming
process but not really that hard.
Cheers,
Rachel McConnell
On 7/18/13 11:07 AM, mark burdett wrote:
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.
(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....)
See also
http://www.nolo.com/legal-encyclopedia/nonprofit-tax-exempt-status-501c3-30…
This section requires that you attach a copy of your articles of
incorporation and your bylaws
<http://www.nolo.com/legal-encyclopedia/nonprofit-formation-documents-articles-incorporation-bylaws-minutes-30311.html>
to
the application form. (Most nonprofits seeking 501(c)(3) status are
corporations. If your entity is an LLC
<http://www.nolo.com/legal-encyclopedia/limited-liability-company>,
unincorporated association
<http://www.nolo.com/legal-encyclopedia/five-reasons-incorporate-nonprofit-association-30266.html>,
or nonprofit trust, you should seek the help of a lawyer
<http://www.nolo.com/lawyers> with experience in nonprofit tax law to
complete your Form 1023 application.)
--mark B.
On Thu, Jul 18, 2013 at 10:50 AM, Marina Kukso <marina.kukso(a)gmail.com
<mailto:marina.kukso@gmail.com>> wrote:
thanks bill, very helpful!
what are the advantages to filing as an LLC?
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?
- marina
On Thu, Jul 18, 2013 at 10:43 AM, William Budington
<bill(a)inputoutput.io <mailto:bill@inputoutput.io>> wrote:
Hey all,
I talked to Danny O'Brien (Noisebridge's financial functionary)
yesterday about the sudoroom legal status. I know this has
been an
ongoing discussion so I'm going to summarize the options we've
already
looked into and present the new information Danny has brought
to my
attention.
*Why do we need a legal status?*
Over the past few months we've found various challenges to our
normal
operations since we don't have a legal status. We aren't able
to sign
up for services like Stripe without having a federal tax id. In
addition, since we are formally under one person's name, he is
liable if
anything happens at sudoroom. Also, we aren't able to sign up
for most
banks -- only the Community Bank of the Bay will actually give
us a bank
account with our status as a DBA. And as we've seen, Community
Bank of
the Bay is not the most web-savvy organization, and so it's hard
for us
to actually check our balances.
*What we've looked at*
Our eventual goal has been to get 501(c)3 status for sudoroom.
This is
a status that would allow us to accept tax-deductible donations
and be
incorporated formally as a nonprofit. A lot of Hacker Spaces go
this
route, and it seems like a reasonable long-term goal. One of the
problems we've been warned of is that it takes a long time to
actually
be granted 501(c)3 status - upwards of 2 years, which can as I
understand be expedited to 10 months.
Because of this delay, we've looked into some other options --
namely
being umbrella'd under another organization's 501(c)3 status.
This
would involve 10% of our revenue going to said umbrella
organization to
cover costs of the books. I've been in contact with Danny at
Noisebridge and Jenny has been in contact with (Steve?) at the
School
Factory and discussing if this is a possibility. It is
certainly one
way to go, but as for Noisebridge they've only umbrella'd
Noisetor, and
they didn't need a separate account for that.
*What I've learned recently*
Danny mentioned that his partner is looking into nonprofit
status for a
new feminist hacker space in SF, and has investigated these
options as
well as others. In order to have a certain degree of autonomy,
it is
probably in our interests to actually not go the umbrella
route and
pursue separate legal status altogether. He also mentioned that
there's
no reason why we couldn't incorporate as an LLC or other
corporate
status before pursuing 501c3 status, and that even if it takes a
number
of years to be granted non-profit status we can transition from
an LLC
without much of a problem. There's no real disadvantage to
having LLC
status in the meantime, as I understand it. The main
advantage of
nonprofit status is tax deduction, but that is usually
superseded on
most peoples taxes by the standard deduction. The main place
where it
does make a difference is when employers do matching donations
for their
employees, then it can make a difference.
*The plan*
It makes sense to me to pursue the options that would resolve our
short-term problems without impeding the path to our long-term
goals.
It seems to me reasonable as a short-term goal to register as
an LLC
(Jenny tells me this can be done in an afternoon and with $50
with a
drive to Sacramento), and as a longer term goal actually pursuing
nonprofit, 501c3 status.
*Disclaimer*
There may be caveats to this plan and I'm not a lawyer.
Bill
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
<mailto:sudo-discuss@lists.sudoroom.org>
http://lists.sudoroom.org/listinfo/sudo-discuss
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
<mailto:sudo-discuss@lists.sudoroom.org>
http://lists.sudoroom.org/listinfo/sudo-discuss
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
http://lists.sudoroom.org/listinfo/sudo-discuss
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
http://lists.sudoroom.org/listinfo/sudo-discuss 
12:25 p.m.
Keep in mind that California LLCs cost $800/year. I don't think that
changes if you are a non-profit, but I'm not 100% sure
On 07/18/2013 12:20 PM, William Budington wrote:
Thanks, this is really helpful info. Then we probably
want to look into
becoming a California Non-Profit Corp then, rather than an LLC?
On 07/18/2013 11:29 AM, Rachel McConnell wrote:
I'm a founding member of both Noisebridge and
Ace Monster Toys, and have
been through the incorporation and 501(c)(3) process with both. I just
want to clarify that incorporation and federal tax exemption are two
separate designations. Incorporation, either as an LLC or a full
corporation, is something you do at the state level, so the state can
identify, tax, and regulate you. The 501(c)(3) is an IRS designation,
which gives you the ability to accept tax deductible donations. You do
have to be incorporated in order to apply for 501(c)(3) status. I don't
think an LLC is eligible as it's a for-profit type of incorporation; I
think you have to be a California Non-Profit Corporation before the IRS
will grant 501(c)(3) status, but this should be verified.
Also, once incorporated, the 501(c)(3) can be applied for immediately.
It did take both Noisebridge and Ace longer than 10 months to receive
approval. At Noisebridge it was because the IRS was apparently baffled
at the concept of a hackerspace and had a lot of follow-on questions. I
think Ace just took a while to file, but also it took over a year for
the IRS to respond. It's an annoying, tedious, and time-consuming
process but not really that hard.
Cheers,
Rachel McConnell
On 7/18/13 11:07 AM, mark burdett wrote:
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
http://lists.sudoroom.org/listinfo/sudo-discuss 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.
(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....)
