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trevor
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Dec 6, 2003, 12:06 AM
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As Rockclimbing.com continues to grow its revenues, expenses, risks, and ownership, it is becoming increasingly more apparent that I will need to convert the RC.com entity into something much more formal like a corporation for example. (no it's not yet) I know a lot about business, tax, and law, but I don't trust myself on this one. So I am looking for someone (preferably a climber and preferably someone with some history with the site) to help me with the restructuring. If you know of someone that can help me with this I would appreciate it. I have some money to pay for the services but pro bono is always appreciated.
Also this may be more complicated that a simple s-corp or corp. I am probably going to need serious advice with various options to fit this RC.com community and RC.com's still small but growing budget.
Please email trevor@rc.com or send me a PM or reply here.
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roughster
Dec 6, 2003, 12:22 AM
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Trevor,
I suggest you (we) bring the issue up with Caughtinside. He is a solid climber and and active person on this site. He is just finishing Law School and may just be the perfect guy for the job.
I'll PM him and have him get in touch with you.
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robmcc
Dec 6, 2003, 4:45 PM
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Well, theooze is a lawyer, isn't he?
Oh, that's right. Banned. The irony is great, there.
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tim
Dec 6, 2003, 6:04 PM
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In reply to: Well, theooze is a lawyer, isn't he?
Indeed. So is Lionel Hutz, but neither statement is germane to the discussion.
It might be ironic if it weren't for his past advice, which we found was out of sync with our goals for the organization. We had a previous working relationship with Stu that didn't really meet our expectations, or his, for that matter. (This was prior to his departure, which followed repeated requests to quit abusing the site) You're welcome to visit Nelson Rocks; I do so on a semi-regular basis, though not to seek Stu's advice. It's a fun place to climb.
Too many people act as if relationships on- and off-line are inexorably linked. They aren't, and it would be unhealthy to believe that they should be. This is one example of why.
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trevor
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Dec 6, 2003, 6:15 PM
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In reply to: Well, theooze is a lawyer, isn't he?
Also any lawyer won't do. I have 2 brothers in law who are laywers and a brother who is going to start law school, but I still need very specific help with incorporation and financing so they can't help me with this specific issue.
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rrrADAM
Dec 6, 2003, 6:23 PM
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Mike (mreardon) may be able to shead some light on this... Among being a movie producer, both climbing and feature movies, he's also a lawyer.
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curt
Dec 6, 2003, 6:47 PM
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In reply to: Mike (mreardon) may be able to shead some light on this... Among being a movie producer, both climbing and feature movies, he's also a lawyer.
Trevor and Tim,
I don't believe that Mike is a member of the Bar anywhere though. So, technically he could get in trouble if you ask him to practice law without being licensed somewhere.
I asked my wife (Lisa) if she would help you out and she has agreed. So, I will ask her to e-mail you about your particular needs. Please PM me the best e-mail address to use. Lisa is a securities and general transactional attorney and she has formed many LLCs, PLLCs, and Corporations both foreign and domestic.
Curt
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andypro
Dec 6, 2003, 6:52 PM
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Ok...I'm not a lawyer. I'm jsut some schmoe who has alot of business law courses under his belt, and experience as a business owner with high liability issues.
Youve said you know stuff, but I dont know how much, so dont be offended if I'm telling you things you already know.
If I were you, I'd go one of two directions.
A) incorporating. Usually this requires two companies to begin with congloming themselves into one, but not always. It's complicated and imposing at first, but not that bad. There are ALOT of benefits to incorporation, but..liablity is universal in a corporation. One guy can take the crew down with the ship.
B) limited liability. Either an LLC (limited liability corporation) on an LLP (limited liability partnership). I would recommend the latter over the former. As I understand it, there are a number of owners of the site. The partnership would obsolve any mess one person created from the others in a legal sense (usually, but not always). There are ALOT of screwball rules that complicate the hell out of LLP's and LLC's, but in certain situations, it can be seriosuly worth the effort.
The biggest complication with an LLwhatever is in the taxes. IT costs more to file, and sometimes things cant be treated the same as with a normally incorporated business. It does, however, allow every aspect to be separate. Example: MedicalMechanico ( a very large company) wants to partner with Jimbobs bicycle shop. In this case, and LLC would make them one company, but an LLP means thers still MedicalMechanico and Jimbobs shop, and they act as one, but are still separate companies than can split and go separate ways without any strings attatched. Jimbob could sell his share in the LLP without having to convince or extort or anyhting from MedicalMechanico.
I would say that in this case, the owners of the site enter into an LLP. One person cant screw everyone else, and you still get the benefits of being a company, as compared to a bunhc of guys running a site.
