Most believe that you can only operate as an association if you legally incorporate. This is not so. Incorporation is not compulsory or obligatory it is a voluntary choice of the group.  The information below gives you some information about incorporation including the advantages and some of the drawbacks.  It is a good idea to weigh up the pros and cons of incorporation to make sure it is right for you.

What is incorporation?

Incorporation is a voluntary means of creating a legal identity.  Through incorporation the association becomes in the eyes of the law a legal body which allows the group to:

  • Continue to exist regardless of the change to the membership;
  • Take legal action in its own name and also allows others to sue the association rather than individual members
  • Buy, sell and own property
  • Borrow money
  • Enter into contracts
  • Apply for government grants 
  • Accept gifts and legacies under a Will
  • Limits the liability of members

Further details of what this means is listed below in the Pro‟s and Con‟s of incorporation section.

Do we have to incorporate?

Incorporation is not obligatory or compulsory.  Many unincorporated groups and clubs operate in the community and function very well. But there are risks and disadvantages to remaining unincorporated.

Pros and cons of incorporation

Advantages

Generally, once the group starts to accumulate money and assets and starts to become active in the community, it should seriously consider incorporating in a way that separates the individual person (member) from the entity. The benefits of incorporating your association include:

  • Simplifies and clarifies the management and ownership of the money and other assets of the body. Bank accounts are held in the name of the association. Assets are purchased and owned by the association. The association can enter into contracts.
  • Provides some legal and financial protection for the management committee of the association who otherwise might be liable for damages and contractual obligations arising from the activities of the association. Without incorporation, a group has no separate legal existence. Incorporation protects committee members from most personal liability but leaves them with the responsibility to act honestly and prudently.
  • Clarifies and formalises the objectives of the association. To become incorporated, associations need to state clearly the purposes for which they are being formed. The purposes, frequently known as the objects of the association, are fixed in the rules of the association (also known as the constitution). The regulating body must be advised of any changes.
  • Sets out regulations about how the association shall operate. These regulations are designed to ensure that the association operates fairly, responsibly and accountably to its members. They also protect against dishonesty and manage matters such as conflict of interest. Being incorporated also requires that some information is regularly made available to the regulating body and to the public about the affairs and operations of the association.
  • Allows organisations to apply for a much wider range of public and private funding. Many government and philanthropic organisations make it a basic requirement that applicants for funding are incorporated.
  • Allows some incorporated bodies to enjoy tax advantages. Considering the benefits incorporation provides within this Act, the cost for incorporation is a worthwhile investment.

Once incorporated, there are some regular compliance tasks required such as the keeping of records, holding of elections and submitting of returns.

Disadvantages

Incorporation whether as an Incorporated association or as a company limited by guarantee requires regular and ongoing compliance with Government regulation.  There is a cost in fulfilling each of the requirements in both time and money. Incorporation also means being open to publicly scrutiny.  Matters to consider prior to looking at incorporating are:

  • Being prepared to forgo total privacy of the association‟s financial matters and accept that there will be public scrutiny of the association‟s activities.
  • Being prepared to follow the regulations as set down by government.  This may not give you the total flexibility that your group has now.
  • Weigh up the risk associated with being incorporated against the benefits of incorporation.
  • most  incorporated associations will be required to have compulsory public liability insurance
  • proper membership records and minutes must be kept

Checklist for whether or not to incorporate

The Caxton Street Incorporated Association Manual set out the following rough checklist which you may find helpful.

If you answer “yes” or “not applicable” or “does not matter” to the following questions an incorporated association may be appropriate. If you answer “no”, consideration ought to be given to whether an incorporated association is really the most appropriate structure for your organisation.

