Keeping It All Together: Some Legal Considerations for Clubs
Beyond establishing a constitution and by-laws, the question of incorporation is one that you and your fellow club members should consider. Check with your accountant and lawyer to understand the financial and legal benefits of incorporation.
To get corporate status for your club, you must file the appropriate documents with your secretary of state. Most clubs file simple “Articles of Agreement” stating that the club is a voluntary corporation established for the purpose of furthering the sport of motorcycling and with no capital stock. It’s relatively simple to file incorporation papers, but you can also have a lawyer do it. To save time and money, be prepared for your visit with the lawyer. Take along a copy of the constitution and by-laws and have two or more club officers present. Also, be prepared to pay a filing fee.
Nonprofit corporation status is available in most states for “not-for-profit” organizations. This type of incorporation avoids much of the financial burden of other types of incorporation. It’s the type of organization most favored by clubs operated not for profit but seeking protection from club liabilities for individual members.
The IRS and your state tax division may have separate requirements for nonprofit corporations. Become familiar with the requirements of each. Failure to comply with federal and state tax regulations governing your club could result in fines and loss of your corporation status.
Below is a sample purpose statement for articles of incorporation. You can either use this statement as your purpose statement or as a reference when composing your own:
To promote the motorcycle lifestyle and protect the future of motorcycling; to develop better and more enthusiastic relations between the general public, the media and the operators and riders of motorcycles; to encourage rider participation in events; to encourage discussion among members of matters pertaining to motorcycles; to sponsor and promote organized events; and in general to perform any acts therewith not forbidden by laws of the state of _____________.
Protecting Your Club’s Name
The AMA has a database of chartered organizers names but, often times, organizations want to protect their name more broadly. The best way to do this is to see if the name you wish to claim for your club is already protected by another group. A quick search on the internet will often reveal if a group already exists with the name you want. Then you can check your state’s Secretary of State website to see if they have protected/registered their name. If no entity exists with the name you wish to use, then you can file with your state’s Secretary of State to further protect your name.
Nonprofit or not, your organization will find itself handling money, and it’s too important to be dealt with carelessly. It’s necessary to include a treasurer among your officers.
It’s often suggested that the position of treasurer be voluntary rather than elective, since the individual concerned enough to volunteer is probably also skilled and concerned enough to handle the details on a consistent basis. Because the successful operation of a treasury depends on a timely flow of paperwork, the treasurer should be a member who understands the formalities of AMA event reports, sanction requests and other club business documents.
The treasurer should make disbursements from a special checking account whenever possible, since each canceled check provides a written record of payment. Excess cash should be deposited promptly in an organization’s savings account. Such an account is a good idea because the organization is more likely to carefully consider every expenditure if it means a bank withdrawal.
It’s the treasurer’s responsibility to keep financial records, including all income and expenditures. These records should list the source of income (ticket sales, concessions, entry fees, etc.), date and amount. Expenditure records should show who was paid, how much and the reason for the payment. It’s also their responsibility to file tax returns. A computer and inexpensive financial-management software can be very useful for simplifying the maintaining of financial records, a computer is invaluable for correspondence, event fliers, etc.
It’s also important to list more than one person on the bank account information (likely treasurer and president) and have dual signatory on checks to avoid any shady business.
After the considerable amount of work you have done to get your organization together, you will want to make sure that you and the other members are going to get the most out of your activities.
The AMA is the only national organization devoted to providing a full range of services to America’s motorcyclists and is equipped to effectively work for the betterment of all forms of motorcycling. Whether a rider prefers motocross or touring, the AMA exists to keep the fun in motorcycling for everyone.
Your organization will enjoy many services and benefits through its AMA affiliation. AMA’s full-time Government Relations Department actively combats all forms of legislation and regulation unfair to motorcyclists. The AMA Racing/Organizer Services Department helps organizers conduct events.
By chartering your organization with the AMA, your status is acknowledged on the AMA website, which can lead to increased membership and exposure.
The AMA has gained the respect of legislators and regulators throughout the nation with its government relations work, and this relationship pays dividends. Time and again, the AMA has helped clubs get public-use permits for organized events.
Sanctioning both recreational and competition events nationwide, the AMA provides a uniform set of rules covering many types of motorcycling activities. With these, members know their abilities will be fairly judged. The popularity of AMA rules is seen in the thousands of events offered each year by AMA organizers.
Affiliation with the AMA gives your organization direction and focus. Your charter provides immediate benefits and, at the same time, incorporates you into a national community in which your image is enhanced and through which you can better work for your interest, the interests of your community and the interests of motorcycling on a national scale.