In order to protect the major players of this project from financial and legal liabilities associated with this kind of undertaking we are going to have to form some sort of business. One of the first suggestions was to set up a corporation. The below is mostly a rewording of my previous post cleaned up a bit so that it can be better understood.

A corporation is a separate legal entity, and the individuals in the company are protected against most financial and legal repercussions if it fails. If we formed a sole proprietorship or partnership and found ourselves owing someone money, that person could bring suit against the owners of the business (us) and can move to seize the our assets in lieu of payments. If we incorporate we only have the money we put into the project to lose. However forming a corporation requires jumping through a lot of hoops and if we fail to do it correctly it could revert back to a partnership which leaves the board holding the bag if any problems arise. (For more on corporations, look here.) Forming a corporation would also give us more fundraising possibilities. We could, for example, sell stock in the corporation in order to raise funds for our projects.

Costs involved with this vary depending on what state one wishes to operate out of. There are also additional fees in order to do business in other states. In checking out websites, I have found many places that will take care of the legal work through various incorporation packages. Ones that guarantee the best coverage and legal help usually range between $500-$600 for a corporation in my home state of NY. (If you want to see an example of such packages, look at the "Corporation Company's Quick Quote" feature.) The price can differ from state to state. While I have primarily researched for NY state, since that is where I live, it may be more advantageous to form the corporation in another state. Delaware, for example has very favorable business laws in regards to corporations. Since our business would be conducted primarily through the web we would have to find out if that would require filing to do business in multiple states or if, since the home company would be centered in NY or elsewhere, that would be unnecessary.

What We Still Need to Know:

1. What state would be best to form a corporation in.
2. Costs associated with doing business in other states (as a corporation).
3. If our business is conducted on the web, would we have to file to do business in other states? (as a corporation)

If you think you know the answers or where to find the
answers to any of these questions, please e-mail me at
merrow@randomfandom.com or comment on the message
board.

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