This page will continuously develop to share the details of sustainable community building tax-related processes and the details of One Community’s tax process specifics. In includes what we annually file for our for-profit and nonprofit entities as well as other sustainable community tax-related resources.
We discuss these areas with the following sections:
NOTE: THIS PAGE IS STILL UNDER CONSTRUCTION
One Community operates a for-profit and nonprofit to open source and build duplicable teacher/demonstration communities, villages, and cities. Here are our tax processes for both.
Here is One Community’s annual nonprofit tax responsibilities and process:
One Community’s annual for-profit tax responsibilities and process:
NOTE: These may be needed for non-profit also.
Open sourcing both our for-profit and nonprofit tax processes is purposed to teach people exactly what this process entails for us so they can make more educated decisions about what kind(s) of entity(s) they wish to set up themselves. It is also purposed to meet our goals of complete transparency.
Taxes should be considered when beginning any community building project. Early consideration is important because taxes are different in different countries, different states, and different counties. This page is focused on the US (for now), and purposed to help people find the information they need as part of their US development process and/or their state and county selection process.
The following areas are discussed:
The best way to understand taxes for a specific area is to talk to a tax specialist within that area. There are resources though that can help you to have a basic understanding of the tax differences for various areas. Here are a few examples showing these tax differences between different states and counties. How important these differences are will differ greatly based on the goals and financial structure of your own community.
To review the most current details for each state and access the state-specific tax documents, here are links to each state’s government tax page.
So, what are the tax concerns that you need to be aware of if you are starting a community? To answer this question, it is helpful to think of your community as a business because “businesses” are what the tax code was written for. With this in mind, many aspects of a business influence the amount of tax due, and even the slightest change of the daily operation can result in hundreds of dollars in tax saving or wasting. This number can balloon to thousands, tens of thousands, or even more if your business/community becomes large enough.
Here are some factors that you might want to be aware of during tax planning:
Another consideration when forming any collaborative community is whether to operate as a for-profit, nonprofit, neither, or both. There are significant differences between the taxation of for-profit and non-profit entities. Operating as “neither” would mean that the community is just group of people living together and not having any specific entity structure.
Here is a side-by-side comparison of the taxation rule differences between a nonprofit (NFP) organization and a for-profit (FP) business:
|Items||Not-for-profit organization with tax exemption status||For-profit business|
|Property tax||Full or partial exemption||No exemption, around 4%|
|Sales tax||Exemption||No exemption, 0-12%|
|Income tax||Exemption||No exemption, 0-20%|
|Employee tax||Social Security tax: 6.2% * first $118,500 of wages
Medicare tax: 1.45% * full wages
(for employee and employer respectively, 2015 tax year)
Property tax consideration includes location, purpose, and market value. A NFP organization might be exempt from the property tax if the whole property is used for qualified purposes. The insurance expense and coverage on the property varies. If the property is owned and managed by the company, the insurance can cover both the building and the office content. But if the property is leased from a third party, the insurance can only cover the office content.
NFP organization who received tax exempt status will not be subject to sales tax and income tax, which can be a huge saving for the company. However, the sales tax exempt is only valid on purchases of necessities used in qualified activities. For example, when hospitals make purchases of medicines, it will qualify as a necessary product and will be sales tax free, but if they buy shavers to sell in the pharmacy store, this purchase will be considered unnecessary thus will not receive the tax benefit. Similar rule applies to income tax exemption, only the portion of income that is directly related to the qualified activities will be tax free.
Employee taxes include Social Security tax and Medicare tax. The tax rate changes every year and it is calculated by multiplying a certain percentage to the employee wages. The employee tax rates are the same for NFP and FP companies. For organizations that hire unpaid volunteers, the employee taxes will be greatly reduced because the wages are considerably lower than for-profit businesses.
Initially, One Community thought that some aspects of One Community’s revenue generating ventures like eco-tourism, sale of products, etc. would only be able to be operated as for-profit. Thanks to the help of our tax and accounting consultants, we’ve now come to believe that all aspects of One Community can be part of our nonprofit. Any that aren’t will be covered with complete details on our for-profit page.
For organizations like ours that are seeking to operate as 100% nonprofit, here are the key areas we’ve researched and consider essential to understand:
Classifying any revenue generating venture as not-for profit has several important criteria that it must meet:
Here is how to apply for tax exemption status. You can also click here for copies of everything we filed when we applied for our nonprofit status.
