midjd
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Post by midjd on Sept 14, 2012 7:54:18 GMT -5
This is kind of an off-the-wall question, but I know there are a lot of people here with business/tax experience who might be able to guide me.
I've been put in charge of researching/making a recommendation on the appropriate corporate structure for our roller derby league. Right now it's organized as an LLC and the founder is the only owner. We want to move toward more general league ownership, but others have raised (very valid) liability concerns.
Another member suggested we form either a co-op or an NFP. I'm unsure of the specific liability or tax concerns with those types of arrangements, and not sure our current activities would qualify us for NFP.
To answer some questions:
- All players are required to carry both personal and league health insurance and there is separate insurance purchased by the league for all bouts/events. The venue owner has an umbrella policy but I'm not sure of the limits.
- The league brings in maybe $6K/year and no profits are distributed to players - they all go toward future events.
- There are about 20 active league skaters and another 10-15 who are probationary or retired.
- The league currently only has one team but should be adding another in 6-9 months.
As you can tell, I have very little corporate/tax knowledge so am mostly starting from scratch here. Hoping some of you can point me in the right direction!
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Deleted
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Post by Deleted on Sept 14, 2012 7:57:37 GMT -5
Just for clarification, are you asking about the league or a team in the league?
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midjd
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Post by midjd on Sept 14, 2012 7:59:43 GMT -5
Oops - the league (I use the terms interchangeably because right now we only have one team). Will clarify in the OP.
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8 Bit WWBG
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Post by 8 Bit WWBG on Sept 14, 2012 8:03:51 GMT -5
Did you ever end up buying/investing in that location? I'm guessing not.
Can the league itself be a corporation, and each team also be a corporation?
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Post by Deleted on Sept 14, 2012 8:05:24 GMT -5
Also, what is the future plans for the league? Are future team members going to be required to buy into the company to be part of the team? Are you trying to add teams to the league? Are those teams going to be separate from the league and your team? Are you going to separate your team from the league if that happens?
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midjd
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Post by midjd on Sept 14, 2012 8:27:08 GMT -5
Nope... I did think about it pretty seriously but I'm not sure it would've been a good investment. I'm not sure - I think it depends on the structure we use  It has been proposed that once skaters pass their skill tests/probationary period and are voted into the league, this confers some ownership, but right now it's all on the founder. |
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Post by Deleted on Sept 14, 2012 8:39:39 GMT -5
What is the ultimate goal of changing the corporate structure? Why does the founder not want to be the owner?
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Post by Deleted on Sept 14, 2012 8:40:56 GMT -5
There is a local roller derby team just starting. I would love to play and i can rollerskate. But, i am afraid of getting hurt. And, if you can't get up and go to work the next day, that won't fly.
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milee
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Post by milee on Sept 14, 2012 8:42:09 GMT -5
You could be a form of NFP, a 501c7 for social clubs. www.irs.gov/pub/irs-tege/eotopicg80.pdfMy personal opinion - you DO NOT want any ownership interest in an activity like this. There is little to no income possibility but a huge amount of liability exposure. Run away if anyone proposes that they want to confer any ownership on you. |
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milee
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Post by milee on Sept 14, 2012 8:47:21 GMT -5
BTW, your tax entity does not necessarily equal your corporate structure. You discussed both in the OP, but there are many situations where your corporate entity is not the same as your tax entity. For example, I'm on the Board of a 501c7 (not for profit social club) that as a not for profit is obviously exempt from taxation on most income, but the legal corporate structure is a traditional corporation.
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8 Bit WWBG
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Post by 8 Bit WWBG on Sept 14, 2012 9:00:54 GMT -5
So MidJD isn't going to be like Arli$$?
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midjd
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Post by midjd on Sept 14, 2012 9:25:49 GMT -5
Well... it's not so much that the founder doesn't want to be the owner... it's that (some of) the other members don't want her to be the owner...  Milee, I definitely agree that there is no real upside to us owning the league and setting ourselves up for liability. Thanks for the info on 501c7 - that sounds like it might be the best for us in our current form. It's kind of weird - we have some people who have had multiple serious injuries in a very short time span, and others who have skated for years with nothing more than a couple of bruises. It doesn't seem to be related to skill/ability, either - some of our best and worst skaters are the most frequently injured. I'm one of the ones (knock wood) who has only had some bad rink rash and a mild concussion in about 15 mos of skating, but there is always that possibility of being seriously hurt. It's so fun, though! ;D |
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Post by Deleted on Sept 14, 2012 10:00:15 GMT -5
Well... it's not so much that the founder doesn't want to be the owner... it's that (some of) the other members don't want her to be the owner... Milee, I definitely agree that there is no real upside to us owning the league and setting ourselves up for liability. Thanks for the info on 501c7 - that sounds like it might be the best for us in our current form. It's kind of weird - we have some people who have had multiple serious injuries in a very short time span, and others who have skated for years with nothing more than a couple of bruises. It doesn't seem to be related to skill/ability, either - some of our best and worst skaters are the most frequently injured. I'm one of the ones (knock wood) who has only had some bad rink rash and a mild concussion in about 15 mos of skating, but there is always that possibility of being seriously hurt. It's so fun, though! ;D How about just creating some bylaws that give a committee of team members decision making power? |
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midjd
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Post by midjd on Sept 14, 2012 10:38:02 GMT -5
We have some rudimentary bylaws in place and are working on the "real" ones - but during this process were wondering if an LLC is really the wisest organization for the group. Then again, it's been an LLC for almost 2 years... if it ain't broke, don't fix it?
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Sum Dum Gai
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Post by Sum Dum Gai on Sept 14, 2012 13:43:05 GMT -5
Loop and I are board members for a local sports league. We're set up as a 501c3, with bylaws laying out how the board is elected each year, and how they'll run the organization. It works pretty well, and it's tax exempt.
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It has been proposed that once skaters pass their skill tests/probationary period and are voted into the league, this confers some ownership, but right now it's all on the founder.