  • Do your committee members require limited liability as far as the possible debts and liabilities of the association are concerned?
  • Does your association need to borrow money from a financial institution?
  • Does your association intend to buy or lease land?
  • Does your association intend to enter into contracts to buy property (other than land) or services?
  • Could your association be left a gift under a will?
  • Will your association be given grants by a government department or local council?
  • Can your association function along democratic lines?Will it make any difference to the public or members of the association if the word “inc” or “incorporated” must form part of its name?
  • Can your association (if over $100,000 in revenue or assets) afford to have its accounts prepared and audited properly each year or find volunteers to do this task?
  • Does your committee meet at least once in every four months in the year?
  • Can your association afford the incorporation fees?
  • Can your association afford the premiums for public liability insurance if the association owns or leases land?Will the association‟s members be willing not to receive any distributions of money from the association?
  • Has your association at least three committee members and at least 7 members?  
  • Will all the committee members be adults?
  • Do the members of the association mind if their annual report and financial statements are made public?
  • Will the association exist for the foreseeable future?
  • Is the association prepared to keep accurate minutes of its decisions and a register of members?
  • Is the income and property of the association to be used solely in promotion of its objects?
  • Will your association conduct art unions, raffles or bingo?

What are the obligations of being incorporated?

While there are benefits to incorporation (for example limited liability) being an incorporated group also comes with obligations. These include:

  • Have to have a name ( which generally must have the words „incorporated‟ or “inc”or “limited‟ or „Ltd” after it);
  • Have to have a written constitution or set of rules that the group agrees to operate by;
  • Having to pay registration fees and annual fees to government
  • Having to keep the public register which includes the name and address of the contact person up to date
  • Have to hold meetings and keep certain records.

NB: The requirements for initial incorporation and the ongoing obligations and reporting requirements vary depending on the type of incorporated legal structure your group chooses.  It will also depend on the income and operations of your organisation. See the next to pages for further details.

Although these obligations must be done they are not too onerous once you get started.  However you do need to have people in the group ready, willing and able to take on the tasks required.

Legislation

Queensland Associations Incorporation Act 1981

Queensland Associations Incorporation regulations

Australian Securities and Investments Commission for details about companies limited by guarantee

Resources

Developing your Organisation is an online wiki from QUT's Centre for Philanthropic and Non-profit Studies.

Incorporated Associations website (Queensland Office of Fair Trading) provides information to support organisations incorporated under the Associations Incorporations Act 1981. This website also includes a simplified guide to Queensland's Associations Incorporation Act 1981 and Associations Incorporation Regulation 1999.

Caxton Street Legal centre

decorative
Legal Aid Queensland has published a series of captioned recordings about their services on their YouTube channel . Videos for community, health and education workers can be found here and include their published community legal education webinars. The next webinar is Child Protection - the law and...
decorative
Crowdfunding is an increasingly popular method of online fundraising for individuals, businesses, not-for-profits and charities. Generally it involves an individual or an organisation setting a fundraising target online and then asking the crowd of the internet for donations to reach that target...
decorative
From 1 July 2017 onwards, new forms will be available on the Blue Card Services website. Check that you have the most current version of the application forms by looking at the ‘valid for lodgement’ date on the top right corner of the form. The new forms will state that they are valid for lodgement...
The Department of Communities, Child Safety and Disability Services' (DCCDS) Community Recovery section is encouraging individuals, carers and service providers in the DCCSDS North and Far North Queensland area to be prepared in relation to Tropical Cyclone Debbie. The likely impacts of a tropical...
decorative
We have launched a brand new course on the Community Door eTraining website which provides an introduction to the social service sector in Queensland for managers and organisations new to the sector. It is free for anyone to access. It features a profile of the sector in Queensland, insights into...
The Queensland Law Handbook is a comprehensive, plain-English legal reource designed to help deal with legal problems. Caxton Legal Centre has recently published the handbook as a website. The handbook has been printed as a hard-copy since the early eighties, but thanks to funding from the...
Back by popular demand The State Councils of Social Service (COSS) are partnering to once again deliver a webinar series to uncover what every not-for-profit organisation needs to know about effectively responding to government procurement processes. The webinars will cover: Getting “tender ready”...
Not-for-profit Law has launched Australia's first free, live chat legal service for community groups and charities. The service is available on the Information Hub (click on the blue chat button at the bottom of every page). The real-time chat service allows users to chat to a team member who will...
Not-for-profit Law has updated its guide to 'The laws of advertising and your community organisation'. The resource provides practical tips to help organisations comply with the laws of advertising and marketing in Australia. Importantly, these laws apply to many fundraising activities of charities...
Australia’s 600,000 charities and not-for-profits, from international aid groups right down to the local tennis club, have recently received a major boost, as Justice Connect’s Not-for-profit Law service launched the acclaimed Information Hub for a national audience. The Not-for-profit Law...