The organization needs to have its approved application with all supporting documents and last three annual reports ready for public inspection.
P.S. Must notify Internal Revenue Service within 27 months from the date of formation to be treated as a 501(c)(3) from the date formed.
If the intent is to operate non-traditional nonprofit ventures, transparency to prove these ventures as nonprofit is essential. Here are the foundations for accomplishing this.
Disclose quarter/semiannual/annual financial statements online and the proof of the contribution to One Community, if no distribution is made to the shareholders, the total revenue received from visitors minus the total expense (program service, utility, depreciation, marketing, taxes, etc.) should equal the amount of contribution to One Community. This will ensure and prove to the public the State Tax Department and Internal Revenue Service that the resort is a 501(c)(3) organization which should receive tax exemptions.
To provide the living experience in a totally sustainable environment in the eco-tourism resort. Educational experience with volunteer tutors explaining the sustainable system and how the community functions.
A certified financial statement should include two years audited Balance sheet and three years audited Income statement. Below examples show only one year format. We are illustrating the income statement format for both the for-profit business and the not-for-profit organization.
NFP organizations account for their resource in funds, and each of the funds is a separate accounting entity, meaning the record of each funds is separate but there might be transfers between funds. According to Financial Accounting Standards Board (FASB), NFP must classify the net assets into three categories: unrestricted, temporarily restricted, and permanently restricted. The classification is based on donors’ will, which means the person or corporation who made the contribution will decide the nature of the asset.
Generally, permanently restricted net assets are the endowments with a principal that can never be used, but the income from the principal is available for expenditure. Temporarily restricted net assets are mainly the resources that are to be used for specific purposes in a set period of time. The net assets that do not fall into the two categories are unrestricted net assets.
Contribution of services are the costs would otherwise occur for the NFP if it is not performed by the unpaid volunteers. Two criteria need to be met for the NFP to recognize the contribution:
1. The services create or enhance non-financial assets.
2. The services require specialized skills and would likely need to be purchased if not donated.
According to FASB, the services are those provided by accountants, carpenters, doctors, electricians, lawyers, nurses, plumbers, teachers, and other professionals.
Journal entry on service contribution recognition:
|Revenue from contributed services||$xxx|
Though GAAP allows organizations to recognize services revenue if above two criteria are met, in real world it is sometimes difficult to justify.
Individuals cannot deduct the value of your time or services, so organizations should not issue receipts of donations for the services.
Each FP business or NFP organization would have differences in financial reporting depending on the nature of the activities. Above information is for illustration only, it does not cover all aspects of a business or NFP operations.
General comparison between NFP compare to FP
When volunteers leave the property, they might want to let One Community manage the house during their leave and earn income from renting it out. When the volunteer (house owner) needs One Community to manage the house during their leave, the house owner will be charged for the expense cost and receive profit if the house is rented out. In the same time, One Community will also earn revenue from providing the management service. We think this will be a win-win situation for both house owner and One Community. Below we have the tutorial on how to record expenses and revenues in this case.
Possible accounts to the Statement of Activities:
The financial statement in excel is constructed with the accounts that will likely be used in the eco-tourism resort. For organizations with other products or services, the accounts needed can be very different. Here are some additional accounts and the accounts with definitions that could vary dramatically for different organizations:
The above accounts and classifications may vary based on specific organizations. For example, investment income might be within program services (the main function of an NFP organization) for a charity foundation, but supporting services for a hospital or college. It is important that organizations consult with a professional accountant who knows about your organization before setting up these accounts for yourself.
Possible accounts to the Statement of Financial position
Many charities and not-for-profit organizations can be tax exempted by IRS.
Charities and not-for-profit organization can apply tax exemption under Section 501(c)(3) and 501(a) of the Internal Revenue Code.
Section 501(c)(3) focuses on the tax exemption of charitable, religious and educational organizations. To apply for tax exemption under Section 501(c)(3), an organization must qualify the standards below:
If an organization fulfills the standards above, it can file Form 1023 to IRS to apply for recognition of exemption under Section 501(c)(3).
Section 501(a) focuses on other nonprofit or tax-exempt organizations. The qualified organizations under Section 501(a) can file Form 1024 to IRS to apply for recognition of exemption.
IRS requires general tax exempt organizations to file annual returns. (There are some exceptions, details)
The initial return date is the 15th day of the fifth month after the organization’s ending date of tax year, the first extended due date is the 15th day of the eighth month after the organization’s ending date of tax year, and the second extended due date is the 15th day of the eleventh month after the organization’s ending date of tax year.
