NCVO and Social Enterprise UK
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Why remain unincorporated

Although most organisations should probably seriously consider incorporating, there may be reasons why it is better for your organisation to remain unincorporated at this stage.

  1. Light touch regulation

    It is sometimes argued that being unincorporated allows a more relaxed operation. Whilst all incorporated organisations are regulated and have to register, complete annual returns and file accounts by law, an unincorporated organisation is only required to comply with the normal statutory obligations of any business with regard to its management (for example, VAT registration, PAYE, health and safety, insurance). However, many organisations feel that the additional administration of incorporation is very small in comparison to the other operational demands that they must meet regardless of the legal form they adopt. Charities (which can be incorporated or unincorporated) are subject to specific charity law regulation in addition to the general law.
  2. Tax advantages

    Reduced rate national insurance (NI) contributions are applicable to owners who are treated as self-employed. Sole trader/partnership losses may be set against tax paid on other income in the same year or in the preceding year, or can be carried back up to three years in the early years of a trade.  For more information on tax go to www.hmrc.gov.uk.