Rob Cozens: I also formed a for-profit corporation
this year ... I am on the Board of Directors of a
non-profit corporation, and might be able to get some
insight from original board members or the
foundation's account or attorney.
Alain : There is no argument more persuasive than
experience.
Rob Cozens: I'm inclined to follow Eric's partnership
approach ...
Alain: So am I now that I have had some time to
reflect on the matter.
Rob Cozens: ... or at least look very carefully at the
consequences of incorporation.
Alain: Not to mention the fact that we would have to
establish the following roles: President, Secretary,
Treasurer, etc. Incorporation is much more demanding
than a partnership in this regard.
Rob Cozens: I don't know about non-profit; but a new
for-profit corporation expecting to generate less than
$1 mil in first-year income pays a $100 filing fee &
$300 franchise fee to file articles of incorporation
in California, and must prepay $500 in estimated taxes
3.5 months into its first income year. Thereafter
there is a minimum tax of $800 annually.
Alain: Expensive, taxes 4 times per year, etc.
Rob Cozens: After nearly two decades of operating a
sole proprietorship I feel like I'm confined to a
"business straight jacket" when conducting corporate
affairs. We're talking formal meeting notice, written
minutes and authorization of most decisions, strict
separation of corporate & personal funds, filings to
the Secretary of State whenever corporate offices move
or corporate officers change, etc.
Alain: What a nightmare!
Rob Cozens: (It has forced me to keep a better set of
books, which is probably a plus.)
Alain: The same kind of argument can be leveled at
business plans too. A plausible fiction that is of
little practical value, except that it helps you
structure and prepare yourself, and (more importantly)
get the financing you need to get down to the real
business affairs.
Rob Cozens: if we are non-profit and our product is
free and the license disclaims any liability, then
potential liability is nil on a practical basis.
Alain: I would add: we stipulate that partners cannot
enter into any contracts whatsoever in the name of our
group. Anything business is strictly personal and has
nothing to do with us collectively.
Rob Cozens: But "practically nil" is not the same as
nonexistent.
Alain: That was the bone that I was chewing too! But
incorporation in order to lessen our liability would
be like doing open-heart surgery when all the patient
needed was some nutritional advice! It is (was) one
of my more misguided propositions, I'm afraid.
Rob Cozens: That's why we have attorneys and insurance
companies, eh Eric?
Alain: Everyone has their "raison-d'�tre", eh!
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