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What it means to be unincorporated

Being unincorporated means that the organisation has no separate legal identity of its own. The full risks and liabilities involved in running the organisation or business are taken on by the individuals who own and/or manage it. Unincorporated entities can take the following forms:

Sole traders

Sole traders are individuals who set up on their own and are solely responsible for their business. There is no requirement for a constitution or registration. Sole traders may employ staff and trade under a business name.

Partnerships

A partnership is defined as ‘the relationship which subsists between persons carrying on a business in common with a view to profit’. Solicitors’ firms and GP practices are often run as partnerships. There is usually a partnership agreement regulating its affairs. If not (or to the extent matters are not covered by such an agreement), the provisions of the Partnership Act apply. There are no registration formalities.

Unincorporated associations

Unincorporated associations are groups that come together for a particular purpose, for example running a sports club. They usually have a constitution that sets out the rules that govern their relationship and a broad membership, which elects a board (in this case usually called a management committee) to run the organisation on behalf of the members.

The central feature of most unincorporated businesses is personal liability for the sole trader, partner or member of the management committee. That means that those individuals enter into obligations, such as contracts, on behalf of their organisation and they are responsible for its debts and other liabilities. If you are on the management committee of an unincorporated association your personal assets are at risk if the assets of the business are not sufficient to cover all the debts and liabilities.

Read more about unincorporated legal forms.