I'd also recommend getting yourself an accountant to handle the site as an account, rather than personal taxes. This gives you an out (that a good lawyer could explout) should something bad happen.
It's a sad day when you ahve t worry more about liability than making money, but when forming new companies these days, that's what it's all about. Gotta CYA.
Remember though, I'm not a lawyer, and could jsut be spouting out of my ass for all you know, so dont take what I'm saying as anyhitng other than an experienced opinion. And above all else, good luck!
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curt
Dec 6, 2003, 7:07 PM
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Andy,
In reply to: limited liability. Either an LLC (limited liability corporation) on an LLP (limited liability partnership). I would recommend the latter over the former. As I understand it, there are a number of owners of the site. The partnership would obsolve any mess one person created from the others in a legal sense (usually, but not always). There are ALOT of screwball rules that complicate the hell out of LLP's and LLC's, but in certain situations, it can be seriosuly worth the effort. The biggest complication with an LLwhatever is in the taxes. IT costs more to file, and sometimes things cant be treated the same as with a normally incorporated business.
No offense meant (and I'm glad you added the disclaimer at the bottom of your post) because much of what you posted above is wrong. Better leave this to the lawyers.
LLCs are very simple. The annual reporting requirements are much more simple than either a C-corp or Subchapter "S" corporation. No board of Directors is required, and no annual filings with the state (usually) or the SEC are required. The tax situation is exactly the same for an LLC, Partnership or Sub "S" corporation. In any of these situations, there exists a tax "passthrough" so that the double taxation (which occurs in C-corporations) is avoided.
Subchapter "S" has its own unique limitations, however--mostly pertaining to ownership restrictions. They can have no foreign owners and can only have a maximum of 75 shareholders. This number was recently increased from 35. OK that's absolutely everything I know about this. If you want more detail, you'll have to ask my wife.
Curt
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mreardon
Dec 6, 2003, 7:36 PM
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In reply to: In reply to: Mike (mreardon) may be able to shead some light on this... Among being a movie producer, both climbing and feature movies, he's also a lawyer. Trevor and Tim, I don't believe that Mike is a member of the Bar anywhere though. So, technically he could get in trouble if you ask him to practice law without being licensed somewhere. I asked my wife (Lisa) if she would help you out and she has agreed. So, I will ask her to e-mail you about your particular needs. Please PM me the best e-mail address to use. Lisa is a securities and general transactional attorney and she has formed many LLCs, PLLCs, and Corporations both foreign and domestic. Curt
It's not so much a legal question being asked, but because it came up: Pre-law school and afterwards (UCLA, Pepperdine Law, both Summa Cum Laude) I formed plenty of companies (everything from DBAs to C-Corps) and did plenty of securities filings (both Reg. D and Reg. A as well as the subsequent paperwork from which the SEC, the CA Dept. of Corps, and Sidley Austin all tried to hire me for) and have bought and sold private and public companies. I'm currently on several boards, a couple charities, and an exec. in four companies. Lately I have stuck to writing/producing films (couple dozen to date, generating somewhere in the neighborhood of $150 million) and am having fun for the next couple months being a dad and climbing before jumping back into the rat race. Technically, I haven't personally done the paperwork in forming a company in a couple years. Been there, done that, now I hire people to do that for me.
There, how's that for spray :D
Okay, back to the original question. Yes I can help, but having the time for what you specifically need, it sounds as if Curt has already offered his wife (if you have seven immediate responses you're not allowed to comment - I had twelve) so I would definitely take him up on that offer. Curt understands business, his wife understands Curt (she likes the follicly challenged).
For filing a corporation, I would recommend Curt's wife. For tax issues, I would recommend an accountant (there are a few on this site). For business structuring, I would recommend either Curt, myself, or anyone else with comparable experience (conference call with Curt and myself?).
Obviously I like the site and everyone involved and any way I can help, will gladly do so.
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trevor
Anonymous Poster
Dec 6, 2003, 7:50 PM
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Mike, as always you are an absolute stud. We have already traded PMs so you already know I will need you. My question is how many more consultants I need to bring in.
I am going to start drafting what I think needs to be decided and the facts that need to be know before that decision is made. Once this decision is made I will need help implementing it for example and accountant and a lawyer to help with the paperwork. The first step doesn't need a degree per se. The second part will need it. But either way Mike you are overqualified already in my mind, which is perfect.
We'll be in touch.
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braveheart
Dec 6, 2003, 8:14 PM
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Uhh... I clicked on the link and got information on Kinkos that sounds like it came out of an episode of "OZ" I just don't get it. I guess they call it Kinkos for a reason.
