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Re: [newtech-1] LLC + 501c3 question

From: Alyssa M.
Sent on: Saturday, March 16, 2013 10:50 AM
Hi Stuart,

I'm sorry but I don't. I know this however because of my experience trying to do something very similar. Your attorney should be help you (I'm an attorney myself but don't specialize in this area of the law).

Good luck!
Alyssa

On Fri, Mar 15, 2013 at 11:08 PM, Stuart Dambrot <[address removed]> wrote:
Thanks, Alyssa.

Do you have a link that details those factors?

Sent from my iPad

On Mar 15, 2013, at 20:59, Alyssa Martina <[address removed]> wrote:

John's response is on point. And, the government will scrutinize your 501c(3) if you also have a related for-profit company to make sure that it isn't being set up as a pass-through. You need to keep the two organizations separate from one another in many respects.

On Fri, Mar 15, 2013 at 10:28 AM, Stuart Dambrot <[address removed]> wrote:

This is a long overdue apology – I intended to write “Thank you, John” – but on reviewing messages on this topic just now, I saw the typo for the first time.

 

From: [address removed] [mailto:[address removed]] On Behalf Of Stuart Dambrot
Sent: Wednesday, January 23,[masked]:09 AM
To: [address removed]
Subject: RE: [newtech-1] LLC + 501c3 question

 

K you, John. I’ve considered an L3V, but I understand it requires grants to be made as a comparatively underused form of investment. Anyway, L3Cs are not yet available in NY.

 

I’ll look into a B corp.

 

From: [address removed] [mailto:[address removed]] On Behalf Of John Gordon
Sent: Tuesday, January 22,[masked]:25 PM
To: [address removed]
Subject: Re: [newtech-1] LLC + 501c3 question

 

Keep in mind that you cannot "own" a 501c3 organization. You can organize it, contribute to it and lead it, but whatever assets you contribute to it, and any growth in value that derives from it, is no longer yours. If the 501c3 is closed for any reason, its remaining assets have to be distributed to other charities - you can't sell it off, much less for a profit. You can be paid by the 501c3 for services rendered, but not "excessively," and your annual return is a public document. If your 2 organizations deal with each other intimately, you need to be able to document how you arrived at preventing conflicts of interest.

 

Just getting 501c3 status itself is a colossal pain; the process in long, arduous and not guaranteed of success. Setting up a B corp or an L3C might be a better route if you can do it.

 

Did I mention that the cost of accounting for a nonprofit is multiples of that of a business organization? Assuming that you can find a competent accountant that will deal with a 501c3, I know from being on a nonprofit board that the cost having the annual Form 990 is very high. If the rate is cheap, then there is probably a reason and this reason will haunt you later.

 

Just some thoughts based on experience in the field.

 

John Gordon

 

On Tue, Jan 22, 2013 at 9:49 PM, Anthony Zeoli <[address removed]> wrote:

Actually, I need to do the same thing with my .com under the LLC and my .org under the 501(c)3. I will read this myself. Thanks.


Tony Zeoli, Founder
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WordPress | Digital Strategy | IA & UxD
310 W. 4th St, Winston-Salem NC 27101
[address removed] | Visit Our Site
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On Tue, Jan 22, 2013 at 7:24 PM, Stuart Dambrot <[address removed]> wrote:

If a sole proprietor wants to form a two-component business structure (an LLC and a 501c3), what are the legal pitfalls? For example, I imagine that key issues would be resource sharing (one human resource, one computer, one office, etc.), expense allocation, taxes, funding the 501c3 in part through donations from the LLC and/or the sole proprietor, and intellectual property. Note that the names would be structured as Name (LLC) and Name Subname (501c3).

 

Sorry to be vague, but it’s an exploratory question that I’m asking for the first time, and after doing research as well.

 

Relatedly, the LLC web presence would be a WordPress site, and the 501c3 a YouTube or Vimeo channel. I’d like the 501c3 site to present as a page on the LLC site. Any thoughts on how that could be done would be greatly appreciated.

 

Thanks in advance for any and all advice and recommendations.

 

SM Dambrot





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