Earlier this year our club (Beer Barons of Milwaukee) wrapped up our incorporation project. This project consisted of becoming incorporated, registering as a non for profit organization, and obtaining insurance. Each of these steps yielded their own benefits but in the end they were all necessary in order for us to obtain the insurance coverage we now have.
The first step was to register with the State of Wisconsin as a Limited Liability Corporation (LLC). This was completed in August of 2008 and the club is legally known as the Beer Barons of Milwaukee Cooperative. This step gained the club two advantages. First, it protects the club Officers and Event Leaders from being sued in the event of some kind of unfortunate incident. Prior to becoming an LLC if something happened each Officer or possibly Event Leader could be sued individually. Now that we’re an LLC, in the event of a law suit, an individual would name the club in the suit, not individual members. On the flip side, the second thing that incorporation gains the club is the ability for the club to take legal action against an individual or another corporation. So in the event of fraud or a contract dispute, current club Officers can initiate legal action and future club Officers can see it through to the end. Prior to incorporation if legal action was required the current club Officers would have to initiate it and see it through to the end (which could be many years after they leave office).
The second step in the project was to register with the Internal Revenue Service as a non for profit organization. This step was taken so the club would not be required to pay federal and state income taxes for the educational services and charitable contributions that are provided from the fees that are collected. In December of 2009 the Barons were approved by the IRS as a 501 (c) (7) organization, which means non for profit social club. It's important to note that in order to register with the IRS we had to submit a copy of our constitution, by-laws, and non-discrimination statement. Here is a link to the Barons for those that might like an example -> http://beerbarons.org/about/constitution.html
The third step was to obtain the necessary insurance for the club. We already had a special single event policy for the beer festival we hold each June (www.worldofbeerfestival.com
), but we didn’t have anything for our monthly club meetings, our Brew-U classes, or club board members. Since we were now a non for profit organization we were able to obtain a policy that covers all of our events, loss of property, and liability for our board members. It’s important to note that in order to obtain this insurance coverage we had to be registered as a non for profit organization. I’ve emailed the details of our insurance coverage to Chris outside of this thread along with the name of our insurance agent for follow up.
The incorporation effort also investigated taking a fourth step, the possibility of seeking sales tax exemption; however that would have required the club to pursue a Public Charities and Private Foundation status. While the club does provide some nice sized charitable efforts at this time, the amount of charitable effort required to achieve this status would greatly change the way the club operates today.
Hope this helps.