For example, an organization’s ending date of tax year is December 31, its initial return date May 15th, first extended return date is Aug. 15th, and second extended return date is November 15th.
If a due date is not a business day, the due date is delayed until the next business day.
According to section 6033(j) of the Internal Revenue Code, organizations that do not file for three consecutive years automatically lose their exempt status. An automatic revocation is effective on the original filing due date of the third annual return or notice.
IRS posts the list of organizations which fail to file annual return for three consecutive years. These organizations are no longer exempt from federal income tax. Consequently, they may be required to file Form 1120 or Form 1041 and pay applicable income taxes. Furthermore, these organizations are not eligible to receive tax-deductible contributions and will be removed from the cumulative list of tax0exempt organizations by IRS.
However, these organizations have opportunities to reinstate their tax-exempt status in four different ways. (http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/Automatic-Revocation-How-to-Have-Your-Tax-Exempt-Status-Retroactively-Reinstated)
If the non-profit organization have employees, they must hold employment taxes from their employee’s wages. The employment taxes include federal income tax withholding (FITW), social security and Medicare taxes (FICA), and federal unemployment taxes (FUTA).
In general, the organization (employer) must deposit federal income tax withheld, and both the employer and employee social security and Medicare taxes. The organization has to decide which deposit schedule to use, monthly or semiweekly, before each calendar year. Reviewing Publication15 for Forms 941, 944 and 945, or Publication 51 for Form 943 can help the organization determine the payment schedule. A maximum penalty is up to 15% if the organization doesn’t make a timely deposit.
There is a base limitation for Social Security tax, which means the organizations withhold their employee’s gross wages until they reach an annual base limit, and employee’s wages above the limit are not subject to social security tax.
However, all wages are subject to the Medicare taxes.
To report employer’s quarterly federal tax return, use Form 941.
FUTA is only paid by the organizations, and employee don’t have to pay for it.
An organization that is exempt from income tax under section 501(c)(3) of the Internal Revenue Code is also exempt from FUTA. An organization that is not a section 501(c)(3) organization is not exempt from paying FUTA tax.
To report employer’s annual federal unemployment (FUTA) tax return, use Form 940.
Besides, if a person services a non-profit organization as an independent contractor, the organization does not generally have to withhold or pay any taxes on payments to him/she.
To differentiate employee and independent contractor, you can find more information in this link http://www.irs.gov/pub/irs-pdf/p15a.pdf.
Employment tax forms related
|Form I-9||Employment Eligibility Verification|
|Form SS-4||Application for Employer Identification Number|
|Form SS-8||Determination of Worker Status|
|Form W-2||Wage and Tax Statement|
|Form W-2C||Corrected Wage and Tax Statement|
|Form W-3||Transmittal of Wage and Tax Statements|
|Form W-3C||Transmittal of Corrected Wage and Tax Statements|
|Form W-4||Employee’s Withholding Allowance Certificate|
|Form W-4P||Withholding Certificate for Pension or Annuity Payments|
|Form 940||Employer’s Annual Federal Unemployment Tax Return|
|Form 941||Employer’s Quarterly Federal Tax Return|
|Form 941||Schedule B, Employer’s Record of Federal Tax Liability|
|Form 941-X||Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund|
|Form 943||Employer’s Annual Tax Return for Agricultural Employees|
|Form 944||Employer’s Annual Federal Tax Return|
|Form 945||Annual Return of Withheld Federal Income Tax|
|Form 1040ES||Estimated Tax for Individuals|
|Form 1040||Schedule H, Household Employment Taxes|
|Form 1042||Annual Withholding Tax Return for U.S. Source Income of Foreign Persons|
|Form 1099-MISC||Miscellaneous Income|
|Form 1099-R||Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRA, Insurance Contracts|
|Form 1120||U.S. Corporation Income Tax Return|
|Form 4137||Social Security and Medicare Tax on Unreported Tip Income|
|Form 8027||Employer’s Annual Information Return of Tip Income and Allocated Tips|
2. Unrelated Business Tax (UBIT)
3. Property taxes
Unrelated Business Income Tax (UBIT)
Step One: determine if your organization engages in unrelated business activities.
Tax exempt non-profit organizations maybe engage in trade or business activities. If these trade or business activities are regularly carried on and are not substantial related to organization’s’ tax-exempt purpose, income produced by these business activities is subject to Unrelated Business Income Tax (UBIT).
