Legal Question in Business Law in Minnesota

When must a 'social group' incorporate?

I belong to a 'social group' of about 175

members. We collect yearly fees to

cover newsletters and costs of hosting

our social events. We have about

$1000-1500 in a bank account due to

this. It is under the name of one of the

members. Are we required or should

we be incorporating as a non-profit or

some type of business? No one is being

paid but we do have some equipment,

supplies and a website that there is

always a question of if the member of

the group who has them drops out or

dies. Trying to do the right thing but

not wanting to make a big issue or

cause lots of work or hassle.


Asked on 11/26/06, 10:08 am

2 Answers from Attorneys

Re: When must a 'social group' incorporate?

Incorporating is a way of ensuring continuity if a member drops out. It can also protect members from personal liability for the organization's debts. If the organization collects fees, taxes may have to be paid on them unless you've obtained tax-exempt status for the organization. You'd most likely want to be set up under IRC section 501c7. I have experience setting up nonprofits and would be happy to talk with you about this if you'd like.

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Answered on 11/26/06, 12:23 pm
David Anderson Anderson Business Law LLC

Re: When must a 'social group' incorporate?

You should incorporate or set up a rudimentary non-profit LLC to avoid personal liability of individual members, should one or more engage in contract or tortious behavior in the name of the organization. I would want a little more info before final advice on this issue.

You do NOT need a charitable qualification under the IRS Code.

Call or email for further assistance. I have 25 years of experience in private practice.

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Answered on 11/26/06, 5:42 pm


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