See also
http://www.nolo.com/legal-encyclopedia/nonprofit-tax-exempt-status-501c3-30…
This section requires that you attach a copy of your articles of
incorporation and your bylaws
<http://www.nolo.com/legal-encyclopedia/nonprofit-formation-documents-articles-incorporation-bylaws-minutes-30311.html>
to
the application form. (Most nonprofits seeking 501(c)(3) status are
corporations. If your entity is an LLC
<http://www.nolo.com/legal-encyclopedia/limited-liability-company>,
unincorporated association
<http://www.nolo.com/legal-encyclopedia/five-reasons-incorporate-nonprofit-association-30266.html>,
or nonprofit trust, you should seek the help of a lawyer
<http://www.nolo.com/lawyers> with experience in nonprofit tax law to
complete your Form 1023 application.)
--mark B.
On Thu, Jul 18, 2013 at 10:50 AM, Marina Kukso <marina.kukso(a)gmail.com
<mailto:marina.kukso@gmail.com>> wrote:
thanks bill, very helpful!
what are the advantages to filing as an LLC?
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?
- marina
On Thu, Jul 18, 2013 at 10:43 AM, William Budington
<bill(a)inputoutput.io <mailto:bill@inputoutput.io>> wrote:
Hey all,
I talked to Danny O'Brien (Noisebridge's financial functionary)
yesterday about the sudoroom legal status. I know this has
been an
ongoing discussion so I'm going to summarize the options we've
already
looked into and present the new information Danny has brought
to my
attention.
*Why do we need a legal status?*
Over the past few months we've found various challenges to our
normal
operations since we don't have a legal status. We aren't able
to sign
up for services like Stripe without having a federal tax id. In
addition, since we are formally under one person's name, he is
liable if
anything happens at sudoroom. Also, we aren't able to sign up
for most
banks -- only the Community Bank of the Bay will actually give
us a bank
account with our status as a DBA. And as we've seen, Community
Bank of
the Bay is not the most web-savvy organization, and so it's hard
for us
to actually check our balances.
*What we've looked at*
Our eventual goal has been to get 501(c)3 status for sudoroom.
This is
a status that would allow us to accept tax-deductible donations
and be
incorporated formally as a nonprofit. A lot of Hacker Spaces go
this
route, and it seems like a reasonable long-term goal. One of the
problems we've been warned of is that it takes a long time to
actually
be granted 501(c)3 status - upwards of 2 years, which can as I
understand be expedited to 10 months.
Because of this delay, we've looked into some other options --
namely
being umbrella'd under another organization's 501(c)3 status.
This
would involve 10% of our revenue going to said umbrella
organization to
cover costs of the books. I've been in contact with Danny at
Noisebridge and Jenny has been in contact with (Steve?) at the
School
Factory and discussing if this is a possibility. It is
certainly one
way to go, but as for Noisebridge they've only umbrella'd
Noisetor, and
they didn't need a separate account for that.
*What I've learned recently*
Danny mentioned that his partner is looking into nonprofit
status for a
new feminist hacker space in SF, and has investigated these
options as
well as others. In order to have a certain degree of autonomy,
it is
probably in our interests to actually not go the umbrella
route and
pursue separate legal status altogether. He also mentioned that
there's
no reason why we couldn't incorporate as an LLC or other
corporate
status before pursuing 501c3 status, and that even if it takes a
number
of years to be granted non-profit status we can transition from
an LLC
without much of a problem. There's no real disadvantage to
having LLC
status in the meantime, as I understand it. The main
advantage of
nonprofit status is tax deduction, but that is usually
superseded on
most peoples taxes by the standard deduction. The main place
where it
does make a difference is when employers do matching donations
for their
employees, then it can make a difference.
*The plan*
It makes sense to me to pursue the options that would resolve our
short-term problems without impeding the path to our long-term
goals.
It seems to me reasonable as a short-term goal to register as
an LLC
(Jenny tells me this can be done in an afternoon and with $50
with a
drive to Sacramento), and as a longer term goal actually pursuing
nonprofit, 501c3 status.
*Disclaimer*
There may be caveats to this plan and I'm not a lawyer.
Bill
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
<mailto:sudo-discuss@lists.sudoroom.org>
http://lists.sudoroom.org/listinfo/sudo-discuss
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
<mailto:sudo-discuss@lists.sudoroom.org>
http://lists.sudoroom.org/listinfo/sudo-discuss
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
http://lists.sudoroom.org/listinfo/sudo-discuss
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
http://lists.sudoroom.org/listinfo/sudo-discuss 
12:22 p.m.
It took AMT ~2 years to fill out the forms, and then ~9.5 months from the
filing to hear back from the IRS (and we got approved right away with no
additional followup required. Noisebridge required additional
followup/clarifications on their application).
On Thu, Jul 18, 2013 at 11:29 AM, Rachel McConnell <rachel(a)xtreme.com>wrote;wrote:
I'm a founding member of both Noisebridge and Ace
Monster Toys, and have
been through the incorporation and 501(c)(3) process with both. I just
want to clarify that incorporation and federal tax exemption are two
separate designations. Incorporation, either as an LLC or a full
corporation, is something you do at the state level, so the state can
identify, tax, and regulate you. The 501(c)(3) is an IRS designation,
which gives you the ability to accept tax deductible donations. You do
have to be incorporated in order to apply for 501(c)(3) status. I don't
think an LLC is eligible as it's a for-profit type of incorporation; I
think you have to be a California Non-Profit Corporation before the IRS
will grant 501(c)(3) status, but this should be verified.
Also, once incorporated, the 501(c)(3) can be applied for immediately. It
did take both Noisebridge and Ace longer than 10 months to receive
approval. At Noisebridge it was because the IRS was apparently baffled at
the concept of a hackerspace and had a lot of follow-on questions. I think
Ace just took a while to file, but also it took over a year for the IRS to
respond. It's an annoying, tedious, and time-consuming process but not
really that hard.
Cheers,
Rachel McConnell
On 7/18/13 11:07 AM, mark burdett wrote:
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.
(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....)
