[hackerspaces] Hackerspace law: unincorporated association

Nick Farr (hackerspaces.org) nick at hackerspaces.org
Thu Aug 5 00:31:45 CEST 2010

On Wed, Aug 4, 2010 at 15:32, Christopher J. Pilkington <cjp at 0x1.net> wrote:
> Someone had mentioned that it might not be necessary for us to
> form a Corporation or LLC to get started; it might be possible
> to just form an unincorporated association.

This is indeed possible, you can get an EIN and even become a
501(c)(3) as an unincorporated association.

However, this is almost always HARDER in the long run, on top of being
a bad idea.  Whether it's personal, financial, tax or other liability,
it's almost always easier to incorporate.

> Personally, I feel that the less paperwork I need to file with
> the government, the better.

Honestly, the easiest route to go is forming a 501(c)(3).  I used to
say the LLC was the easiest route to go, but several LLCs have had big
problems sorting out tax issues between founding and current members
and almost always end up shelling out a large amount of cash to a CPA
to figure it out.  This is on top if the tax liabilities that the LLC
has to reimburse the members, which has its own paperwork nightmares
attached, etc.

Going the Incorporating and 501(c)(3) route involves a lot of
paperwork up front, but saves a lot of hassles in the end.  Even the
paperwork up front has been done so many times, you can almost copy &
paste the answers from other hackerspaces.  After that, it's sending
in 2-3 "check this box" forms each year--and, they usually go very,
very easy on non-profits.

Nick Farr
nick at hackerspaces.org

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