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non profit and profit, FAQ

posted Jul 23, 2012, 10:51 PM by Gabriella Levine   [ updated Jul 24, 2012, 9:41 PM ]
Questions I had and answers I got today from my friend Stephanie who has worked with many small ventures, mostly artists and musicians, to register non profits as well as profits: 
She has some grants in mind for us, which is cool too...

S-corp vs C Corp vs LLC: 
S corp: sole proprietorship, not for us
llc - good for dealing with a lot of money, or copyright issues
BUT an LLC doesnt have an owner / employees. Rather, it has members. AND we do taxes ourselves, NOT as part of the company. Better for a community project i think?

Who will be our fiscal sponsor: Death by Audio, a guitar pedal company. They are friends of mine, as well 
This will allow us to get funding tax-exempt: They will not really charge us. Thanks!
We will need a board of 4, I think, people. We must have a 2x per year board meeting. 

What do we need to do during the year: 
2 board meetings, and submit the board papers
file taxes by the due date in march

Can Cesar be the president of the company without a social security #: I dont think so...Eventually, he will need to present his SS# to get an EIN, employer ID, so no - It looks like he will need to get sponsored to work in the US somehow, or something like that

what happens if we go bankrupt ? as a non profit, it's ok. get a bank account once we have a registered company.

Can I work for the profit and the non profit or be the director of both a profit and a non profit: YES. 
And the profit can donate to the non profit. However: the conflict of interest policy applies, so that if i'm working for the profit, and we are discussing the nonprofit, but I am the director or involved in the non profit, I can have no say in the discussions.

Can i make a salary with a non profit: the president and vice president can, only.

Can i be hit with fees, as a non profit: If you forget to file something: taxes, or board notes (2x per year)

How long will it take us to get a non profit: 
In ny, it will take us 2 weeks - 1 month to set it up as a registered non profit. Then it will take about 6months - 1 year for the IRS to recognize us as a 501c. Therefore, we will receive all grants through a fiscal sponsor to eschew fees.

How much will it cost us to register and what is the timeline for a NY non profit: 
125 dollars to set up the non profit registered, (eligible to open a bank account then) , then if we plan to have <10000 dollars, 400 for the IRS 
My friend will charge us 750 to take care of it all for us, unless we offer her something in exchange - like a free boat... or something

...more to come