[sudo-discuss] Legal Status

Marina Kukso marina.kukso at gmail.com
Thu Jul 18 10:50:56 PDT 2013


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 at 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
>
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>
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