See also
http://www.nolo.com/legal-**encyclopedia/nonprofit-tax-**
exempt-status-501c3-30124.html<http://www.nolo.com/legal-encyclopedia/no…
This section requires that you attach a copy of your articles of
incorporation and your bylaws
<http://www.nolo.com/legal-**encyclopedia/nonprofit-**
formation-documents-articles-**incorporation-bylaws-minutes-**30311.html<…
to
the application form. (Most nonprofits seeking 501(c)(3) status are
corporations. If your entity is an LLC
<http://www.nolo.com/legal-**encyclopedia/limited-**liability-company<http://www.nolo.com/legal-encyclopedia/limited-liability-company>
http://lists.sudoroom.org/**listinfo/sudo-discuss<http://lists.sudoroom.…
______________________________**_________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.**org <sudo-discuss(a)lists.sudoroom.org><mailtolt;mailto:
sudo-discuss(a)lists.**sudoroom.org <sudo-discuss(a)lists.sudoroom.org>>
http://lists.sudoroom.org/**listinfo/sudo-discuss<http://lists.sudoroom.…
______________________________**_________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.**org <sudo-discuss(a)lists.sudoroom.org>
http://lists.sudoroom.org/**listinfo/sudo-discuss<http://lists.sudoroom.…
______________________________**_________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.**org <sudo-discuss(a)lists.sudoroom.org>
http://lists.sudoroom.org/**listinfo/sudo-discuss<http://lists.sudoroom.…
,
unincorporated association
<http://www.nolo.com/legal-**encyclopedia/five-reasons-**
incorporate-nonprofit-**association-30266.html<http://www.nolo.com/legal…
,
or nonprofit trust, you should seek the help of a lawyer
<http://www.nolo.com/lawyers> with experience in nonprofit tax law to
complete your Form 1023 application.)
--mark B.
On Thu, Jul 18, 2013 at 10:50 AM, Marina Kukso <marina.kukso(a)gmail.com
<mailto:marina.kukso@gmail.com**>> wrote:
thanks bill, very helpful!
what are the advantages to filing as an LLC?
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?
- marina
On Thu, Jul 18, 2013 at 10:43 AM, William Budington
<bill(a)inputoutput.io <mailto:bill@inputoutput.io>> wrote:
Hey all,
I talked to Danny O'Brien (Noisebridge's financial functionary)
yesterday about the sudoroom legal status. I know this has been
an
ongoing discussion so I'm going to summarize the options we've
already
looked into and present the new information Danny has brought to
my
attention.
*Why do we need a legal status?*
Over the past few months we've found various challenges to our
normal
operations since we don't have a legal status. We aren't able
to sign
up for services like Stripe without having a federal tax id. In
addition, since we are formally under one person's name, he is
liable if
anything happens at sudoroom. Also, we aren't able to sign up
for most
banks -- only the Community Bank of the Bay will actually give
us a bank
account with our status as a DBA. And as we've seen, Community
Bank of
the Bay is not the most web-savvy organization, and so it's hard
for us
to actually check our balances.
*What we've looked at*
Our eventual goal has been to get 501(c)3 status for sudoroom.
This is
a status that would allow us to accept tax-deductible donations
and be
incorporated formally as a nonprofit. A lot of Hacker Spaces go
this
route, and it seems like a reasonable long-term goal. One of the
problems we've been warned of is that it takes a long time to
actually
be granted 501(c)3 status - upwards of 2 years, which can as I
understand be expedited to 10 months.
Because of this delay, we've looked into some other options --
namely
being umbrella'd under another organization's 501(c)3 status.
This
would involve 10% of our revenue going to said umbrella
organization to
cover costs of the books. I've been in contact with Danny at
Noisebridge and Jenny has been in contact with (Steve?) at the
School
Factory and discussing if this is a possibility. It is
certainly one
way to go, but as for Noisebridge they've only umbrella'd
Noisetor, and
they didn't need a separate account for that.
*What I've learned recently*
Danny mentioned that his partner is looking into nonprofit
status for a
new feminist hacker space in SF, and has investigated these
options as
well as others. In order to have a certain degree of autonomy,
it is
probably in our interests to actually not go the umbrella route
and
pursue separate legal status altogether. He also mentioned that
there's
no reason why we couldn't incorporate as an LLC or other corporate
status before pursuing 501c3 status, and that even if it takes a
number
of years to be granted non-profit status we can transition from
an LLC
without much of a problem. There's no real disadvantage to
having LLC
status in the meantime, as I understand it. The main advantage of
nonprofit status is tax deduction, but that is usually superseded
on
most peoples taxes by the standard deduction. The main place
where it
does make a difference is when employers do matching donations
for their
employees, then it can make a difference.
*The plan*
It makes sense to me to pursue the options that would resolve our
short-term problems without impeding the path to our long-term
goals.
It seems to me reasonable as a short-term goal to register as an
LLC
(Jenny tells me this can be done in an afternoon and with $50
with a
drive to Sacramento), and as a longer term goal actually pursuing
nonprofit, 501c3 status.
*Disclaimer*
There may be caveats to this plan and I'm not a lawyer.
Bill
______________________________**_________________
sudo-discuss mailing list
sudo-discuss@lists.sudoroom.**org<sudo-discuss@lists.sudoroom.org>
<mailto:sudo-discuss@lists.**sudoroom.org<sudo-discuss@lists.sudoroom.org>
6:05 p.m.
Another disadvantage of 501(c)(3) status are the limitations regarding
politically-oriented activity, given our interest in local politics:
- There is an absolute prohibition on any 501(c)(3) to participate and/or
intervene in any political campaign on behalf of or against candidates for
public office.
- There is a cap in what is broadly defined as lobbying - so that at most
20% of exempt purpose expenditures, decreasing to 5% as the organization's
budget grows larger. 26 USC §4911(c)(2) -
http://www.law.cornell.edu/uscode/text/26/4911
Also, to address the relevance of potential profit distribution to members
of a project. The idea and the spirit of how we've been collaborating -
from my understanding - is distinctly that it is not about charity. It's
about self-empowerment and access to knowledge. There are a few reasons why
I think this is not an insignificant point at this stage.
First, the new SEC Crowd-funding provisions would allow entities that meet
the criteria of being a crowd-funding platform - to distribute public
shares in a product/service. This isn't about a few people pocketing
hacker-space donations. It's a radically new opening for crowd-sourced
initiatives to offer something substantial to moderate sized non-Wall St.
investors in independent innovation that is locally oriented rather than
another free t-shirt or a mention in the credits. Equity, also not
incidentally, will likely have a strong positive impact in raising the low
completion rate of current crowd-funding provider projects.
