[hackerspaces] Hackerspace legal formation and insurance

Nick Farr (hackerspaces.org) nick at hackerspaces.org
Mon May 24 01:40:50 CEST 2010

On Sat, May 22, 2010 at 23:17, Matthew McCabe <matt at mrmccabe.com> wrote:
> The Austin Hackerspace is looking at options for forming a legal
> entity and are considering an LLC or DBA.  What legal formation do the
> US based hackerspaces typically use?

US Hackerspaces typicaly go the Non-Profit Corporate route, or the LLC
route.  I actually have never heard of a hackerspace going DBA.

The main advantage to being a non-profit is the tax benefit, ability
to receive grants and offer tax-deductibility for donations as well as
membership control of the organization.  The main disadvantage is the
paperwork overhead.

The main advantage to an LLC is simplicity of paperwork.  The downside
is that those listed as members of the LLC are liable for paying taxes
on the profits of the hackerspace.

Both an LLC and a Non-Profit corporation offer "corporate shield"
status, meaning the assets of the directors/members are not generally
at stake in a claim on the activities of the hackerspace.

> Also, we are looking at buying liability insurance to protect the
> founders and members of the space.  Any suggestions on what level of
> coverage we should have?

Get the general (commercial) liability insurance coverage required by
your lease.  You really don't need insurance until you actually
acquire a space and most other insurance for small organizations is
not generally worth the cost.

Nick Farr / http://nickfarr.org / 8B13F204
Washington, DC, 20013-1208
Currently in Germany: +49 177 647-8916
P: +1 (707) 676-FARR
F: +1 (866) 536-2616

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