Step Two: determine if your organization’s business activities fall into the categories below.
Unrelated business activities include sale of merchandise and publications, advertising, gaming, rental income, parking lots, and debt management plan service.
Step Three: Determine the exceptions
There are some exceptions that not subject to unrelated business income tax.
Step Four: Filing for Unrelated Business Income Tax (UBIT)
If a tax-exempt organization has gross unrelated business income more than $1,000 for any tax year, this exempt organization must file Form 990-T, in addition to the requirement to file Form 990, 990-EZ, 990-N, or 990-PF.
Form 990-T is due the 15th day of the 5th month following the end of the organization’s accounting period (tax year). However, an automatic 6-month extension of time to file can be requested by filing Form 8868.
Failing to pay Unrelated Business Income tax on time will lead to interest and penalty charges by IRS.
Forms can be used to file UBIT
|Form 990-T||Exempt Organization Business Income Tax Return|
|Form 990-W||Estimated Tax on Unrelated Business Taxable Income for Tax-Exempt Organizations|
|Form 1120||U.S. Corporation Income Tax Return|
|Form 8868||Application for Extension of Time to File Exempt Organization
More information can be found in Publication 598, Tax on Unrelated Business Income of Exempt Organizations.
Property tax exemption for nonprofit organizations
The qualification and application for property tax exemption varies in different states. Here we take the situation in the state of California for instance.
Step 1: Determine the eligibility of property tax exemption”
In State of California, to apply the property tax exemption, a nonprofit organization must qualify the tax-exempt regulations under the Internal Revenue Service 501(c)(3) or California Franchise Tax Board 23701(d).
In addition, to be eligible to apply property tax exemption in State of California, the nonprofit organizations must be organized for one or more following tax exempt purposes: religious, hospital, scientific or charitable. What’s more, the property claimed for tax exemption must be used exclusively for qualified exempt activity.
The property used by other organizations tax exempt organization (under Internal Revenue Code 501(c)(3) or 501(c)(4) or Franchise Tax Board 23701(d)), incidentally for exempt purposes only can be tax exemption.
Step 2: apply for the property tax exemption
Firstly, the nonprofit organizations should submit their formative documents, including 1) current Articles of Incorporation filed with the Secretary of State, 2) tax Letter from Internal Revenue Service or Franchise Tax Board, 3) annual financial statements, 4) documentation supporting exempt activity, to the Board of Equalization. If a nonprofit organization is eligible for property tax exemption, The Board of Equalization will issue an Organizational Clearance Certificate.
Secondly, the organization should apply local county assessor for reviewing their property for qualifying use and issues the exemption.
Step 3: filing
A retroactive filing is available for eligible organizations for up to 4 prior years, and maximum late-filing penalty for retroactive filing is $250 per year, per property
|Claim for Organizational Clearance Certificate||www.boe.ca.gov/proptaxes/pdf/boe277.pdf|
|Claim for Supplemental Clearance Certificate||www.boe.ca.gov/proptaxes/pdf/boe277l1.pdf|
|Assessors’ Handbook: AH267: Welfare, Church and Religious Exemptions||www.boe.ca.gov/proptaxes/pdf/ah267.pdf|
|County assessors and contact Information||www.boe.ca.gov/proptaxes/assessors.htm|
|Irrevocable Dedication and Dissolution language
(Property Tax Rule 143)
|Publication 149 – Property Tax Welfare Exemption||www.boe.ca.gov/proptaxes/pdf/pub149.pdf|
|Welfare Exemption Claim forms and assessor
|BOE-263||Lessors’ Exemption Claim|
|BOE-267-S||Religious Exemption Claim|
|BOE-267-SNT||Religious Exemption Change in Eligibility or Termination Notice|
|BOE-277||Claim for Organizational Clearance Certificate – Welfare Exemption|
|BOE-277-LLC||Claim for Organizational Clearance Certificate – Welfare Exemption – Limited Liability Company|
|BOE-278-OCC||Verification for Continued Eligibility of Organizational Clearance Certificate – Welfare Exemption or Veterans’ Organization Exemption|
|BOE-267||Claim for Welfare Exemption (First Filing)|
|BOE-267-A||Claim for Welfare Exemption (Annual Filing)|
|BOE-267-H||Welfare Exemption Supplemental Affidavit, Housing – Elderly or Handicapped Families|
|BOE-267-L||Welfare Exemption Supplemental Affidavit, Housing – Lower-Income Households|
|BOE-267-R||Welfare Exemption Supplemental Affidavit, Rehabilitation – Living Quarters|
|BOE-277-F1||Welfare or Veterans’ Organization Exemption Organizational Clearance Certificate|
|BOE-277-F2||Welfare or Veterans’ Organization Exemption Organizational Clearance Certificate|
Property tax exemption for nonprofit in the State of Utah
In the State of Utah, property owned by a nonprofit organization which is used exclusively for religious, charitable and educational purpose, is exempt.
