Incorporated Associations: Everything You Need To Know

Incorporation isn’t just for businesses – not-for-profits can also choose to incorporate their organisation. Whether your organisation is a charitable trust, social club, non-governmental organisation, foundation, or community club, you have the option to become an incorporated entity.

There are many benefits to registering your organisation as an incorporated association. However, there are also several legal requirements that you will need to adhere to. Keep reading to learn more about what it takes to incorporate an association and whether it’s the right choice for your organisation.

Understanding The Concept Of An Incorporated Association

So, what exactly is an incorporated association?

An incorporated association is a not-for-profit organisation that adopts a specific legal structure. Many not-for-profit organisations choose to become incorporated and typically display the abbreviation “Inc.” after their name.

While companies often adopt this kind of legal structure, not-for-profits can also benefit from incorporation. Once registered as an incorporated association, the organisation enjoys the legal advantages of being an independent legal entity. However, with these benefits come greater responsibilities. Incorporated associations are held to higher regulatory and compliance standards, making them more official and trustworthy.

How It’s Different From Other Legal Structures

Not every legal structure gives an organisation independent legal status. 

An independent entity exists separately from its founders or members. This means the organisation isn’t legally tied to its founders and can enter into contracts, own property, sue or be sued, and engage in other legal activities, just like a person, but on its own behalf.

In contrast, less formal legal structures – such as unincorporated associations, voluntary associations and cooperatives,  do not have this legal separation. The founders or owners remain personally liable for the actions of the organisation. This can be pretty risky, as your personal assets could be at stake if the organisation faces financial or legal issues.

Incorporating your organisation offers key protections, as it limits the personal liability of its founders and members. It also enhances the organisation’s credibility, as incorporation typically involves greater regulatory compliance, which can increase trust among donors, members, and external partners.

Benefits Of Registering As An Incorporated Association

The key benefit of registering as an incorporated association always comes back to its status as an independent legal entity. As mentioned, independent legal entities not only provide separation between the founders and the organisation for liability protection, but they also enable the organisation to conduct official matters independently. While someone will still be officially signing and acting on behalf of the association, legally, the association is responsible for its actions.

Let’s take a closer look at a few things an incorporated association can do:

• Ability to Enter into Contracts: Instead of signing your own name, the association can legally enter into contracts on its own behalf.
• Capacity to Buy, Own, and Sell Property: An incorporated association can hold property in its own name and sell it when needed, without requiring an individual’s name.
• Can Open Bank Accounts: The association can open its own bank accounts, keeping personal and organisational finances separate.
• May Sue or Be Sued: In case of legal disputes, it’s the incorporated association, not you personally, that would be involved in the legal process.
• May Employ Staff: The association has the ability to hire employees, allowing it to manage staff to support its operations.
• Eligibility to Apply for Government and Non-Government Grants: Incorporated associations can apply for specific grants and funding opportunities that are available to charitable organisations.

Not only does an incorporated association provide liability protection for its owners, the association is able to go beyond you. That means, if you opt to leave or any other scenario where you can’t be present – the association has the ability to continue its good work despite your absence. 

Obligations Of Associations

Running an incorporated association isn’t all about legal perks, there’s a number of legal obligations you will need to look out for as well. Incorporated associations are very well regulated, therefore it’s important to make sure your reporting to the relevant authorities, keeping up with your tax requirements and ensuring your activities are always legally compliant. 

Let’s take a look at these obligations in more detail. 

Annual Reporting Obligations

As an incorporated association, your organisation will need to report to the relevant state or territory regulator. Typically, you’re required to submit annual financial reports and audits, and notify the regulator of any changes to your organisation’s details, such as when a committee member resigns or a new public officer is appointed.

There are usually timeframes that need to be respected when reporting matters to your regulator. Failing to comply with these deadlines can result in penalties or fines, so it’s important to stay on top of your reporting obligations.

Tax Obligations 

Everybody has to deal with tax-incorporated associations are no exception. It’s important to ensure your organisation stays on top of its tax obligations with the Australian Taxation Office (ATO). Failing to do so can lead to serious consequences. Additionally, it’s wise to look out for potential tax benefits and relief, as these could significantly benefit your incorporated association.

Statutory Obligations

As an incorporated association, there are several legal requirements you must follow that may not apply to other types of organisations. For instance, the Associations Incorporation Reform Act 2012 outlines the accounting, auditing, and annual reporting obligations that every incorporated association must adhere to. Understanding your responsibilities under this legislation is crucial to ensuring your association operates in a legally compliant manner.

