The TL;DR:

  • For financial, legal, and practical reasons, theATL.social needs to move into a legal structure.
  • With the current donors and donations, plans need to be shared sooner-than-later.
  • While a non-profit is preferred, a for-profit LLC is the least expensive and least complicated structure.
  • Financial records will be maintained on OpenCollective, intending to convert/transfer assets into a non-profit or other shared governance model when there is the interest and capacity to do so.

The Details

With the Open Collective donations contributions ramping up (thank you, donors!), Sharing the current pathway for establishing a legal structure for theATL.social would be appropriate as funds are being contributed.

First, what’s the status quo?

Michael (me) operates theATL.social services in my capacity as an individual. This means that any income I receive from the site can be taxed as personal income, any services I purchase from vendors are done under my name, and there is no legal separation between theATL.social and, well, me.

This arrangement was fine when the site operated as a small hobby project. When theATL.social was started, I was still determining if the site would be used months later.

However, six months later, with a target fundraising goal of $200/month, expansion of services offered, and level of user engagement, it’s time to begin the legal structure discussions.

A 501©(3) status (a non-profit) is my primary preference for the legal structure. This setup would require, however, a Board of Directors willing to take on fiduciary responsibility, fundraising, and compliance with laws and regulations associated with non-profits. An accountant and bookkeeper would also be required to ensure records are maintained consistent with rules from Federal, State, and Local authorities.

I was chatting with the core membership of theATL.social, while there is interest in pursuing non-profit status, personal time and resources are unavailable to begin that process.

Instead of a non-profit, the most simple and least expensive legal structure under which theATL.social could be established is as a sole proprietorship Limited Liability Company (LLC). Under this arrangement, I can establish a bank account into which contributions may be contributed and expenses deducted, and my legal liability is limited.

An LLC is, by definition, a for-profit legal structure. It would be my intent, however, to operate the LLC in a manner where contributions directly fund expenses and any excess profits utilized for the benefit of theATL.social. While the LLC would not legally mandate that I follow those strictures, through the use of OpenCollective, I intend to provide the maximum degree possible on financial transactions.

Some costs (~$350) are also associated with an LLC, whose expenses would be posted to OpenCollective. These expenses include filings, business licenses, etc.

In time, should theATL.social continue its current growth pathway, I prefer to move to a shared fiduciary governance model. When that time arrives, I look forward to transferring assets from the LLC to the non-profit or converting the non-profit to an LLC.

There are a few additional items on which I would like to write, but this post is long enough for now!

Thoughts, questions, comments, or concerns? Feel free to comment in this post!