Second, not everyone can be expected to have enough excess time and
resources to direct their efforts towards something that doesn't generate
some sort of income or salary. If we are in fact trying to relate to our
local community in Oakland - ought to be the presumption in order to
attract genuine interest. The Telecentre model more prevalent outside the
US in places in Africa, South America, and South-East Asia, for example,
are distinguishable from the cybercafe, co-working space, or (some)
hackerspaces - in hacking at problems assuming a relative scarcity of
resources rather than over-abundance.
Finally, the federated model we've been discussing is intended to enable
the flexibility of related projects to fund themselves. We've already come
across this - should we have to wait for all of Sudo Room consensus
(whatever that means) in order to channel funds towards something? The
existence of a 501(c)(3) through which all funds flow through would likely
predetermine how initiatives will be funded and projects organized as a
result.
On Thu, Jul 18, 2013 at 12:22 PM, David Rorex <drorex(a)gmail.com> wrote:
It took AMT ~2 years to fill out the forms, and then
~9.5 months from the
filing to hear back from the IRS (and we got approved right away with no
additional followup required. Noisebridge required additional
followup/clarifications on their application).
On Thu, Jul 18, 2013 at 11:29 AM, Rachel McConnell <rachel(a)xtreme.com>wrote;wrote:
I'm a founding member of both Noisebridge and
Ace Monster Toys, and have
been through the incorporation and 501(c)(3) process with both. I just
want to clarify that incorporation and federal tax exemption are two
separate designations. Incorporation, either as an LLC or a full
corporation, is something you do at the state level, so the state can
identify, tax, and regulate you. The 501(c)(3) is an IRS designation,
which gives you the ability to accept tax deductible donations. You do
have to be incorporated in order to apply for 501(c)(3) status. I don't
think an LLC is eligible as it's a for-profit type of incorporation; I
think you have to be a California Non-Profit Corporation before the IRS
will grant 501(c)(3) status, but this should be verified.
Also, once incorporated, the 501(c)(3) can be applied for immediately. It
did take both Noisebridge and Ace longer than 10 months to receive
approval. At Noisebridge it was because the IRS was apparently baffled at
the concept of a hackerspace and had a lot of follow-on questions. I think
Ace just took a while to file, but also it took over a year for the IRS to
respond. It's an annoying, tedious, and time-consuming process but not
really that hard.
Cheers,
Rachel McConnell
On 7/18/13 11:07 AM, mark burdett wrote:
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
http://lists.sudoroom.org/listinfo/sudo-discuss
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.
(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....)
See also
http://www.nolo.com/legal-**encyclopedia/nonprofit-tax-**
exempt-status-501c3-30124.html<http://www.nolo.com/legal-encyclopedia/no…
This section requires that you attach a copy of your articles of
incorporation and your bylaws
<http://www.nolo.com/legal-**encyclopedia/nonprofit-**
formation-documents-articles-**incorporation-bylaws-minutes-**30311.html<…
to
the application form. (Most nonprofits seeking 501(c)(3) status are
corporations. If your entity is an LLC
<http://www.nolo.com/legal-**encyclopedia/limited-**liability-company<http://www.nolo.com/legal-encyclopedia/limited-liability-company>
http://lists.sudoroom.org/**listinfo/sudo-discuss<http://lists.sudoroom.…
______________________________**_________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.**org <sudo-discuss(a)lists.sudoroom.org><mailtolt;mailto:
sudo-discuss(a)lists.**sudoroom.org <sudo-discuss(a)lists.sudoroom.org>>
http://lists.sudoroom.org/**listinfo/sudo-discuss<http://lists.sudoroom.…
______________________________**_________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.**org <sudo-discuss(a)lists.sudoroom.org>
http://lists.sudoroom.org/**listinfo/sudo-discuss<http://lists.sudoroom.…
______________________________**_________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.**org <sudo-discuss(a)lists.sudoroom.org>
http://lists.sudoroom.org/**listinfo/sudo-discuss<http://lists.sudoroom.…
,
unincorporated association
<http://www.nolo.com/legal-**encyclopedia/five-reasons-**
incorporate-nonprofit-**association-30266.html<http://www.nolo.com/legal…
,
or nonprofit trust, you should seek the help of a lawyer
<http://www.nolo.com/lawyers> with experience in nonprofit tax law to
complete your Form 1023 application.)
--mark B.
On Thu, Jul 18, 2013 at 10:50 AM, Marina Kukso <marina.kukso(a)gmail.com
<mailto:marina.kukso@gmail.com**>> wrote:
thanks bill, very helpful!
what are the advantages to filing as an LLC?
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?
- marina
On Thu, Jul 18, 2013 at 10:43 AM, William Budington
<bill(a)inputoutput.io <mailto:bill@inputoutput.io>> wrote:
Hey all,
I talked to Danny O'Brien (Noisebridge's financial functionary)
yesterday about the sudoroom legal status. I know this has been
an
ongoing discussion so I'm going to summarize the options we've
already
looked into and present the new information Danny has brought to
my
attention.
*Why do we need a legal status?*
Over the past few months we've found various challenges to our
normal
operations since we don't have a legal status. We aren't able
to sign
up for services like Stripe without having a federal tax id. In
addition, since we are formally under one person's name, he is
liable if
anything happens at sudoroom. Also, we aren't able to sign up
for most
banks -- only the Community Bank of the Bay will actually give
us a bank
account with our status as a DBA. And as we've seen, Community
Bank of
the Bay is not the most web-savvy organization, and so it's hard
for us
to actually check our balances.
*What we've looked at*
Our eventual goal has been to get 501(c)3 status for sudoroom.
This is
a status that would allow us to accept tax-deductible donations
and be
incorporated formally as a nonprofit. A lot of Hacker Spaces go
this
route, and it seems like a reasonable long-term goal. One of the
problems we've been warned of is that it takes a long time to
actually
be granted 501(c)3 status - upwards of 2 years, which can as I
understand be expedited to 10 months.
Because of this delay, we've looked into some other options --
namely
being umbrella'd under another organization's 501(c)3 status.
This
would involve 10% of our revenue going to said umbrella
organization to
cover costs of the books. I've been in contact with Danny at
Noisebridge and Jenny has been in contact with (Steve?) at the
School
Factory and discussing if this is a possibility. It is
certainly one
way to go, but as for Noisebridge they've only umbrella'd
Noisetor, and
they didn't need a separate account for that.
