As far as I see it, there are two possible organizational structures
that Habari might consider for an Habari org: limited liability
company (LLC), or membership corporation (also known as a non-stock
corporation). Both structures have the benefit of protecting the
assets of the individuals that participate in the organization, but
there are some important differences.
LLC
- must declare a set of owners; changes in ownership must be filed
with the state
- allows for declaration of an external manager
- not eligible for non-profit status
- "pass-through" tax status
- must prepare individual Schedule K's for all owners
- owners include revenue/losses from the LLC on their personal tax
returns
- many owners = a lot of extra tax work
Membership corporation
- creates a separate legal entity which is managed by a group of
"members" (no shareholders)
- members are not eligible to receive dividends
- membership changes need only be recorded in meeting minutes
- may apply for 501(c)3 status
- the ASF seems to have had little trouble obtaining this. They filed
under the "scientific purposes" section of 501(c)3. See:
http://www.apache.org/foundation/records/ASF-1023.pdf
- taxed separately (must file its own tax return if revenue exceeds
$25,000 in a given year)
>From my perspective, the membership corporation seems like the natural
choice for us because the project management committee (PMC) would
become the members of the corporation. It removes the issue of
deciding on a small subset of people to become owners which you might
consider to avoid extra paperwork with an LLC.
If others agree, then the next steps are as follows.
1) Agree upon a set of bylaws. I might again suggest that we look to
the ASF for guidance here. Check out their bylaws:
http://www.apache.org/foundation/bylaws.html
That should provide a starting point for discussion, which we can
modify to suit our particular needs.
2) Choose a state for formation. Since Habari does not have a physical
office anywhere, we are free to file wherever we choose. Many
organizations with similar freedom choose Delaware because of its
Chancery court system which allows for efficient resolution of
business disputes (the Delaware state website claims that 50% of all
publicly traded companies are based in Delaware: http://corp.delaware.gov/)
3) Pay a company to act as our registered agent. Just do a google
search for "Delaware corporation" and you'll see plenty of choices. I
have no idea which ones are reputable. But, unless one of you own a
piece of property in Delaware that you want to declare as Habari's
office, we need to hire someone else that can take on this role for
us. It looks like the fees for this service are quite cheap...
4) The list continues with actually filing paperwork. As this message
is already quite long, though, I'll stop here.
--Blake
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