Incorporated Associations In Australia: State-By-State Requirements

When running an incorporated association, the main legal requirements and reporting authority will come from your state, rather than federal legislation and regulators. Each state and territory has its own legislation, rules, and regulatory body for incorporated associations. It’s crucial to understand which laws apply in your state and become familiar with the relevant requirements.

New South Wales: 

• Legislation: Associations Incorporation Act 2009
• Regulator: NSW Fair Trading

Victoria:

• Legislation: Associations Incorporation Reform Act 2012
• Regulator: Consumer Affairs Victoria

Queensland:

• Legislation: Associations Incorporation Act 1981
• Regulator: Office of Fair Trading (Queensland)

Western Australia: 

• Legislation: Associations Incorporation Act 2015
• Regulator: Department of Mines, Industry Regulation and Safety (Consumer Protection)

South Australia:

• Legislation: Associations Incorporation Act 1985
• Regulator: Consumer and Business Services

Tasmania:

• Legislation: Associations Incorporation Act 1964
• Regulator: Consumer, Building, and Occupational Services

Australian Capital Territory:

• Legislation: Associations Incorporation Act 1991
• Regulator: Access Canberra

Northern Territory: 

• Legislation: Associations Act 2003
• Regulator: Licensing NT

Different states also have varied rules on how to set up an incorporated association, so it’s important to learn the specific process for incorporation based on the state in which you plan to operate.

How To Set Up An Association

Even though every state has their own specific requirements for setting up an incorporated association, here’s a general guideline on the steps involved: 

1. Select a name for you incorporated association 
2. Gather the necessary legal documents 
3. Appoint a committee and public officer to manage your association 
4. If your state requires it, you will need to hold a general meeting 
5. Complete and submit  the application for incorporation to the relevant regulator 
6. Pay any applicable fees 

7. Wait for approval – you should receive a  certificate of incorporation  once your application has been successfully processed 
8. Apply for an Australian Business Number (ABN) if necessary – this can be useful for tax purposes 
9. Register for relevant tax obligations such as GST or PAYG 

If you’d like to know more about what’s the process for setting up an incorporated association, we’ve written about it in our article, How to Set up an Incorporated Association. 

Required Documentation 

When submitting the required documentation to set up your incorporated association, it’s important to ensure that your documents are well-prepared and carefully drafted to avoid the need for resubmission.

Documents such as the articles of incorporation, governance rules, and the application form should be meticulously prepared to avoid errors and establish a strong foundation for your organisation. To ensure everything is accurate and compliant, consider seeking the help of a legal expert during this step.

Associated Fees

Fees are also an important part of incorporating an association. These fees can relate to the registration process or any ongoing fees that might arise later. It’s crucial to ensure you’re aware of these costs and have budgeted for them, so there are no surprises down the road.

Common Challenges For Nonprofit Organisations

It’s not unusual for organisations – even well-intentioned non-profit organisations that have been cleverly incorporated – to face their share of challenges. This is almost part of running any organisation. However, you can be prepared and protect your organisation for when challenges arise, ensuring you can overcome them and focus on the work that truly matters.

Typically, non-profit organisations encounter issues related to fundraising, handling conflicts of interest, managing volunteers, and ensuring legal compliance. Good legal preparation can help overcome many of these challenges, including diversifying fundraising strategies, ensuring your legal compliance measures are in place, and having the correct legal agreements (such as a Volunteer Agreement) and processes to manage any conflicts that may arise.

Maintaining The Organisation

Legal measures aren’t just important for setting up your incorporated association and preparing for potential challenges. The stronger your organisation’s legal health, the better chance you have of maintaining a well-functioning and compliant organisation.

Focus on ensuring that the roles of members are well established, internal processes and regulations are clearly communicated, and you have a reliable system for staying compliant with the relevant regulations in your state. Consider having well-drafted Employment Contracts to ensure all staff are aware of their responsibilities, as well as implementing Workplace Policies to streamline and standardise important processes. Regularly consulting with a legal expert can help you stay informed about the regulatory framework that surrounds your organisation, ensuring that you never miss any important updates.

Establish Your Organisation’s Structure Seamlessly With Sprintlaw

Setting up the right legal structure for your organisation is critical to its long-term success. At Sprintlaw, we specialise in helping not-for-profits navigate the legal landscape. If you’re thinking of forming an incorporated association, our expert team is here to ensure a seamless setup process. With our support, you can focus on your mission while we handle the legal details.

Need assistance setting up your incorporated association with ease? Check out how we can help you on this page. If you would like a consultation on setting up an incorporated association, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

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