Incorporation allows an organisation to limit the personal risk of its members. Therefore the triggers for incorporation are often that an organisation is taking on risks. The following are some examples of things an organisation might do which would increase the risks associated with it:
- Taking on a lease
- Buying a freehold property
- Taking on employees
- Raising finance
- Entering into contracts
- Risk management related to your product or service (for example child care or food services)
Incorporation is a form of risk management but there are other others e.g. insurance, which may be suitable in some cases. For taking on property, using a custodian trustee or the Official Custodian for charities (free) can deal with the ‘vesting title’ issues. More information on this can be found in the publication Reducing the Risks.