*What I've learned recently*
Danny mentioned that his partner is looking into nonprofit
status for a
new feminist hacker space in SF, and has investigated these
options as
well as others. In order to have a certain degree of autonomy,
it is
probably in our interests to actually not go the umbrella route
and
pursue separate legal status altogether. He also mentioned that
there's
no reason why we couldn't incorporate as an LLC or other
corporate
status before pursuing 501c3 status, and that even if it takes a
number
of years to be granted non-profit status we can transition from
an LLC
without much of a problem. There's no real disadvantage to
having LLC
status in the meantime, as I understand it. The main advantage
of
nonprofit status is tax deduction, but that is usually
superseded on
most peoples taxes by the standard deduction. The main place
where it
does make a difference is when employers do matching donations
for their
employees, then it can make a difference.
*The plan*
It makes sense to me to pursue the options that would resolve our
short-term problems without impeding the path to our long-term
goals.
It seems to me reasonable as a short-term goal to register as an
LLC
(Jenny tells me this can be done in an afternoon and with $50
with a
drive to Sacramento), and as a longer term goal actually pursuing
nonprofit, 501c3 status.
*Disclaimer*
There may be caveats to this plan and I'm not a lawyer.
Bill
______________________________**_________________
sudo-discuss mailing list
sudo-discuss@lists.sudoroom.**org<sudo-discuss@lists.sudoroom.org>
<mailto:sudo-discuss@lists.**sudoroom.org<sudo-discuss@lists.sudoroom.org>
12:23 p.m.
I think this is really helpful. And I think it's clear that there are
different advantages to different tax structures - as people have been
articulating quite well already.
I've suggested before that we look more seriously into 501(c)(7)
because of the relative advantages regarding tax emption, more like a
public-facing community space, and more consistent with the kind of
governance we've chosen. I don't know how long it takes to get that
process going, but would be happy to look into it.
A significant disadvantage of 501(c)(3) most applicable to our
predicament is that it would require naming a Board of Directors. How
would we go about deciding that? Who would they be?
People have then replied - well then we can put whoever on there and
it doesn't really matter. Well then we're in a much worse spot than
we're currently in. Those people are way more on the hook both in
terms of financial liability and insurance liability, and therefore
credibly in charge.
The situation now, as I understand it, is even less exposed than Bill
mentions below. The bank account is not under anyone's name. it is
under Sudo Room. In order to give us this account, without having a
federal tax ID (& thus choose corporate structure), the bank wanted to
have someone or some people - connected to the account only by way of
having another, separate account in the bank under their own name.
Part of what was convincing to the bank was the fact that we had
detailed in the Articles of Association already the priority of how
funds will be reinvested and a commitment to accounting transparency.
This is separate from anything related on the insurance end, because
that has to do with the entity renting the space, not the bank account
anyhow.
It seems to me that in order to reap the benefits of the different
advantages of the different structures, we go ahead and pursue all of
them. Sudo Room should contain, or be connected to a 501(c)(3) to
receive charitable donations for that kind of work. An LLC enables
those thinking about the SEC provisions, recently announced to go into
effect in ~60 days - to organize themselves in a way that allows them
to offer equity in future profits to the crowdfunding public. All of
the interest in local politics and clear public policy purpose of Sudo
Room-related entities like Oakland Wiki, Hack the Budget, Code for
America, etc. - suggests that a Sudo PAC organized as a 501(c)(4)
would make a lot of sense for some of the projects that are being
hatched at Sudo Room. Seem like some clusters of people would be best
organized as an LLP (Limited Liability Partnership).
That's why it has seemed to me like we should keep this core kernel
agnostic on tax structure, and narrow in its purpose. Early stage
innovation projects and ideas have many different ways in which they
could be optimally funded. If we are to repurpose these structures to
to allow for the kind of exchange of ideas and structural commitment
to the maintenance of diversity, then just doing whatever is fastest
or easiest or what everyone else does can't be enough.
my 2 bitcoins.
On Jul 18, 2013, at 11:29 AM, Rachel McConnell wrote:
I'm a founding member of both Noisebridge and Ace
Monster Toys, and
have been through the incorporation and 501(c)(3) process with
both. I just want to clarify that incorporation and federal tax
exemption are two separate designations. Incorporation, either as
an LLC or a full corporation, is something you do at the state
level, so the state can identify, tax, and regulate you. The 501(c)
(3) is an IRS designation, which gives you the ability to accept tax
deductible donations. You do have to be incorporated in order to
apply for 501(c)(3) status. I don't think an LLC is eligible as
it's a for-profit type of incorporation; I think you have to be a
California Non-Profit Corporation before the IRS will grant 501(c)
(3) status, but this should be verified.
Also, once incorporated, the 501(c)(3) can be applied for
immediately. It did take both Noisebridge and Ace longer than 10
months to receive approval. At Noisebridge it was because the IRS
was apparently baffled at the concept of a hackerspace and had a lot
of follow-on questions. I think Ace just took a while to file, but
also it took over a year for the IRS to respond. It's an annoying,
tedious, and time-consuming process but not really that hard.
Cheers,
Rachel McConnell
On 7/18/13 11:07 AM, mark burdett wrote:
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.
(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....)
See also
http://www.nolo.com/legal-encyclopedia/nonprofit-tax-exempt-status-501c3-30…
This section requires that you attach a copy of your articles of
incorporation and your bylaws
<http://www.nolo.com/legal-encyclopedia/nonprofit-formation-documents-articles-incorporation-bylaws-minutes-30311.html
http://lists.sudoroom.org/listinfo/sudo-discuss
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
http://lists.sudoroom.org/listinfo/sudo-discuss
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
http://lists.sudoroom.org/listinfo/sudo-discuss to
the application form. (Most nonprofits
seeking 501(c)(3) status are
corporations. If your entity is an LLC
<http://www.nolo.com/legal-encyclopedia/limited-liability-company>,
unincorporated association
<http://www.nolo.com/legal-encyclopedia/five-reasons-incorporate-nonprofit-association-30266.html
,
or nonprofit trust, you should seek the
help of a lawyer
<http://www.nolo.com/lawyers> with experience in nonprofit tax law to
complete your Form 1023 application.)
