Friday 15 July 2022

Guide to Legal Forms Unincorporated legal forms

 The distinguishing feature of unincorporated forms is that they have no separate legal

personality. There are three main forms:

https://zijilegalforms.com/

This is the simplest way to set up and run a business: ownership and control of the

business rests with a single individual. Being a Sole Trader is inherently risky because the

Guide to Legal Forms Unincorporated legal forms


individual is not separate from the business and has sole unlimited personal liability for the

business, its debts and contractual obligations, and any claims against it. They own all the

assets of the business and can dispose of them as they wish, and may employ staff and

trade under a business name. However it is unlikely that sole trader status will be suitable

for businesses which need more than a small level of external investment – being

unincorporated limits borrowing and prevents the business raising equity finance by

issuing shares.

Regulation for the Sole Trader is minimal: there is no requirement for a formal constitution

for the business, and no need to register or file accounts and returns with Companies

House. Sole Traders are treated as self-employed by HMRC and must register and make

an annual self assessment tax return – profits from the business are treated as personal

income subject to income tax and national insurance contributions.

Unincorporated Association

Unincorporated Associations are groups that agree, or ‘contract’, to come together for

specific purpose. They normally have a constitution setting out the purpose for which the

association has been set up, and the rules for the association and its members. They are

typically governed by a management committee. All members of the management

committee will again have unlimited personal liability, unless they are specifically

indemnified in the constitution. As for a Sole Trader, there is a limitation on raising finance,

minimal regulation, and self-employed tax status for management committee members.

Partnership

A Partnership is a relatively simple way for two or more legal persons to set up and run a

business together with a view to profit. A partnership can arise, without any formal

agreement, when people carry on a business in common, but typically there is agreement

to trade as a partnership. Partners will usually draw up a legally binding partnership

agreement, setting out such matters as the amount of capital contributed by each partner

and the way in which they will share the profits (and losses) of the business.

Again the Partnership has no separate legal personality. Partners share the risks, costs

and responsibilities of being in business. Because partners generally bear the

consequences of each other’s decisions, partners usually manage the business

themselves, though they can hire employees. Partners usually raise money for the

business out of their own assets, and / or with loans, although again being unincorporated


No comments:

Post a Comment

Get the Best Video & Music download apps for free

How to install paid video download app for free? Step 1 Go to the testing phase section where the mobile app development company tests soft...