So you have started a sports club or maybe a social group looking to connect with others. You know what kind of group you want to make but you don’t know how to make it. Or maybe you already have the group but you don’t know what the next step is.
This article will provide key steps required for forming a club or association.
There are two kinds of associations – incorporated and unincorporated. Your group might fall under one of these categories already. Don’t stress just yet about knowing what they are, this article will run you through the differences as well.
What is an Association
An association is generally a not-for-profit (NFP) group, where people band together for a common purpose. This purpose does not have to be anything grand. It can be something simple like a sports club or a social group. There are two kinds of associations; unincorporated and incorporated.
Types of Associations
Although one has more legal obligations than the other, they both exist under tax law. It is important to know whether you do fall under one of these groups to make sure you are complying with the law. Lastly, each state may have different requirements to start an association.
Luckily, the Australian Tax Office (ATO) has links for what you need for each state.
Unincorporated Associations
An unincorporated association is fairly flexible. You can have a set of rules for the group without needing a formal constitution. There are also no minimum members required. Furthermore, you do not need to register either. However, the group is not a separate legal entity.
Meaning, if the association has any problems, the members themselves are liable. Although the association is not incorporated, it is still treated as a company for income tax purposes.
Incorporated Associations
An incorporated association has more obligations than an unincorporated association. When an association becomes incorporated, it becomes its own legal entity. As a result, it can enter into contracts, open up bank accounts and continue after its members change. In addition, the members gain the benefit of having limited liability. General members of an association are usually only liable for their membership fees.
In contrast, obligations are also created when an association becomes incorporated. The association now needs to comply with reporting and financial requirements, amongst other obligations. However, if you plan to operate as a business or give your members monetary benefits, you cannot incorporate your association. An incorporated association must have a minimum of 5 members.
There is no obligation to incorporate your association. To determine whether incorporating is the right move for you, it is a good idea to talk it over with a business lawyer first.
What do you need to start one?
There are no legal requirements to start an unincorporated association.
To start an incorporated association in NSW, there are a number of things you need:
- Five or more members
- A Constitution (Needs to address each matter in Associations Incorporation Act 2009 No. 1 (‘The Act‘))
- A Committee (At least three or more members, each member of the committee needs to be over 18)
- Public Officer (Official point of contact for the association, also needs to be over 18)
- An Official Address (A place the public officer can generally be found)
In addition, it is worthwhile considering your association’s insurance needs. However, there is no obligation under The Act to have insurance for your association.
Starting an Association: The Pre-Steps
Before you start an association, you might need to make certain considerations to ensure it is the right step for you. Before registering your association, you will also need to think about tax consequences, name of your association, etc.
Name your Association
You will need to decide on a name for your association. This name should reflect your goals and purpose as an association. You will also need to ensure that the name is not already taken by someone else. You can check that on the Australian Securities and Investments Commission website, or on the NSW Incorporated Associations Online Register.
Create a Plan
For any association to thrive, good planning is crucial. Here, your plan should include the type of association you want to establish–is it an unincorporated association or an incorporated association?
You should conduct a landscape research to understand how groups similar to yours have set up their association. Will you have a private members’ association or a paid-association that is open to all?
Establish Objects Of The Association
Once you have decided the type of association that you wish to establish, you should set the objectives of your association. An incorporated association should have set objectives that describe the purpose and range of activities of the association.
Generally these objectives are included in the Constitution of the Association. Every incorporated association must have a constitution that addresses each of the matters referred to in Schedule 1 of the Associations Incorporation Act 2009.
Draft the Constitution
The constitution of the association governs the relationship between the association and its members and defines who will all be bound by the Constitution. The Constitution generally also outlines the objectives of the association.
Get a free legal document when you sign up to Lawpath
Sign up for one of our legal plans or get started for free today.
Prepare Form A2 (Application for registration of incorporated association)
The A2 form is an actual application for registering an incorporated association. This means you should have 5 or more individuals or an existing unincorporated body that you are looking to incorporate.
Registering your Association
To register your association, you need to lodge a form with the relevant office of your state. In NSW, this is the Fair Trading Office and the public officer must lodge the form. The public officer can send the form through email, mail, or in person at any Service NSW Centre. Furthermore, the association will need to pay fees to become registered.
