Legal Question in Business Law in Massachusetts

From the sound of it, incorporation sounds like a good idea if for no other reason than that a set of clear rules would apply to your "group." Fighting over this would cost a whole lot more than the available assets. The default rule in law is that a group of people coming together for a business purpose would be a partnership, so unless you and your partner constitute a majority of the "informal group" you likely would have to abide by the vote of a majority. Documenting a partnership is usually more expensive than forming a corporation. As to your final question, you and your partner likely are holding the money in a fiduciary capacity on behalf of the partnership, so you could get yourselves into legal trouble by doing anything other than (i) abiding by majority decision, or (ii) paying the funds over to a successor "manager."

Best wishes,

LDWG

I agree with the previous attorney's assessment that you and your other colleagues find yourself in a partnership, with certain responsibilities and obligations to one another and the enterprise.

I also agree that a loose partnership will invite disagreements and misunderstandings in the future, which will then harm the operation of the enterprise or require more costly legal intervention. Incorporation may provide a framework for operation and a certain level of formality and transparency that can help avoid future conflict. It can also provide you with a certain level of personal protection from liability.

If you would like to discuss your options, please feel free to contact my office. My colleague who focuses on small business incorporation and management would probably be happy to speak with you.

You should incorporate as a non-profit and register with both the state and federal government. Filing fee for a non-profit in MA is $35.00. The cost is in creating the articles and the by-laws and filing with the IRS which is required within 27 months of creation.

As to who has control of the money, unless you set out rules it would seem that you all do.

Please feel free to contact me if you have more questions.