Discusses entity formation and maintenance

1. Urban Food, Farm & Agriculture Law
Practicum
Silvia Mansoor
Student Clinician
Everybody Eats Conference
February 8, 2014

2. Urban Food, Farm & Agriculture
Law Practicum
Different Business Entities
Sole
Proprietorship
Limited
Liability
Company
Partnership
Corporations
Cooperatives

3. Urban Food, Farm & Agriculture
Law Practicum
Different Business Entities
Limited Liability Company (LLC)
• Two Different Types of Management:
– Member-Managed: Everybody is involved with day-to-day work
– Manager-Managed: A few members are involved with day-to-day work
• Limited Liability: Unlike sole proprietorships and partnerships,
traditionally, there is no personal liability for members
• Can operate perpetually (never-ending)

4. Different Business Entities
Corporation
• Includes a board of directors and officers
• Two general kinds:
– For-Profit
• Purpose is to make money
– Non-Profit
• Purpose is to serve a public need—i.e. charity, education, science
• Can get tax-exempt status from the IRS
Urban Food, Farm & Agriculture
Law Practicum

5. Different Business Entities
Cooperative
• Thrive on people working together
• Are owned and controlled by the users
• Can be for-profit or non-profit
Urban Food, Farm & Agriculture
Law Practicum

6. Urban Food, Farm & Agriculture
Law Practicum
I know
what I
want.
Now what?

7. Urban Food, Farm & Agriculture
Law Practicum
The Practicum can help you with:
• Nonprofit
Corporations
• LLCs
• Cooperatives
• Co-Clinician Sean
Tobin will discuss

8. Urban Food, Farm & Agriculture
Law Practicum
Nonprofit
Corporation
LLC
BylawsArticles of
Incorporation
Operating
Agreement
Articles of
Organization

9. Urban Food, Farm & Agriculture
Law Practicum
Articles of Incorporation
• “Birth certificate”
• If trying for Tax-Exempt status:
• Organization Purpose: religious,
charitable, educational, literary
or scientific
• Dissolution Clause: Assets will be
distributed for a public purpose
to another nonprofit or to the
government
• $20 filing fee

10. Urban Food, Farm & Agriculture
Law Practicum
Bylaws
• Internal organizational and governing document
• Usually includes topics on:
• Meetings
• Board Composition
• Voting
• Officers
• Conflict of Interest Issues
• Other organizational matters
• If trying for Tax-Exempt Status:
• Purpose clause
• Dissolution clause
• Conflict of interest policy

11. Urban Food, Farm & Agriculture
Law Practicum
Articles of Organization
• “Birth certificate”
• Similar to Articles of
Incorporation
• Includes articles on:
• Purpose
• Manager-Managed
• Maximum duration if not
perpetual
• $50 filing fee

12. Urban Food, Farm & Agriculture
Law Practicum
Operating Agreement
• Similar to Bylaws
• Internal organizational and governing document
• A contract between members
• Usually includes topics on:
• Meetings
• Who runs the LLC
• How members can join and leave
• Where the money will come from
• Voting
• How everybody gets their money
• Other organizational matters
• Must be in writing! Must be signed!

13. You have your nonprofit or LLC now.
Don’t let it go!
Urban Food, Farm & Agriculture
Law Practicum

14. IRS Filings
• All 501(c)(3) organizations must file
an Annual Return. Will be a
variation of 990, depending on
circumstances:
• 990-PF
• 990-N
• 990-EZ
• If an organization fails to file for
three years in a row, then the tax-
exempt status will be revoked
LLCs have to file with the IRS too! 1065, 1120, 1120S, K-1
Urban Food, Farm & Agriculture
Law Practicum

15. All Nonprofits
• File an Annual Information with
LARA
• Report the names and addresses of
directors and officers
• No later than October 1st of each
year
• $20 filing fee
• If not filed for more than two years,
then automatic dissolution
LLCs
• File an Annual Statement with LARA
• Update basic information
• No later than February 15th of each
year
• $25 filing fee
• If not filed for more than two years,
then automatic dissolution
Urban Food, Farm & Agriculture
Law Practicum
State Filings

16. Thank You!Michigan State University College of Law
Urban Food, Farm & Agriculture Law Practicum