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curt
Dec 6, 2003, 9:58 PM
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Consultant: someone who borrows your own watch to tell you what time it is--and then charges you for it.
Curt
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diesel___smoke
Dec 7, 2003, 1:33 AM
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Incorporating is not that difficult, although each state varies a little for the requirements, I can make you a list of what you'll need to do to incorporate and where you can get such needed documents. I might be willing to let you look over my articles of incorporation, bylaws, and original incorporators' form.
Jp
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dredsovrn
Dec 7, 2003, 1:52 AM
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From my personal business experience, you should first talk to a top notch accountant. They should be able to guide you through the various options for different business structures (ie corp, LLP, LLC, and many others). A good accountant understands the tax and liability implications of the various entities and will advise you on bringing in lawyer when appropriate. Typically, lawyers are not savvy enough with the tax end. No offense to lawyers, but that has been my experience.
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jhump
Dec 7, 2003, 2:36 AM
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Keep in mind, just about every state formed its own LLC law before the uniform statute was passed, so each state differs significantly. This (LLC)may be the best format due to ease of creation, pass through taxation, and even those with a managing hand in the business are shielded from liability. This is unlike LLP's where any party creating policy/managing in the firm, whether labeled as "employee" or not can be held personally liable to the firm's creditors. The danger in creating an LLC is that it is such a new and unestablished creature of law, many states lack high court opinions on key issues. The LLP has been around a while and court holding are more predictable like agency, partnership, and corporate law.
In which state are you planning on forming. Perhaps consider Delaware for it's formation friendly law.
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jhump
Dec 7, 2003, 2:38 AM
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That will be $27,000 for my services. I've got boat payments people!
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trevor
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Dec 7, 2003, 7:55 PM
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As for Delaware, I know it is usually the state of choice for corporations. But in California you are still subject to tax laws if you do business in that state. The problem is I live in CA and therefore will do much of the work here. But with people all over the nation, it's hard to tell how much business we actually do in CA or somewhere else. The tax is a minimum $800 for all corporations registered and/or doing business in the state. Considering I don't really think I'll start making a profit on the site for a while, this is a concern.
Trevor
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sandbag
Dec 7, 2003, 8:16 PM
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Why not set it up as a 501 or a 503C charitable contribution type organization. You can still make money, you cant sell stock, and youre tax free. its not quite that simple, but seeing the nature of the information exchanged, i.e. climbing advice, guidebooks, ropes courses(see where im going with this?) etc, you may be able to set it up in that way. Now, the rub is the nature of all the wackos that will start looking into every little facet of RC.com and scrutinizing its laungage, or its insensitive topics, etc. Its a sticky wicket, but looks like you have a whole host of awesome legal resources thus far. LLC would be the best way to go unless you want to be a big multinational conglomerate.
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curt
Dec 8, 2003, 4:38 AM
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dredsovrn,
In reply to: Typically, lawyers are not savvy enough with the tax end. No offense to lawyers, but that has been my experience.
Just ask Enron how much they liked getting their primary advice from Arthur Anderson--in retrospect.
Curt
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mreardon
Dec 9, 2003, 5:27 PM
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In reply to: dredsovrn, In reply to: Typically, lawyers are not savvy enough with the tax end. No offense to lawyers, but that has been my experience. Then you have been using entirely the wrong lawyers. In fact, I have found it to be the other way around. The legal ramifications of corporate formation are far broader than the few things that accountants can advise you on, such as taxes. Just ask Enron how much they liked getting their primary advice from Arthur Anderson--in retrospect. Curt
Thanks Curt. I had seven immediate responses. I rarely see accountants hiring lawyers, but lawyers seem to hire a lot of accountants.... :D
And for those that have had to suffer law school, tax class is a requirement. CPAs don't have to take a legal class. Okay, back to the original question before this gets hijacked away.
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turbo
Dec 9, 2003, 6:19 PM
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I am willing to offer any tax advice/research for free. I am a CPA in Arizona, so my state tax law will be mostly limited to AZ. California, ehh, I personally try to stay away from because it is so wacky, but federal is that same no matter which state.
I don't want to get into the legal stuff with the lawyers about which is better LLC, LLP, S-Corp, C-corp, we could go in circles for months on that one. I would look at other web sites that are similar to RC.com and see how the are filed as, entity wise. Since llc and corps are all public record and should be on file with the secretary of state. Most times states have these accessible via their web site.
One thing is for sure 501(c) subchapter whatever would be nice, but the reporting and filing requirements far outway the benefits, from what I see RC.com being.
BTW - LLC or S-corp seem the be the best choice, from my perspective.
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dave1970
Dec 9, 2003, 6:40 PM
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Check into a Nevada LLC
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