--mark B.
On Thu, Jul 18, 2013 at 10:50 AM, Marina Kukso
<marina.kukso(a)gmail.com
<mailto:marina.kukso@gmail.com>> wrote:
thanks bill, very helpful!
what are the advantages to filing as an LLC?
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?
- marina
On Thu, Jul 18, 2013 at 10:43 AM, William Budington
<bill(a)inputoutput.io <mailto:bill@inputoutput.io>> wrote:
Hey all,
I talked to Danny O'Brien (Noisebridge's financial
functionary)
yesterday about the sudoroom legal status. I know this has
been an
ongoing discussion so I'm going to summarize the options we've
already
looked into and present the new information Danny has
brought to my
attention.
*Why do we need a legal status?*
Over the past few months we've found various challenges to our
normal
operations since we don't have a legal status. We aren't able
to sign
up for services like Stripe without having a federal tax
id. In
addition, since we are formally under one person's name, he is
liable if
anything happens at sudoroom. Also, we aren't able to sign up
for most
banks -- only the Community Bank of the Bay will actually give
us a bank
account with our status as a DBA. And as we've seen,
Community
Bank of
the Bay is not the most web-savvy organization, and so it's
hard
for us
to actually check our balances.
*What we've looked at*
Our eventual goal has been to get 501(c)3 status for sudoroom.
This is
a status that would allow us to accept tax-deductible
donations
and be
incorporated formally as a nonprofit. A lot of Hacker
Spaces go
this
route, and it seems like a reasonable long-term goal. One
of the
problems we've been warned of is that it takes a long time to
actually
be granted 501(c)3 status - upwards of 2 years, which can as I
understand be expedited to 10 months.
Because of this delay, we've looked into some other options --
namely
being umbrella'd under another organization's 501(c)3
status. This
would involve 10% of our revenue going to said umbrella
organization to
cover costs of the books. I've been in contact with Danny at
Noisebridge and Jenny has been in contact with (Steve?) at the
School
Factory and discussing if this is a possibility. It is
certainly one
way to go, but as for Noisebridge they've only umbrella'd
Noisetor, and
they didn't need a separate account for that.
*What I've learned recently*
Danny mentioned that his partner is looking into nonprofit
status for a
new feminist hacker space in SF, and has investigated these
options as
well as others. In order to have a certain degree of
autonomy,
it is
probably in our interests to actually not go the umbrella
route and
pursue separate legal status altogether. He also mentioned
that
there's
no reason why we couldn't incorporate as an LLC or other
corporate
status before pursuing 501c3 status, and that even if it
takes a
number
of years to be granted non-profit status we can transition
from
an LLC
without much of a problem. There's no real disadvantage to
having LLC
status in the meantime, as I understand it. The main
advantage of
nonprofit status is tax deduction, but that is usually
superseded on
most peoples taxes by the standard deduction. The main place
where it
does make a difference is when employers do matching donations
for their
employees, then it can make a difference.
*The plan*
It makes sense to me to pursue the options that would
resolve our
short-term problems without impeding the path to our long-term
goals.
It seems to me reasonable as a short-term goal to register
as an LLC
(Jenny tells me this can be done in an afternoon and with
$50 with a
drive to Sacramento), and as a longer term goal actually
pursuing
nonprofit, 501c3 status.
*Disclaimer*
There may be caveats to this plan and I'm not a lawyer.
Bill
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
<mailto:sudo-discuss@lists.sudoroom.org>
http://lists.sudoroom.org/listinfo/sudo-discuss
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org <mailto:sudo-discuss@lists.sudoroom.org
12:29 p.m.
On Thu, Jul 18, 2013 at 12:23 PM, Eddan Katz <eddan(a)clear.net> wrote:
An LLC enables those thinking about the SEC
provisions, recently announced
to go into effect in ~60 days - to organize themselves in a way that allows
them to offer equity in future profits to the crowdfunding public.
I don't think you're gonna be making any profits off a hackerspace (Even
TechShop, with all its funding and fancy tools and expensive membership, is
struggling). Even if you did manage to, imagine how people would feel when
they found out that money given to sudoroom was ending up in people's
pockets instead of going towards the space & its programs.
On Thu, Jul 18, 2013 at 12:25 PM, Andrew <andrew(a)roshambomedia.com> wrote:
Keep in mind that California LLCs cost $800/year. I
don't think that
changes if you are a non-profit, but I'm not 100% sure
Same for non-profit. UNLESS you are tax exempt, in which case you don't
have to pay it. (non-profit and tax exemption status are two separate
things)
12:37 p.m.
Has anyone looked at or familiar with the newer nonprofit mutual benefit
corp now available in California...
http://www.sos.ca.gov/business/corp/pdf/articles/arts-mu.pdf
On Thu, Jul 18, 2013 at 12:29 PM, David Rorex <drorex(a)gmail.com> wrote:
On Thu, Jul 18, 2013 at 12:23 PM, Eddan Katz
<eddan(a)clear.net> wrote:
--
ThanX,
;+)
https://www.noisebridge.net/wiki/Fort
An LLC enables those thinking about the SEC
provisions, recently
announced to go into effect in ~60 days - to organize themselves in a way
that allows them to offer equity in future profits to the crowdfunding
public.
I don't think you're gonna be making any profits off a hackerspace (Even
TechShop, with all its funding and fancy tools and expensive membership, is
struggling). Even if you did manage to, imagine how people would feel when
they found out that money given to sudoroom was ending up in people's
pockets instead of going towards the space & its programs.
On Thu, Jul 18, 2013 at 12:25 PM, Andrew <andrew(a)roshambomedia.com> wrote:
Keep in mind that California LLCs cost $800/year.
I don't think that
changes if you are a non-profit, but I'm not 100% sure
Same for non-profit. UNLESS you are tax exempt, in which case you don't
have to pay it. (non-profit and tax exemption status are two separate
things)
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
http://lists.sudoroom.org/listinfo/sudo-discuss
8:54 p.m.
When I've asked around for suggestions of who to talk to about this stuff,
coming from the perspective we're coming from, and all roads lead to the
Sustainable Economies Law Center (http://www.theselc.org/). If you haven't
been to any of their events - these people are pretty awesome. They host
regular Legal Cafes where anyone can ask a wide range of questions and find
out for themselves what the deal is, including different options for the
very things we're talking about. They also do regular Happy Hours where you
can meet like-minded folks - there was one nearby at Make Westing last week.
