Legal Question in Business Law in California

Re: Hi

No. California law expressly recognizes unincorporated associations - the statutes affecting them are found in the Corporations Code between sections 18000 and 18640. Nonprofit associations are also defined; they are a subspecies of unincorporated associations.

An unincorporated association may, but is not required, to file certain papers with the Secretary of State; these include a statement of its existence, the location of its principal office, or designating an agent for service of process.

I would recommend getting a copy of the code sections and that the association's leadership become somewhat familiar with them. They are not lengthy or complicated.

I think an organization's existing and functioning as an unincorporated association is fine while it does not handle much money or engage in much of a business, and is run by volunteer efforts. At any point where it has a volume of transactions, hires staff, enters into leases, makes taxable profits, etc., it is probably time to have the additional structure afforded by incorporating.

I think that an unincorporated association is eligible to apply for and receive an employer identification number from the IRS and unless it qualifies for nonprofit status under the Internal Revenue Code its income (if any) will be taxable as though it were a corporation. If this is an issue, consult with a tax expert.