Difference Between Partnership and Association

The difference between society and association is the set 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 very different realities from the formal point of view.

Both forms are considered a method of organization for the development of a given project .

However, their distinctions will lie in various aspects when carrying out this task.

Criteria of difference 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 aspect, 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 from external sources ( interested investors ), the associations, for the most part, finance their work with contributions from their founders, employers, sympathizers or governments, which contribute in aid in the form of private donations or public aid.
  • Minimum of participants: An association needs a minimum of three associates to have origin. Meanwhile, in the case of companies, one person is enough for it, 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 VAT or corporate tax commitments .
  • Destination of their income : Statutorily, the associations that obtain profits must invest them in their own corporate purposes. That is, they are not intended to generate profits or dividends as commercial companies are.
  • Public registry: Every company 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 carrying out secondary economic activities or for communication or advertising purposes.
  • Public oversight : 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 convergence model between both realities. That is, 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 nature may have a drinks and snacks service at the events it may hold. But that will not be its main organizational spirit.

Situations of convergence between society and association

Sometimes there are economic cases in which an association originates as an element of opacity .

That is, through the creation of non-profit associations or foundations , the achievement of profit is pursued.

This responds, usually, to motivations of economic malpractice, or fraudulent use of the organizational advantages that associations can count on.