Re: Re: Membership sale agreement questions | <– Date –> <– Thread –> |
From: Rob Sandelin (robsanmicrosoft.com) | |
Date: Mon, 18 Apr 94 18:37 CDT |
Martin Schafer wrote: >Until you incorporate, your group is legally a partnership. This >is a recognized form and people should be willing to take you >seriously as long as you seem organized and seem like you know >what you are talking about. Please take note: If you have no legal agreement at all, you are considered by the courts (and there is a lot of legal precedent for this) to be a limited partnership. What this means is that each individual has an equal liability and share in any judgements against you. For example, a lawsuit against the partnership, which resulted in a million dollar judgement would mean each member would have to pay an equal share. Ten members would owe 100 grand each. If you didn't have that money a lien could be placed on your salary, assets could be taken, etc. This is not a very common scenario but it is why many groups incorporate early on. There was an intentional community in Tennessee in the late 70's which got into tax trouble. They found out by surprise that they were a partnership and each individual ended up under the IRS tax confiscation proceedings. A bunch of poor hippies who were peacefully living together in Tipis on some land, who were anarchists and had no agreements of any kind, lost everything they had -Tipis, buses, etc. Big brother closed them down hard. This is an extreme case but incorporating doesn't really cost much and it doesn't hurt you in any way that I know of.... If you are developing cohousing for 20 or so units at $100,000 or so each that is a 2 million dollar project, even if there are only 5 of you so far it pays to 1. Hire an attorney to draw up incorporation paperwork for you. 2. Keep accurate records of all funds spent and collected. When you incorporate you can get a tax id number and get a corporate bank account and you also will need to understand taxes. (Money assessed for expenses is not federally taxable, but states have varying and pecular tax laws and some of them do tax such money) Figure an attorney will cost $4-500 and you can do it cheaper by getting some sample articles of incorporation from groups in your area and using them as samples to draw up your own. Then all the attorney does is review your work and advise, a hour or so charge. In many states you can put in a clause in your articles of incorporation which allows you to change the purpose of the organization by some sort of majority vote. Having such a clause allows you flexibility later on if you want to become a 501 c type organization or for other reasons want to change your purpose. Some groups collect a small assessment per member $10-20 per month to raise funds for such expenses. This is good idea and can also serve as a membership criteria. If someone can't invest a little each month, will they really ever commit to the blood, sweat and tears of a major development project? Of course, once you incorporate you have presidents, treasurers and such and then you'll need some bylaws to define what they do, how meetings are run, how funds are to be used, etc......And of course that will take 400 hours of meetings to wrangle out and then there will be board meetings, and reports and committees....Maybe it would be easier just to raise dental floss in Montana? :-} Rob Sandelin Puget Sound Cohousing Network
- Re: Re: Membership sale agreement questions, (continued)
- Re: Re: Membership sale agreement questions Lynne Farnum, April 18 1994
- Re: Re: Membership sale agreement questions Stephen Hawthorne, April 18 1994
- Re: Re: Membership sale agreement questions Martin Schafer, April 18 1994
- Re: Re: Membership sale agreement questions Rob Sandelin, April 18 1994
- Re: Re: Membership sale agreement questions Rob Sandelin, April 18 1994
- Re: Re: Membership sale agreement questions Stephen Hawthorne, April 19 1994
- Re: Membership sale agreement questions Jim_Snyder-Grant . LOTUS, April 19 1994
- Re: Re: Membership sale agreement questions Stephen Hawthorne, April 19 1994
- Re: Membership sale agreement questions Rob Sandelin, April 19 1994
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