LLC Establishment FAQ

(References to “me” or “I” refer to Michael (@michael/@admin)

Additional questions, thoughts, or concerns? Ask away in this post and I’ll be glad to answer

1. Why are you forming an LLC?

  • To ensure the sustainable operation of for as long as users want to use its services.
  • To limit my personal financial and legal liability from operating and funding services.
  • To consolidate resources under a single legal umbrella and de-aggregate those resources from my personal financial and infrastructure investments.
  • To establish the ability for to establish a bank account, enter into contracts, to purchase services as an independent entity, and not in my personal capacity.

2. What will be the impact of the LLC on day-to-day operations of

  • The ultimate impact will be to ensure the sustainable operations of this instance as long as users want to use (and fund) it.
  • In the next couple of weeks, the OpenCollective fiscal host will shift to the LLC, and other resources related to will similarly indicate LLC ownership.
  • No other negative operational impacts are expected, but some additional happy feature announcements coming soon!

3. Why did you not choose to establish a 501©(3) Non-Profit instead of an LLC:

  • The administrative, reporting, and regulatory requirements for the establishment and operation of a 501©(3) were beyond the time and personal resources at hand: specifically, the need for a legal advisor and an accountant/bookkeeper. Also, while the State of Georgia does allow the establishment of a non-profit with only one Board member, for practical purposes, additional people would be needed to serve on the Board in a fiduciary capacity.
  • Under the IRS regulations governing 501©(3) organizations, the ability of those organizations to engage in partisan political speech is restricted. Although is obviously not a partisan political organization, I and potential board members could choose to engage in that speech in a manner that could be interpreted as an opinion of the organization. I have found, from my work in other organizations, that the “policing” of speech is a contentious and stressful endeavor. And opponents or detractors of could engage in retaliatory behavior on the basis of the organizations’ leaders’ speech.
  • The administrative and regulatory requirements for LLCs in Georgia are very simple, and other than taxes and a business license, comprise only an annual renewal.

4. Why did you not establish a Public Benefit Corporation, Cooperative, or similar Corporate Structure?

  • Each of the above corporate structures requires a substantial administrative, regulatory, and financial reporting burden. Compliance with those corporate structures, for practical purposes, requires legal and accounting advisory services.
  • Each of those structures also requires a set of individuals willing to serve on a Board in a fiduciary capacity, meaning that those individuals jointly hold legal and financial responsibility for the organization’s operation. From multiple informal queries, there was no interest from the current set of users or participants to serve in this role.
  • The administrative and regulatory requirements for LLCs in Georgia are very simple and other than taxes and a business license, comprise only of an annual renewal.

5. Are you starting the LLC for personal financial gains, profit, or motive?

  • No. At present, is almost breaking even, not including my personal labor and the labor of others towards the operation of the instance. I do not intend or expect this LLC to provide a source of income above and beyond expenses for the time being, nor do I intend to pay myself for the operation of the instance.
  • In the event that receives enough funds and is engaged in enough activity such that operating the instance becomes a full- or part-time job for myself or future employees or contractors of the LLC, compensation proportional to work provided may be considered. Any compensation will be fully disclosed via an OpenCollective expense.

6. Does this mean you will start charging people to use

  • No. I do not plan to charge people to use There may be some “freemium”-type services above-and-beyond what is offered in the core Mastodon or Lemmy software packages offered to contributors, but all core services will continue to be open to all.

7. Would you consider changing the legal structure of in the future?

  • Yes. Circumstances change, and additional funds or additional individuals with an interest to put time and resources into a more appropriate structure could require a re-evaluation of the existing legal structure.

8. If you are now for-profit, is a contribution a purchase? Or, what’s going on?

  • will functionally operate as a business that sells no products but does receive and solicit voluntary monetary contributions (well, “tips”) to operate the site and to provide site services to others.

9. How will you ensure transparency in governance, process, and trust and safety?

  • With the establishment of the LLC, an operating agreement will be established. For LLCs, the agreement is typically an internal document that details day-to-day operations of the business. - Although this document is not required to be filed with the State of GA’s Secretary of State, this document is valid for legal purposes. I intend to both make public relevant sections of this agreement and utilize this agreement to establish advisory committees and procedures viewable by all users.
  • Included in this agreement will be a re-written Privacy Policy, on which I would look forward to working with users to develop.

10. What if someone wants to buy the LLC? What happens if Michael doesn’t want to operate the service any more, or gets “hit by a bus”?

  • I intend to establish procedures in the operating agreement to address parameters for the transfer of’s assets in the event that I am unable or unwilling to continue operating the site.
  • Michael H
    8 months ago

    @bayport I’m not sure on what you are specifically asking - if you could clarify?

    An LLC could sell or provide whatever it wants - the primarily legal requirement is that what’s being bought/sold is something legal, and from the IRS’s perspective, that the business is not a hobby and is profitable for at least 3 out of 5 tax years.

    WIth this in mind, the LLC would provide a service, to which people may pay/contribute for that service to be generally available to them and others. (*edited)

    • bayport
      18 months ago

      I’m not sure what I’m asking either. I guess I was more clarifying that while the llc doesn’t sell a product, it does offer the services of hosting and managing the Mastodon and Lemmy application instances, etc

      • Michael H
        28 months ago

        @bayport No worries! The top 2 legal requirements for an LLC are 1) LLC isn’t doing something illegal, and 2) it is a profit-seeking business and not a hobby (+ permits, etc…)

        And, the IRS of course doesn’t look favorably on money losing businesses that are deducting obviously personal assets.

        However, is an OpEx only business - no assets current or planned. There is IP/branding, but that isn’t relevant to any accounting in this situation.