A partial exemption is granted only where a separately identifiable portion of a property is exclusively used for qualified purposes. For example, when part of a building is devoted to charitable purposes and part is rented out to individual private concerns for substantial consideration, only the part of the property that is used for charitable purposes is exempt from taxation, not the part of the building rented out for revenue. [Parker v. Quinn, (23 Utah 332)(64P 961), 1901] [Odd Fellows’ Bldg. Ass’n v. Naylor, 53 Utah 111, 177 P. 214 (1918)]
When a nonprofit entity acquires property after the lien date and that property is to be used exclusively for religious, charitable, or educational purposes, it must collect and pay proportional property taxes from January 1st to the date of acquisition. (Section 59-2-1101)
If a property that is allowed the exclusive use exemption ceases to qualify for the exemption because of a change in ownership, the new owner is to pay a proportional tax based on the period of time beginning on the day that the new owner acquired the property and ending on the last day of the calendar year in which the property was acquired. [Section 59-2-1101 (4)]
When the property ceased to qualify for the exclusive use exemption because of an ownership change, the new owner and previous owner of the property are required to report the acquisition of the property to the county assessor within 30 days from the day that the new owner acquired the property. [Section 59-2-1101 (4)]
Application for property tax exemption
A written application for exemption must filed to the board of equalization as well as documents below:
Application documents for exemption must be filed by March 1. When a person acquires property on or after January 1 that qualifies for an exclusive use exemption, that person may apply for the exclusive use exemption on or before the later of: (1) March 1st or (2) 30 days after the day in which the property is acquired. [Section 59-2-1102 (10)]
Annual Signed Statement Filing
The owner of certain tax-exempt property is required to file a signed statement, no later than March 1st each year, certifying the use of the property during the past year.
|PT-020||Application for Property Tax Exemption|
|PT-020A||Application for Exemption Schedule A – Real Property|
|PT-020B||Application for Exemption Schedule B – Personal Property|
|PT-020C||Application for Exemption Schedule C – Benefactors|
|PT-021||Annual Application and Statement for Continued Property Tax Exemption|
|PT-022||Active Duty Armed Forces Property Tax Exemption Application|
|PT-023||Application for Residential Property Exemption|
More forms information can be found by the link below:
Tourism revenue has been identified as the revenue stream most capable of accomplishing our global transformation goals by further supporting and sharing One Community as a teacher/demonstration community, village, and city. We will use a combination of the visitability of our location, educational classes, and non-stop creation of open source blueprints to market and share this option with the world. Sustainable infrastructure combined with an all volunteer labor force will keep operational expenses low while we share the fulfilled living and enriching environment as a marketable eco-tourism option. This will allow us to offer significantly more value, for a lower price, with an endless and free open source sharing marketing engine that benefits us and the world. In short, the more (and higher quality) our open source sharing, and the more fun our environment is, the more successful we will be; all of which will help to fuel our secondary revenue streams as well.
Q: Is anyone (directors, consultants, etc.) paid as part of One Community?
No, we are a 100% unpaid volunteer organization.
Q: How would individuals who want to make money as part of One Community do so?
Please see our entrepreneurial model page.
Q: Are you basing these concepts on an existing model? In other words, how confident are you they will work?
These concepts are based on the foundations of intelligent business in almost any industry: providing value, low cost to profit ratio, and a quality marketing engine. The successful (and growing) model to compare what we are creating with would be the affordable tourism industry. Affordable tourism continues to gain market share and sustainability as an industry and an interest continue to grow also. Visiting a property like One Community’s, an environment like One Community’s, and hands on experience with all of One Community’s open source blueprints and creations all add to our desirability and marketability. Further add to this that the entire “staff” of One Community are non-profit volunteer residents not doing a “job,” but rather operating the Highest Good society model that is the core of One Community, makes it a fun place to be and visit, and an exciting and world changing organization to maintain.
