associations clubs financial questions

8 Financial Questions for Clubs and Associations in Switzerland Answered

Associations like clubs and special interest groups are an important part of Swiss life. Here, answers 8 important financial questions relevant to associations.

There is no record of the exact number of clubs and other associations in Switzerland. Estimates place the number at between 40,000 and 80,000. Statistics released by the Federal Statistical Office show that around 48.1% of men and 39.8% of women living in Switzerland are members of at least one association.

But the everyday operations of clubs and associations often raise difficult and potentially awkward financial questions. Who is responsible for damages to property or personal injuries? What taxes are involved?

Here, answers 8 key financial questions which new and existing associations should ask.

1. What is our tax status?

Many people wrongly assume that associations automatically enjoy tax-free status. That is not the case. By default, associations are required to file tax returns and pay taxes on income and wealth just like other legal entities. However, associations can apply for tax-free status by providing proof that they perform a socially or culturally beneficial function on a non-profit basis.

2. Who is liable for damages

It is easy to assume that each member’s personal liability insurance and household insurance covers damages to their property and liability for damages or injuries to others. While this is true in many cases, there are other instances in which determining liability is not that simple. If a person is injured or property is damaged during a club meeting or event, the club will be held liable. If your association engages in activities which could possibly lead to injuries or damages, you should consider taking out association liability insurance. This insurance covers liability for damages which occur in the line of an association’s regular activities.

3. Can we get a loan as an association?

You can find loans for associations using the business loan comparison by selecting “Association” under “Business type”. However, not all conventional lenders currently provide loans to associations. Pay attention to interest rates and service fees because business loans do not fall under Swiss consumer credit laws.

4. Who pays legal charges if we get sued?

No matter what activities your association engages in, there is always a chance that you will run into legal trouble. The more active your association is, the higher the chance of it running into legal trouble. Commercial legal insurance can protect you from the potentially high costs of legal procedures.

5. Do we need to keep books?

Whether or not your association qualifies for tax-free status, you will be required to keep accurate records of income and expenses. While making use of a professional book keeping service can save you a lot of time, small associations can also make use of any one of a number of low-cost book keeping tools. Some online book keeping tools are designed specifically for Swiss associations.

6. Should we open a bank account?

Many associations either charge membership fees, engage in income-generating activities or receive donations. This money will have to be kept separate from the finances of members. While you can hold the money in cash, opening an association account can help you organize association funds and facilitate book keeping. You can compare association accounts using the business account comparison. Just select “Association” under “Business type”.

7. Who is liable to cover association debt?

The association is liable to pay its debt itself out of association assets, unless association statutes include a clause which makes members liable to pay association debt. As long as a debt liability clause is not included in association statutes, members bear no liability for debt.

8. Can an association charge membership fees?

Associations can charge membership fees, but only if association statutes include a clause which specifically states that the association charges membership fees. If no such clause is included, the association does not have a legal right to membership fees.

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