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CLUB - INCORPORATE, LLC OR OTHER CHOICES

1524 Views 15 Replies 13 Participants Last post by  JIM UMBERGER
As a Board member of a local gun/conservation club that was formed over 60 years ago, how are other clubs around the country protecting themselves? We were never incorporated or established as a taxpaying entity. We pay land assessment taxes. We pay for liability insurance since we rent the club for weddings, receptions, parties and meetings. We also have trapshooting open to the public and run a co-operative trout nursery. No member gets paid for their work. We are fortunate to have a little money in the bank, but most is put back into club operations and upkeep. With all the under worked lawyers around these days, do we need some type of protection against lawsuits that could destroy the club and/or the individual Board members. Are other clubs incorporating, forming an LLC or protecting yourselves in other ways? Or are we good as we are and hope we never get sued? Looking for helpful feedback from other clubs and informed members. Thank you for taking the time to read this post.
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You need to talk to an attorney, a CPA, and an insurance agent in your area and give them the details relevant to your club so they can advise you on the laws and regulations that pertain to your city and state.

Even if you could find people who are in your area and are legally qualified and allowed to speak on the topic on an open forum, you probably won't find any who'll do it for free. Any information you get here will not probably not be helpful and may hurt in the long run.
 

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You need to talk to an attorney, a CPA, and an insurance agent in your area and give them the details relevant to your club so they can advise you on the laws and regulations that pertain to your city and state.

Even if you could find people who are in your area and are legally qualified and allowed to speak on the topic on an open forum, you probably won't find any who'll do it for free. Any information you get here will not probably not be helpful and may hurt in the long run.
+1 for this. You are just hangin’ it out in the breeze otherwise.
 

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Thanks skeetman you just said all members here are just a bunch of dumb asses.
That’s not exactly what he said... let’s look at it from a different prospective. If you were accused of a crime, would you go seek council, or post on an Internet forum? Every situation is somewhat unique and needs expert advice and planning, not opinions. I hope you were just trying to be funny. (And it was, kinda)

@JIM UMBERGER is asking about staying OUT of legal trouble, not finding it. The organizations charter, financials, insurance, assets, BoD configuration, State to be incorporated etc need to be taken into account.

Stick with @skeet_man advice. Even skeeters are right sometimes.
 

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Yes, your club needs legal advice and incorporation to protect members and your executive. Your advice should be from qualified experts in your State.
There are advantages to incorporation as a "not for profit", but that has implications for what happens to the assets of the club at dissolution.

I'm with Skeet_man. Don't get your specific legal or medical advice from some random poster on the Internet.
 

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Jim,

You do need to speak to the professionals as listed above in your state. However, I am qualified to set forth some general concepts that will be the foundation for those conversations.

You most certainly need to incorporate as a not for profit entity per your state's Corporate Law. Most state corporate laws give significant and special personal protection to the officers, directors,members and volunteers of a not for profit entity.

Your attorney will draw up your incorporation papers though many states now have simplified the process and anyone can form a corporation online in a few minutes. However, you will need Bylaws which set forth how the corporation will be governed. You do need expert help for these because they need to be constructed to meet the state law's requirements to extend those personal protections and to meet the requirements of your soon to acquired general liability insurance and your officers and directors insurance policies. The above is why you need an attorney and an insurance agent, preferably experienced in gun club structure, governance and operations. So, contact at least 5 large clubs in your state and get some recommendations.

You will also need a CPA that specializes in member owned not for profit clubs with hard assets. Based upon those assets and the amount and source of income the club generates, he will advise you as to which IRS regulation best suits your club for tax filing purposes. These are found in reg 501 C. A 501 (c) 3 was mentioned above. This designation is used by non profits primarily as it allows donations to the entity to be tax deductible. Unless you plan on raising a lot of money and have an ongoing fundraising operation it is not a good selection because it is extremely difficult and expensive to operate legally as the IRS regs governing donations change regularly.

So, yes. Find a qualified not for profit experienced attorney, a gun club knowledgeable insurance agent and an experienced not for profit CPA. Do this now ASAP before you all lose your club and your collective butts.

As an extra note for those reading this. If your club has not had a thorough review of your bylaws in the last 5 years by a qualified attorney, they probably are out dated and may not be providing all the protection that your officers, directors and members need.
 

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You should be incorporated regardless of whether your organization is a club or a business. Not enough information in your post to give an opinion one way or the other. You may need a lawyer with experience in the area to decide.

There is a lot of confusion regarding non-profit and not-for-profit tax exempt organizations. You may fit into the Social Club category 501(c)(7) if the majority of income is from members. See this website for more info:

IRS definition of Social Clubs

Jerry
 

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As a Board member of a local gun/conservation club that was formed over 60 years ago, how are other clubs around the country protecting themselves? We were never incorporated or established as a taxpaying entity. We pay land assessment taxes. We pay for liability insurance since we rent the club for weddings, receptions, parties and meetings. We also have trapshooting open to the public and run a co-operative trout nursery. No member gets paid for their work. We are fortunate to have a little money in the bank, but most is put back into club operations and upkeep. With all the under worked lawyers around these days, do we need some type of protection against lawsuits that could destroy the club and/or the individual Board members. Are other clubs incorporating, forming an LLC or protecting yourselves in other ways? Or are we good as we are and hope we never get sued? Looking for helpful feedback from other clubs and informed members. Thank you for taking the time to read this post.
Skeet_man's advice is on track, without knowing the state you are in we're just guessing on most of it.
Spending a couple of grand to get the correct advice is well worth the peace of mind that comes with it.
 

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Discussion Starter · #16 ·
Thank you all for your input. I know we need to get legal counsel to do things correctly. I was just looking for how other clubs were doing it, if they were. It is hard to convince members that have been doing things the same way for 50 years that times are changing. I was hoping to get feedback from other clubs to see if they are doing something or not. The more help/info, the better to try and convince the "old guard" that we might need to look at legal protection. Will try to get approval for legal expenses to explore our options. Hate to see anyone or any club get burned. Thanks again! Break'em all!
 
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