Legal Entities

Definition - An association, corporation, partnership, proprietorship, trust or individual that has legal capacity to enter into agreements or contracts, assume obligations, incur and pay debts, sue and be sued in its own right and to be held responsible for its actions.

1) Unincorporated association –  An organisation set up through an agreement between a group of people who band together for a purpose and not revolved on money, such as a volunteer group or a sports club. You don’t need to register an unincorporated association, and its free to set one up. the members of the "Unincorporated Association" are personally responsible for any debts and contractual obligations. If the association does start trading and makes a profit, you’ll need to pay Corporation Tax and file a Company Tax Return in the same way as a limited company.

2) Limited partnerships – The liability for debts that can’t be paid is split among partners. Partners’ responsibilities differ as general partners can be personally liable for all the partnerships’ debts and limited partners are only liable up to the amount they initially invest in the business General partners are also responsible for managing the business

3)Limited liability partnerships – The partners in a partnership aren’t personally liable for debts the business can’t pay – their liability is limited to the amount of money they invest in the business. The partners’ responsibilities and share of the profits are set out in an Limited liability partnership agreement. ‘Designated members’ have extra responsibilities.

5)Sole trader – If you start working for yourself, you’re classed as a self-employed sole trader.  As a sole trader, you run your own business as an individual. You can keep all your business’s profits after you’ve paid tax on them. You can employ staff.  the phrase Sole trader just means you’re responsible for the business, not that you have to work "solo".

4)A private limited company -  is often a small business such as an independent retailer in a town. Shares do not trade on the stock exchange. However a public limited company can sell their shares on the stock exchange. There are 2 types of limited company.

6)Limited company – A limited company has special status in the eyes of the law. These types of company are incorporated, which means they have their own legal identity and can sue or own assets in their own right. The ownership of a limited company is divided up into equal parts called shares. Whoever owns one or more of these is called a shareholder.