The difference between society and association is the accumulation of criteria that distinguish the nature and mission of both types of formal grouping.
Although the concepts of society and association are used colloquially, often, to refer to the same thing, they are two well differentiated realities from the formal point of view.
Both forms are considered a method of organization for the development of a specific project.
However, their distinctions will lie in various aspects when carrying out this task.
Difference criteria between society and association
Taking into account the definition of both companies and associations, it is possible to classify their main distinctions based on the following aspects:
- Motivation : The main difference between one and the other is the search for profit, that is, the profit motive. In this regard, companies are constituted in pursuit of an economic benefit or the efficient management of assets, that is, they are for profit.
- Origin of their funds : While the companies have contributions from their partners or external sources (interested investors), the associations mostly finance their work with contributions from their founders, patrons, supporters or Governments, which contribute in aid in the form of of private donations or public aid.
- Minimum of participants: An association requires a minimum of three associates to have origin. Meanwhile, in the case of companies, one person is enough for this, as in the case of sole proprietorships.
- Taxation : The tax treatment of both modalities differs. Normally, associations have greater fiscal freedom, as they do not have to comply with commitments regarding VAT or corporation tax.
- Destination of its performance : By statute, associations that obtain profits must revert them to their own corporate purposes. That is, they are not intended to generate profits or dividends as commercial companies are.
- Public registry: Every society must legally be registered in the corresponding official registry of each territory to carry out its activity. On the contrary, associations only have this obligation in cases of performance of secondary economic activities or communication or advertising purposes.
- Public supervision : Both concepts are governed by different laws on competition or regulatory compliance.
Can an association make a profit?
It is important to highlight that there is a model of convergence between both realities. In other words, formally, an association can carry out a commercial activity, just as a commercial company would.
However, the main motivation of the association, as well as the axis that governs its operation, should not be economic activity. Therefore, it must be reflected in their respective statutes.
For example, an association of a cultural and pictorial type may have drinks and snacks service in the events that it can carry out. But that will not be your main organizational spirit.
Situations of convergence between society and association
Sometimes, there are economic cases in which an association arises as an element of opacity.
In other words, through the creation of non-profit associations or foundations, the achievement of profit-making purposes is pursued.
This responds, usually, to motivations of economic malpractice, or fraudulent use of the organizational advantages that associations can count on.