It was in fact from Janelle Orsi, its Executive Director, that I got the
idea that 501(c)(7) may be most appropriate. I got a chance to speak to her
about Sudo Room at the last Legal Cafe event. She has her own law practice (
http://janelleorsi.com/), and its my understanding that there's a long line
of organizations who want to work with her. Interestingly, the SELC have
seriously considered getting an office next to Sudo Room and still have not
settled on any (semi-)/permanent location.
Recommendations for who else is best to talk to, especially in relation to
crowd-funding, have also inevitably led to another founder of the SELC -
Jenny Kassan. She's a partner at K2 Legal downtown here on Broadway (
http://k2-legal.com/aboutus/ourteam/jenny/). She is also the CEO of Cutting
Edge Capital (http://www.cuttingedgecapital.com/), who seem to consistently
break new ground for finding possible ways to raise money in a cooperative
structure. When I spoke to her recently, she intimated that they may have a
crowd-funding platform operational in the next few months. She also
mentioned that they would be looking for a whole bunch of new projects as
candidates for launch on this platform. She was very pleased to hear that
there are a lot of interesting and ambitious projects being hacked and
hatched here at Sudo Room.
The other organization that always comes up when I've asked around is the
East Bay Community Law Center (EBCLC) (http://www.ebclc.org/), which is
also connected to Berkeley Law School Clinics. This is also an impressive
and inspiring organization. They host the Neighborhood Justice Clinic (
http://www.ebclc.org/njc.php) open to the public and helpful in getting
questions answered.
On Thu, Jul 18, 2013 at 11:07 AM, mark burdett <mfburdett(a)gmail.com> wrote:
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.
(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....)
See also
http://www.nolo.com/legal-encyclopedia/nonprofit-tax-exempt-status-501c3-30…
This section requires that you attach a copy of your articles of
incorporation and your
bylaws<http://www.nolo.com/legal-encyclopedia/nonprofit-formation-docume…
to
the application form. (Most nonprofits seeking 501(c)(3) status are
corporations. If your entity is an
LLC<http://www.nolo.com/legal-encyclopedia/limited-liability-company>
, unincorporated
association<http://www.nolo.com/legal-encyclopedia/five-reasons-incorpor…ml>,
or nonprofit trust, you should seek the help of a
lawyer<http://www.nolo.com/lawyers> with
experience in nonprofit tax law to complete your Form 1023 application.)
--mark B.
On Thu, Jul 18, 2013 at 10:50 AM, Marina Kukso <marina.kukso(a)gmail.com>wrote;wrote:
thanks bill, very helpful!
what are the advantages to filing as an LLC?
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?
- marina
On Thu, Jul 18, 2013 at 10:43 AM, William Budington <bill(a)inputoutput.io>wrote;wrote:
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
http://lists.sudoroom.org/listinfo/sudo-discuss
Hey all,
I talked to Danny O'Brien (Noisebridge's financial functionary)
yesterday about the sudoroom legal status. I know this has been an
ongoing discussion so I'm going to summarize the options we've already
looked into and present the new information Danny has brought to my
attention.
*Why do we need a legal status?*
Over the past few months we've found various challenges to our normal
operations since we don't have a legal status. We aren't able to sign
up for services like Stripe without having a federal tax id. In
addition, since we are formally under one person's name, he is liable if
anything happens at sudoroom. Also, we aren't able to sign up for most
banks -- only the Community Bank of the Bay will actually give us a bank
account with our status as a DBA. And as we've seen, Community Bank of
the Bay is not the most web-savvy organization, and so it's hard for us
to actually check our balances.
*What we've looked at*
Our eventual goal has been to get 501(c)3 status for sudoroom. This is
a status that would allow us to accept tax-deductible donations and be
incorporated formally as a nonprofit. A lot of Hacker Spaces go this
route, and it seems like a reasonable long-term goal. One of the
problems we've been warned of is that it takes a long time to actually
be granted 501(c)3 status - upwards of 2 years, which can as I
understand be expedited to 10 months.
Because of this delay, we've looked into some other options -- namely
being umbrella'd under another organization's 501(c)3 status. This
would involve 10% of our revenue going to said umbrella organization to
cover costs of the books. I've been in contact with Danny at
Noisebridge and Jenny has been in contact with (Steve?) at the School
Factory and discussing if this is a possibility. It is certainly one
way to go, but as for Noisebridge they've only umbrella'd Noisetor, and
they didn't need a separate account for that.
*What I've learned recently*
Danny mentioned that his partner is looking into nonprofit status for a
new feminist hacker space in SF, and has investigated these options as
well as others. In order to have a certain degree of autonomy, it is
probably in our interests to actually not go the umbrella route and
pursue separate legal status altogether. He also mentioned that there's
no reason why we couldn't incorporate as an LLC or other corporate
status before pursuing 501c3 status, and that even if it takes a number
of years to be granted non-profit status we can transition from an LLC
without much of a problem. There's no real disadvantage to having LLC
status in the meantime, as I understand it. The main advantage of
nonprofit status is tax deduction, but that is usually superseded on
most peoples taxes by the standard deduction. The main place where it
does make a difference is when employers do matching donations for their
employees, then it can make a difference.
*The plan*
It makes sense to me to pursue the options that would resolve our
short-term problems without impeding the path to our long-term goals.
It seems to me reasonable as a short-term goal to register as an LLC
(Jenny tells me this can be done in an afternoon and with $50 with a
drive to Sacramento), and as a longer term goal actually pursuing
nonprofit, 501c3 status.
*Disclaimer*
There may be caveats to this plan and I'm not a lawyer.
Bill
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
http://lists.sudoroom.org/listinfo/sudo-discuss
_______________________________________________
sudo-discuss mailing list
sudo-discuss(a)lists.sudoroom.org
http://lists.sudoroom.org/listinfo/sudo-discuss
19 Jul
19 Jul
11:34 a.m.
Here's to SELC. I've looked at some co-op options with members of their
circle before for other projects. If anyone wants to join me at their next
event, do! and we'll raise these questions.