Pages

Are you looking for support in Queensland, or trying to find a service that meets your needs? Now you can search oneplace , the service directory hosted by the Queensland Family and Child Commission. oneplace is an easily accessible directory of community services to help Queensland families to get...
Fair Trading Queensland Incorporated Associations website (Queensland Office of Fair Trading) provides information to support organisations incorporated under the Associations Incorporations Act 1981. This website also includes a simplified guide to Queensland's Associations Incorporation Act 1981...
In Queensland the Office of Fair Trading regulates Associations and non-profits. https://www.qld.gov.au/law/laws-regulated-industries-and-accountability/queensland-laws-and-regulations/associations-charities-and-non-for-profits
Legal Aid have a series of captioned recordings about Legal Aid Queensland services on their YouTube channel . Videos for community, health and education workers can be found here and include their published community legal education webinars. Upcoming webinars can be found on the Information for...
The Community Resource Handbooks were launched by Volunteering Queensland on 12 May 2015. They consolidate the knowledge gained through Volunteering Queensland's community leadership work with more than 2,000 community groups over the past fifteen years. The handbooks are aimed at small to medium...
The Sector Capacity team at QCOSS has worked with the costing methodology developed and kindly shared by the Endeavour Foundation to create an easy to use Unit Costing Tool. This tool supports organisations to understand their cost drivers, and allows them confidently plan and negotiate the level...
Information technology and online solutions can help your community organisation work better. ACOSS, Infoxchange and the Department of Communications have teamed up to bring you Digital Business Kits which give you the tools and information to do more online. Digital Business Kits are hosted on...
Many not-for-profit organisations are now developing income-generating activities to reduce the reliance on government and philanthropic funding, and others are establishing social enterprises to respond to client needs in a sustainable way. The development of business skills and systems is very...
The following resources have been translated to assist these communities in establishing a community organisation. Resources available in English العربية - Resources available in Arabic Thuɔŋjäŋ - Resources available in Dinka پښتو - Resources available in Pashto فارسی...
Changing your Legal Structure from an Incorporated Association in Queensland to a Company Limited by Guarentee
Queensland Associations Incorporation Act Queensland Associations Incorporation Regulations Queensland Co-operatives legislation Commonwealth Corporations Act Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act).
Industrial relations legislation in Queensland can be found on the Fair Work Commission's website . The main pieces of legislation are: Fair Work Act 2009 Fair Work Regulations 2009 Fair Work Commission Rules 2013
There are a range of legal structures which may be suitable for Queensland not-for-profit community groups. The four main options are: an incorporated association: Associations Incorporation Act 1981 (QLD) and Associations Incorporation Regulation 1999 (QLD) a company limited by guarantee:...
What do you need to succeed?
Author: 
Shelley Dunlop, QCOSS

Community Door hosts a number of useful tools and resources that can assist you with service delivery. These are all free and available for anyone to download. A few of the most popular tools are highlighted here.

...

Author: 
Kylie Hogan, National Disability Services

The Community Services Industry is facing a myriad of reforms and challenges now and into the future. 

Challenges such as an ageing population, workforce shortages, sector-wide reforms, technological advances and economic uncertainty are making it more important than ever for...

See videos from StudioQ related to this topic

Share or Print