Legal Question in Family Law in Maryland
donations
I'm starting my own business and want to raise capital by asking for donations from family, friends, etc.... Is there anything illegal in asking for small donations from a number of family, friends, etc...? A friend thinks this is illegal. Also, on a similar note, I recently saw a young woman in a USA Today Newspaper write up who found herself in debt due to divorce. So she created a website and asked for donations fom strangers to help her get out of debt and was able to generate quite a bit of donations. If this wasn't wrong I don't see what I'm trying to do to be that much different. Please advise!!!!!!!!
1 Answer from Attorneys
Re: donations
There is nothing illegal about receiveing donated capital to begin a business enterprise (i.e., for profit). Moreover, non-profit organizations do this all the time.
However, several words of caution. If you are incorporating, there may be implications against the corporation. And, even if you are not incorporating, you should "accept" these "donations" properly. An attorney's assistance is advised so that each "donative transaction" is properly effected and leaves free any claim against prospective business. Depending on the amount of capital involved, certain tax matters will also need to be addressed.
Call me if you would like my assistance with setting up and structuring your business.
G. Joseph Holthaus III
(410) 799-9002
P.S. The woman who set up the website is best advised to speak with a tax specialist or attorney.
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