Summary of the meeting on November 26, 2007 at Borderlands Books.
Tim, attorney, gave presentation regarding various organizational models for companies in California. He is most familiar with Cooperatives. He recommended using Jenny Casen (510-535-1011) as an attorney to help with Bylaws, organization, and paperwork, as he is not accepting new clients. Another attorney is Van Baldwin.
Accountants necessary for a larger organization are bookkeepers (day to day expenses and record keeping), CPA (auditing), and tax preparer (for filing taxes and making sure everything is legal).
- Partnership – What government views you as if you do not file any paperwork. Everyone in partnership is liable when sued. Taxes are paid as individuals
- C-corp (subchapter C in tax code) – property rights rule. One person can have more than one voting and earning share in the company. File taxes as a company on profit, then as individuals.
- S-corp – can’t save money, 12 (or 35) owners maximum. File taxes as a company and then as individuals.
- LLC – more flexable than S-corp as you do not have to have structure. Taxes are different, but you pay tax on every dollar you earn as a company. It’s open ended as far as organization, but will get taxed a lot more over time than a coop or a corp. However, you’re able to pass money to members without paying payroll tax (more money for individuals, less for company).
- 501(c)(3) non-profit. Public benefit corporation. The majority of board members cannot be “economically interested” in corporation. Less taxes. Could run a non-profit for public benefit and taxes, and have a corp for profit sharing (if you’re to organize as a co-op).
- Coop. Requires bylaws and structure. Will talk more about this in our next meeting.
I have a diagram that I will re-draw and show people at the next meeting regarding the tax and spending structure of a co-op or a corp.
Things of interest to me:
- A coop is a T-corp, meaning the guidelines are in subchapter T of California’s tax code
- In a coop, members get wages. Non members also get wages. At the end of the year, if there is profit, members get a share of that based on either ratio of hours worked to the total, or ratio of wages earned to the total. You can set up rules in teh bylaws to have founders make bonuses based on the fact that they were in the company before profit existed…but that’s legal and bylaw specific.
- Never give money generated by non-members to members…give it to the company.
- An LLC has a “self-employment” tax for every dollar received. Also, all corp’s are responsible for 15% tax on wages for social security. In co-ops and corps, half is paid by employee, half by company.
- http://usworker.coop for Worker Ownership Fund (initial startup funding for co-ops) and for documentation.
- LLC has revenue tax and not corporate tax. The revenue tax kicks in once you make $250,000. At $500k, the tax is $900, at it maxes out at $5,000,000, where the tax is $6000. This is in addition to the self-employement tax.
- No tax the first year, but hte second year has a minimum of $800 tax regardless of profit.
- Look for attorney and accountant(s)/bookkeeper(s). Also, find sample bylaws in Nolo Press guides or from Co-op Incorporation Source Book.
- Meet guys from http://techcollective.com/. They do IT work and are organized as a cooperative corporation. Could use them for advice and IT work
.
No Comments Yet
No comments yet.
Comments RSS TrackBack Identifier URI
Leave a comment