When you register your association, you need to choose a name. The name cannot be the same or too similar to a name of an existing association. Here’s a comprehensive list of current associations in NSW,
Cancelling an Association
Maybe learning how to cancel an association seems odd in an article about starting one. Bear with me. Some people may be put off starting an association if they don’t know how to back out of one.
To cancel an incorporated association, it needs to be agreed upon by the members through a special resolution. Afterwards, you can submit an application to the relevant state department and they will handle the rest.
Some of the association’s financial information may be needed. If your corporation has any assets, you will also need to decide beforehand what happens to them. The asset’s distribution needs to be given the ok by the secretary and cannot be designed to give benefits to past or current members.
How to Structure an Association: Choosing The Right Employees
An incorporated association is considered a separate legal entity from its members. It can be an effective structure for small community organisations as they are simpler and more affordable than a company structure. Once you have set up your association, you will also need to pick the right employees. You can either hire casual or full-time employees. Here’s what you need to know:
- A sole trader is someone who owns and operates a business under their personal name.
- A partnership is when two or more people come together to form a business.
- A company is when you register your business as a separate entity from your personal affairs.
Marketing Your Association
Based on who you want to join your association you will need to market to the right crowd. For instance, if you have a sports association, such as a tennis association, you can gain popularity by recruiting popular tennis players in your area as members.
You would want to advertise to tennis players in your area to recruit them. Having more members can also help you raise more funds for your association. You can market your association using social media, print ads, flyers, face-to-face events, etc.
- Social Media: A Facebook or Instagram page can showcase the daily happenings in your association, the events that you organise, your speciality and your current members. This can be attractive for other interested members.
- Ads: Print or television adverts can reach a diverse set of audience and therefore be a great inexpensive tool to target interested members in your community.
- Flyers: You can also send out flyers or stick them in prominent areas around your community.
- Events: One way to directly target interested members would be to host an event, such as a tennis match, a food club, etc. to attract people who might share the same interests as your association.
Associations and the Law
Your association will need to fulfil certain legal or regulatory requirements. These requirements can change from state to state, but requirements can include:
- having a committee that manages the association
- having a public officer
- acting under all the rules of legislation
- holding an annual general meeting once a year
- lodging an annual statement every year
- keeping proper accounting records
- keeping minutes of all committee and general meetings
- having registers of members and all committee members
While setting up your association or setting up a private membership association, these are some legal forms you will need to file:
- Registering your association: You will need to register your incorporated association using an A2 form.
- Form to transfer property when an unincorporated body becomes an incorporated association: You will need to file Form A5 Certificate of public officer to change property ownership of an unincorporated association when you register to function as an incorporated association.
- Form A12 – T1 and Form A12 – T2 : Associations are required to file a summary of financial affairs annually. These generally need to be filed within one month after holding the annual general meeting. Form A12-T1 is for large associations and form A12-T2 is for small associations.
- Form A9 : Form A9 is the notice of appointment of a public officer and notice of change of association address which must be filed by the public officer of the association.
Setting up an association can be beneficial for your organisation. It can help you get an Australian Business Number (ABN), be registered as a charity with the ACNC, and obtain Deductible Gift Recipient (DGR) status, and have access to grants and donations.
However, setting up an association can be a difficult process. Talking to a lawyer can help you in setting an association. If you are still wondering how to start a professional association, talk to a lawyer today!
Get a fixed-fee quote from Australia's largest lawyer marketplace.
FAQs
- Can anyone set up an association?
Yes, anyone who is at least 18 years old and lives in Australia can set up an association.
- How do I become an association in Australia?
You will need to either function as an unincorporated association or register to function as an incorporated association in Australia.
- How do you establish an association?
You will need to file a Form A2 to register as an incorporated association. If you wish to function informally as an unincorporated association, you just need to form a group of individuals who share the common interests to start your association.
- How do I start and register an association?
Based on the state you are in, you will need to register your association by filing the form A2 to register your association. Once you have registered your association, you will need to set the objectives of your association as well as your constitution.
