Once you have made the decision you want to integrate, the next decision is the decision of the legal structure you want to adopt. The choice is abundant and it can seem overwhelming to decide which option to choose. It`s worth taking your time to decide and make sure the structure you choose is right for your club, as each structure has its own strengths. Below is a brief description of the main legal structures adopted by sports clubs in Scotland. CLUB. An association of people. It differs from a partnership in that members of a club are not permitted to bind each other beyond what they are expressly or implicitly authorized as representatives of the other in the respective transaction; In trade associations or joint partnerships, a partner may bind its co-partners, since each has a property right over the whole. 2 mees. & Welsh. 172; Colly, Partn. 31; History, part. 144; Wordsworth on Joint Stock Companies, 154, ff.; 6 W.
and p. 67; 3, W. and p. 118. Although exempt from income tax, social clubs are generally required to file annual returns of their income and expenses with the Internal Revenue Service. In addition to filing an annual tax-exempt organization return, social clubs may be required to file other tax returns and pay payroll taxes. Some clubs may be required to submit certain reports electronically. Federal and state laws recognize and provide special benefits for organizations established as social clubs. Section 501(c)(7) of the Internal Revenue Code provides a tax exemption for social clubs that meet the following definition: According to the court, intimate unions such as families are characterized by “relative smallness, a high degree of selectivity in decisions to accept and maintain membership and isolation from others in critical aspects of the relationship.” These associations are still protected by the Court, unlike large commercial enterprises.
Private clubs like the Jaycees fall somewhere in between. According to the Court, factors that may be relevant in determining whether a particular organization is an intimate association include “size, purpose, guidelines, selectivity [and] sympathy.” Money changes a lot of things, including the nature of your club. Raising money for equipment, education, travel, and contests without a formal company or organizational structure can lead your group into troubled financial waters. For example, if your group is fundraising, who is it? Your group leader may have to report this on their personal income tax return, as they may be considered the owner. The creation of a society for the administration of money separates the money of the association from the personal money. The Jaycees In the first case, Roberts v. United States Jaycees, 468 U.S. 609, 104 pp. C. 3244, 82 L. Ed. 2d 462 (1984), the Supreme Court considered the constitutionality of a State law on public premises that had been applied to a private club.
The club, the U.S. Jaycees, a large national and international civic organization, had been commissioned by the Minnesota Department of Human Rights to accept women as full members. The court rejected the Jaycees` argument that the order violated their constitutional rights. In its decision, the Court identified two different types of protected associations: intimate associations and expressive associations. In that case, the court went beyond its decisions in Roberts and Rotary by approving a legal presumption that large clubs that serve food and receive payments from non-members are not eligible for First Amendment protection. The Court highlighted the fact that significant commercial exchanges take place in most clubs and that “commercial transactions are often concluded and personal contacts are made which are valuable for the purposes of business, employment and professional advancement”. According to the Court, such characteristics are important in determining the non-private nature of associations. The law upheld by the Court in that case limited the definition of a private club in order to remedy a situation deemed inappropriate by a legislative body.
The main purpose of the social club must be fun, leisure or some other non-profit purpose. “Other non-profit purposes” means purposes similar to pleasure and leisure. Members really need to be in the organization for fun. The organization needs to focus on adhering to its members so they can meet people, share interests, relax and have fun. If the primary goal is to share business information, the nonprofit will likely be better qualified than the 501(c)(6) business league. If the purpose is to provide services to members, such as insurance, the organization may be a taxable business. Members can engage in the game despite being illegal under state and local laws and retain an exception. Club income may not be used for the private benefit of a specific person, with the exception of general benefits for members of pleasure and leisure. The state`s police power includes surveillance of entertainment and therefore regulates associations to ensure that the aims of these organizations are legitimate and that the organizations do not harm society.
The by-laws may authorize the revocation of a club`s bylaws if it engages in illegal activities. Appropriate records of the use of club facilities must be kept to prove the member`s use in relation to non-members. Members of another social club are treated as non-members, even if there is a reciprocal agreement between the clubs. Fortunately, the Internal Revenue Service has defined a safe haven that allows social clubs to generate income from non-members without compromising their exemption status. Social clubs may receive up to thirty-five percent of their gross income from non-member sources, including investment income. Of these thirty-five percent, fifteen percent of the total gross income may come from the use of club facilities by non-members. A club may have different responsibilities towards non-members. For example, a hunting club may be required to purchase insurance in the event of an accidental injury within its limits. Similarly, a club owes guests on the club grounds the duty to exercise the usual precautions to prevent them from being violated. A social club that wishes to retain its 501(c)(7) status cannot discriminate against or expel members on the basis of race, color, or religion.