Combining all these things produces a place people want to visit, that will offer much more interesting and fun things to do, at a lower price, with a higher profit margin, staffed by people who are (instead of “workers”) equal and full shareholders in the experience. On top of this, we are changing the world for the better and the more fun and beautiful residents make One Community, the more they individually benefit, the more visitors benefit, and the more it benefits One Community’s global transformation goals.
For these reasons, we are very confident in the financial viability of One Community.
Q: What about duplicability, how will this be duplicable for others?
The marketing engine of One Community is growing to specifically support and coordinate with other teacher/demonstration communities, villages, and cities too. When other teacher/demonstration hubs contribute to the global open source archive, we will help them promote their work through our engine. We will operate this like a franchise where inclusion is based on open source contributions to positive and permanent global transformation. This means future models will have a significantly easier time implementing this same model. We will are also open source free-sharing the complete for-profit, non-profit, and entrepreneurial models and details of One Community so others will be able to duplicate them with our without association with One Community.
Q: Why do you have a for-profit component, why not be 100% non-profit?
There are two primary reasons for this:
First, in essence One Community is establishing itself to place maximum profits into our non-profit and global goals. However, there are elements of One Community that will not legally fall under the umbrella of a non-profit and these areas will need to be classified and taxed as for-profit ventures operated under a separate legal entity. We also see it as a positive thing for both One Community and Visitors so long as we offer enough value that people feel good about the investment in the for-profit elements of One Community. In this way we hope to demonstrate and spread Highest Good economics as part of our model too.
Second is our goal to demonstrate and open source share a model that is A) sustainable and B) can meet the needs of as many people as possible. In the case of the model being sustainable, we do not consider any model that operates 100% on donations as a sustainable and duplicable solution because donated resources are limited. Revenue is also necessary to purchase everything that cannot be produced effectively internally like machinery, appliances, technology, clothing, some food items, vehicles, etc. These items will differ for different people in different locations and an effective revenue stream addresses this.
In the case of meeting the needs of as many people as possible, One Community is also taking into account those who have debt, those seeking only to invest, and the reality that there will be many who will try a model like this and then change their mind and want to leave and/or do something else. The for-profit element of One Community is purposed to provide duplicable revenue streams that help all three of these group while also helping share and spread teacher/demonstration communities, villages, and cities by demonstrating them as a progressive and profitable opportunity.
Q: If you are a team of people without debt, how do you intend to teach people with debt how to become free of debt?
Our goal is to clearly define as many of the variables as possible for creating a financially viable teacher/demonstration hub with a diversity of options for implementation to suit different demographics and budgets. The more One Community grows and expands, the more open source blueprints, tools, tutorials, and resources we will provide for others to duplicate our efforts. This is why we are focused on people joining the Pioneer Team that are financially stable, so we can focus 100% of our energy on open source creation for those that aren’t in such a fortunate position. This is also one of the reasons why we won’t move onto the property with any debt as an organization.
Q: If you are a non-profit organization, how do you intend to operate for-profit businesses too?
Any activities of One Community deemed by tax code and federal law to not be operable under our 501(c)3 status will be operated under a separate for-profit corporate entity.
Q: Will One Community ever pay any of its members?
One Community’s #1 financial priority is expansion and our global goals. If we are accomplishing expansion and these goals successfully, and a 100% consensus of the membership agrees that distribution of funds is warranted and will not in any way compromise these goals, then distributions can be made.
Q: What about property liability and ownership by individuals versus a foundation, corporation, etc.?
Premise Liability: (click here for a resource about this)
The property owners or non-owner residents, are responsible for maintaining a relatively safe environment. When people enter the property and hurt themselves because the environment is not safe, they may sue the property owners or residents unless they are intoxicated or are trespasser. The residents are treated in the same manner as the property owner.
Insurance on premise liability:
Business owner policy includes property coverage and general liability coverage.
Property: Building, officer contents
General liability: Property damage or bodily injury suffered by a third party (not owned or employed by the business) accidentally caused by normal business operation.
If the owner also occupies the property, the owner can insure the office building and the office contents of the building on the same policy; most insurance companies can only insure the office contents in a leased space.
If the property manager is an employee of the property owner, the owner usually will continue to be liable for the injuries caused by negligence because employers are responsible for the action of their employees and agents.
How to identify whose responsibility:
The ownership form does not increase or decrease the total amount of liabilities taken by the owner or the manager, but it does influence the insurance coverage of the property. Only when the manager is also the owner of the property, can they insure the building and the office contents, otherwise the manager can only insure the office contents.