# Incorporation. Yes, no?



## Bob Vivian (Sep 10, 2004)

Hi Folks,
Re the question of incorporating, I talked with the Attorney that is helping me get my new business started. He’s a classmate of mine, Bill Speakman. He spoke thusly:

The purpose in incorporating is to protect the individual members from personal liability for any actions done by the Group. In the case of a suit or other action only the assets of the Group would be vulnerable.

There is obvious merit here but, Bill said, there are other considerations.

Firstly, the incorporation process can cost several hundred dollars, $500-700 with the aid of an Attorney. Bill said we could do the work ourselves but there are many pitfalls along the way.

Secondly, we don’t need to incorporate in order to function. He’s an officer in the Rotary which is not inc’d and they have many checking and saving accounts, and investments. They are considered an “Unincorporated Assn.”

Thirdly, by the very nature of our activities, the likelihood that PAPAS would cause “actionable” damages is minimal and, if there were damages, the extent of those damages would also be minimal.

Also, each member’s liability would extend only to his or her _solely_ owned assets. Most of us, myself included, have little or no _solely_ owned assets. In most cases, assets are jointly owned with a spouse and, according to Bill, are not vulnerable.

However, in the case of you Singles, and the Roshons who are both Club members, there are issues that should be discussed further on the 7th.

Don’t worry. Be happy. A simple General Liability Insurance Policy, held by PAPAS, would provide protection to each of us. I’m waiting for a call back from an Insurer re the cost and feasibility of such a policy.

This is a matter of weighing risk vs. cost and feasibility.

I’m also talking with the Insurer re bonding for our Treasurer. (With good reason. Have you noticed how “beady” Tim’s eyes are?)  

I hope this is clearer than Kate’s soil mix. We’ll discuss this further at the next meeting. In the meantime, add your thoughts and comments here.

Bob


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## hooha (Apr 21, 2005)

I'm interested to hear how much the liability insurance would cost, and what it would cover. Can we still be sued as individuals if we have the liability insurance?

In this day and age, more ass covering is always better. Say someone sets up a CO2 system, they have a mishap and blame us. I'd like the added piece of mind that they can't go after us individually thinking because of my profession I have a crapload of money sitting around.

That's my 2 pesos....


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## Bob Vivian (Sep 10, 2004)

I should hear from the Insurer within the next couple of days and I'll pass what I learn on. 

He did say that we should have Liability Insurance whether we incorporate or not, which says something, I think, about the protections provided by inc's. I'm quessing that the incorporation will protect our personal assets and the insurance will protect PAPAS.

He also said that we may want to include AOA under the policy since we regularly meet there. AOA could possibly be in the liability string in case of a suit against PAPAS. I will certainly get more info on that.

Bob


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## BillW (Apr 23, 2005)

One way we could be liable for damages is if we set up a display tank (at a show or whatever) and it leaks, the water can cause a lot of damage to carpeting and whatever is on lower floors. Also I have some concern that if negative comments are made on our web site, or wherever, about some business that we could be sued. 

A question, if as Bill Speakman says there is little value to incorporation then why are GPASI, PMASI and other clubs that I know all incorporated? I know PMAS was not incorporated when first founded, but did so after they started to grow. Maybe Earl can ask them why they decided to incorporate.

Bill


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## Bob Vivian (Sep 10, 2004)

You are correct, Sir. Your scenario is, coincidentally, the same that the Insurer brought up when we initially talked. He carried it a step further. What if the spilled water caused someone to slip and injure themselves?

There are certainly serious considerations here. I don't think that Bill (Speakman) is necessarily arguing against incorporating or minimizing its value. He is saying that incorporation need not be automatic. He's suggesting that we consider a real world balance of risk vs cost and complication.

Keep in mind that the Liability Insurance would speak to both your scenarios, Bill. How effectively I don't know.

I have the same questions everyone has. At this point, I don't favor any option. If I gave an impression otherwise, it was unintended. At the next meeting we'll initiate a formal inquiry and get "the facts, nothing but the facts".

Bob


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## hooha (Apr 21, 2005)

It would be helpful to have a list of our yearly expenses (website, (future?) rent, possible insurance/incorporation expenses) etc. for next meeting.


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## madmax (Sep 29, 2004)

Efren, are you talking about possible expenses for the future? As of right now we have no expenses. We spent some money last year on a poster board to put above the show tank at the big GPASI show.


Tim


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## hooha (Apr 21, 2005)

yes, since we didn't have any expenses last year 
I can only assume we will have some sort of expenses in the future.


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## BillW (Apr 23, 2005)

madmax said:


> Efren, are you talking about possible expenses for the future? As of right now we have no expenses. We spent some money last year on a poster board to put above the show tank at the big GPASI show.
> 
> Tim


Possible expenses:
Sponsering a class at the GPASI spring show (we did this last year).

An advert in the GPASI spring show flyer

Buying equipment, if we have a raffel at the GPASI show. Though this will, hopefully result in profit from sales we still need to make the initial outlay.

Humm, maybe we could raffel off a one year membership?

website hosting cost

Paying expenses for guest speakers. I would like to see 2 or three during the year.


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## Bob Vivian (Sep 10, 2004)

Other possible expenses: 
Liability Insurance Approx. $255.00 for $300,000.00 in coverage.
Incorporation approx. $500.00-1000.00.

Bob


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## BillW (Apr 23, 2005)

Bob Vivian said:


> Other possible expenses:
> Liability Insurance Approx. $255.00 for $300,000.00 in coverage.
> Incorporation approx. $500.00-1000.00.
> 
> Bob


Is that that a yearly cost for libility insurance?

Bill


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## Bob Vivian (Sep 10, 2004)

Yes.


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