Association

An association is a body of persons united without a charter, but upon the methods and forms used by incorporated bodies, for the prosecution of some common enterprise. Some entities may be associations taxable as a corporation.
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Definition

An association is a body of individuals who unite without a formal charter but function using the methods and structures typical of incorporated entities. The primary purpose of an association is the pursuit of a common enterprise or interest. Associations can range from professional organizations, trade groups, to social clubs and may sometimes be treated for tax purposes similarly to corporations if they meet certain criteria.

Examples

  1. Professional Associations: These include organizations like the American Medical Association (AMA) and the American Bar Association (ABA), which support professionals through networking, policy advocacy, and continuing education.
  2. Trade Associations: Groups such as the National Association of Realtors (NAR) provide resources and representation for occupations and industries.
  3. Social Clubs: Informal groups such as local book clubs or sports teams that primarily aim to gather people with shared recreational interests.

FAQs

Q1: What legal form does an association take?

A1: While an association itself is not formally incorporated, it operates under similar methods and rules as formal corporate entities, with a structure that includes officers, members, and bylaws.

Q2: Can an association be taxed like a corporation?

A2: Yes, in some situations, associations may be taxable like corporations. If the operation and organization of an association resemble a for-profit corporation, it may be subject to similar tax regulations.

Q3: Do associations require a formal charter to operate?

A3: No, associations typically unite and function without a formal charter, but they adopt methods and governance structures similar to those of incorporated bodies.

Q4: What common purposes do associations serve?

A4: Associations are typically formed for a variety of common purposes, including advancing a profession, trade advocacy, social interaction, community service, or lobbying for specific policy outcomes.

Q5: How are associations governed?

A5: Associations are usually governed by a set of bylaws and a board or group of officers elected by the members. This governance structure helps to ensure that the association’s activities align with its stated mission and goals.

  1. Incorporated Entity: A business entity that has been formed as a legal corporation under the jurisdiction of a state’s corporate law.
  2. Nonprofit Organization: An organization that operates for a social, educational, charitable, or religious purpose rather than to provide income for owners or shareholders.
  3. Bylaws: Rules and guidelines established by an association, corporation, or other organization to regulate itself as allowed by law.
  4. Charter: A legal document that provides for the creation of a corporate entity, stating its structure, purpose, and governance.

Online References

Suggested Books for Further Studies

  1. “The Handbook of Nonprofit Governance” by BoardSource
  2. “Managing Associations: A History of Association Management in the United States” by James J. Donnelly
  3. “Association Law Handbook: A Practical Guide for Associations, Societies, and Charities” by Jerald A. Jacobs

Fundamentals of Associations: Business Law Basics Quiz

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