How to Set Up an Association Management Business

An association management business is a unique business structure in which the members of the company or association pay dues. In return for their dues, they receive explicit benefits. These benefits are administered by a board, which may include a chief executive officer, chief operating officer or other C-level executives. Setting up an association is different in every state since businesses are licensed at the state level. However, there are some basic steps to setting up an association.

#1 Determine If You Qualify

There are some professionals who are not lawfully permitted to run their businesses as associations. For example, legal professionals, accountants and other certified professionals may need to set up partnerships, liability companies or other structures. They may be restricted from collecting dues from members. Most business structures, including nonprofit corporations, do provide for management through an association. In order to determine if your business will qualify, ask your state business licensing office for information on the process.

#2 Define Your Purpose

Your association must function for a unique purpose. For example, if you have a company that operates several offices, you may want each office to incorporate separately. Then, your holding company, formed as an association, can oversee the management of the separate offices but retain a separate legal identity. This association is serving the purpose of asset preservation, which is only one of many reasons an association structure may be beneficial. An association can also bind together parties with very separate interests. For example, a homeowners' association is a legal business entity made up of members with different goals. 

#3 Form a Schedule of Services

Your schedule of services is like a business plan for your association. It details what the members will receive in exchange for their fees. For example, a homeowners' association may agree to cover yard maintenance, outdoor painting or roof repairs. It may omit financial responsibility for indoor repairs. This should be defined in the schedule of services. In the example of a business, an association management may provide payroll and human resources services but omit vendor management services. 

#4 Outline Financial Requirements

The next step is to determine the financial requirements your association will demand of its members. Fees should be explicitly listed. More importantly, your association must determine a way to modify a fee schedule in the future. Other financial requirements, such as minimum credit ratings, accounting reports and fiscal details, should be included in this doctrine. 

#5 Obtain Licensing

Finally, the last step is to obtain licensing as an association. This can be done by submitting a request to the state licensing board. You will likely have to pay a nominal fee for your listing. Retain copies of your application and license for the future. You will need these documents if you are ever facing a lawsuit, financial dispute or other situation that would require proof of your legal registration. Once you are a legal entity, all that is left is the election of your executives in order to begin administering the business of your association.

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