Tue, July 23, 6:00pm – 8:30pm at hub Berkeley, 2150 Allston Way, Suite 400
On Thu, Jul 18, 2013 at 8:54 PM, Eddan <eddan(a)clear.net> wrote:
When I've asked around for suggestions of who to
talk to about this stuff,
coming from the perspective we're coming from, and all roads lead to the
Sustainable Economies Law Center (http://www.theselc.org/). If you
haven't been to any of their events - these people are pretty awesome. They
host regular Legal Cafes where anyone can ask a wide range of questions and
find out for themselves what the deal is, including different options for
the very things we're talking about. They also do regular Happy Hours where
you can meet like-minded folks - there was one nearby at Make Westing last
week.
It was in fact from Janelle Orsi, its Executive Director, that I got the
idea that 501(c)(7) may be most appropriate. I got a chance to speak to her
about Sudo Room at the last Legal Cafe event. She has her own law practice (
http://janelleorsi.com/), and its my understanding that there's a long
line of organizations who want to work with her. Interestingly, the SELC
have seriously considered getting an office next to Sudo Room and still
have not settled on any (semi-)/permanent location.
Recommendations for who else is best to talk to, especially in relation to
crowd-funding, have also inevitably led to another founder of the SELC -
Jenny Kassan. She's a partner at K2 Legal downtown here on Broadway (
http://k2-legal.com/aboutus/ourteam/jenny/). She is also the CEO of
Cutting Edge Capital (http://www.cuttingedgecapital.com/), who seem to
consistently break new ground for finding possible ways to raise money in a
cooperative structure. When I spoke to her recently, she intimated that
they may have a crowd-funding platform operational in the next few months.
She also mentioned that they would be looking for a whole bunch of new
projects as candidates for launch on this platform. She was very pleased to
hear that there are a lot of interesting and ambitious projects being
hacked and hatched here at Sudo Room.
The other organization that always comes up when I've asked around is the
East Bay Community Law Center (EBCLC) (http://www.ebclc.org/), which is
also connected to Berkeley Law School Clinics. This is also an impressive
and inspiring organization. They host the Neighborhood Justice Clinic (
http://www.ebclc.org/njc.php) open to the public and helpful in getting
questions answered.
On Thu, Jul 18, 2013 at 11:07 AM, mark burdett <mfburdett(a)gmail.com>wrote;wrote:
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.
(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....)
See also
http://www.nolo.com/legal-encyclopedia/nonprofit-tax-exempt-status-501c3-30…
This section requires that you attach a copy of your articles of
incorporation and your
bylaws<http://www.nolo.com/legal-encyclopedia/nonprofit-formation-docume…
to
the application form. (Most nonprofits seeking 501(c)(3) status are
corporations. If your entity is an
LLC<http://www.nolo.com/legal-encyclopedia/limited-liability-company>
, unincorporated
association<http://www.nolo.com/legal-encyclopedia/five-reasons-incorpor…ml>,
or nonprofit trust, you should seek the help of a
lawyer<http://www.nolo.com/lawyers> with
experience in nonprofit tax law to complete your Form 1023 application.)
--mark B.
On Thu, Jul 18, 2013 at 10:50 AM, Marina Kukso <marina.kukso(a)gmail.com>wrote;wrote:
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thanks bill, very helpful!
what are the advantages to filing as an LLC?
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?
- marina
On Thu, Jul 18, 2013 at 10:43 AM, William Budington <bill(a)inputoutput.io
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wrote:
Hey all,
I talked to Danny O'Brien (Noisebridge's financial functionary)
yesterday about the sudoroom legal status. I know this has been an
ongoing discussion so I'm going to summarize the options we've already
looked into and present the new information Danny has brought to my
attention.
*Why do we need a legal status?*
Over the past few months we've found various challenges to our normal
operations since we don't have a legal status. We aren't able to sign
up for services like Stripe without having a federal tax id. In
addition, since we are formally under one person's name, he is liable if
anything happens at sudoroom. Also, we aren't able to sign up for most
banks -- only the Community Bank of the Bay will actually give us a bank
account with our status as a DBA. And as we've seen, Community Bank of
the Bay is not the most web-savvy organization, and so it's hard for us
to actually check our balances.
*What we've looked at*
Our eventual goal has been to get 501(c)3 status for sudoroom. This is
a status that would allow us to accept tax-deductible donations and be
incorporated formally as a nonprofit. A lot of Hacker Spaces go this
route, and it seems like a reasonable long-term goal. One of the
problems we've been warned of is that it takes a long time to actually
be granted 501(c)3 status - upwards of 2 years, which can as I
understand be expedited to 10 months.
Because of this delay, we've looked into some other options -- namely
being umbrella'd under another organization's 501(c)3 status. This
would involve 10% of our revenue going to said umbrella organization to
cover costs of the books. I've been in contact with Danny at
Noisebridge and Jenny has been in contact with (Steve?) at the School
Factory and discussing if this is a possibility. It is certainly one
way to go, but as for Noisebridge they've only umbrella'd Noisetor, and
they didn't need a separate account for that.
*What I've learned recently*
Danny mentioned that his partner is looking into nonprofit status for a
new feminist hacker space in SF, and has investigated these options as
well as others. In order to have a certain degree of autonomy, it is
probably in our interests to actually not go the umbrella route and
pursue separate legal status altogether. He also mentioned that there's
no reason why we couldn't incorporate as an LLC or other corporate
status before pursuing 501c3 status, and that even if it takes a number
of years to be granted non-profit status we can transition from an LLC
without much of a problem. There's no real disadvantage to having LLC
status in the meantime, as I understand it. The main advantage of
nonprofit status is tax deduction, but that is usually superseded on
most peoples taxes by the standard deduction. The main place where it
does make a difference is when employers do matching donations for their
employees, then it can make a difference.
*The plan*
It makes sense to me to pursue the options that would resolve our
short-term problems without impeding the path to our long-term goals.
It seems to me reasonable as a short-term goal to register as an LLC
(Jenny tells me this can be done in an afternoon and with $50 with a
drive to Sacramento), and as a longer term goal actually pursuing
nonprofit, 501c3 status.
*Disclaimer*
There may be caveats to this plan and I'm not a lawyer.
Bill
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15 comments
11 participants
participants (11)
-
Andrew -
Anthony Di Franco -
David Rorex -
Eddan -
Eddan Katz
-
J.C. -
Marina Kukso -
mark burdett -
Rachel McConnell -
rusty lindgren -
William Budington