{"id":2429,"date":"2022-03-02T06:28:21","date_gmt":"2022-03-02T06:28:21","guid":{"rendered":"https:\/\/uk.legalvision.com.au\/?p=2429"},"modified":"2025-07-02T00:41:44","modified_gmt":"2025-07-01T23:41:44","slug":"benefits-of-incorporation","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/corporations\/benefits-of-incorporation\/","title":{"rendered":"What Are the Benefits of Incorporation?"},"content":{"rendered":"\n

If you are a business owner or are thinking of starting a business, you may be wondering what the benefits of incorporation are. For instance, you may wonder if it is worth it, since you will have many more administrative obligations. This article will explain the legal principle behind incorporation and then walk through the practical advantages and disadvantages. <\/span><\/p>\n\n\n\n

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Board Minutes - First Meeting of Directors<\/div>\n
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This template refers to the minutes of the first meeting of the directors of a Company.<\/p>\n <\/div>\n \n\nDownload Now<\/a> <\/section>\n <\/div>\n\n\n\n\n

What is Incorporation?<\/span><\/h2>\n\n\n\n

There is a specific process that must be followed in order to incorporate a company in the UK. Incorporation is a legal process that takes an unincorporated business and transforms it into its own separate legal personality. <\/span><\/p>\n\n\n\n

Incorporation does not happen automatically. Unless you go through specific legal steps, for example, registering your business at Companies House, your business will exist as an unincorporated entity. The effect is that it will not have any separate existence from its owner. It cannot enter into its own contracts or own its own property. Therefore, all assets and any obligations, including the business\u2019s debt, lie with the business owner. <\/span><\/p>\n\n\n\n

Unincorporated Businesses <\/span><\/h3>\n\n\n\n

Put another way, all businesses are unincorporated until they go through the incorporation process. <\/span><\/p>\n\n\n\n

The most common kind of unincorporated business is the sole trader (sometimes called a sole proprietorship). This legal business structure arises automatically when you engage in any commercial activity as the sole business owner. <\/span><\/p>\n\n\n\n

The other common unincorporated business is the general partnership (or unincorporated partnership). Your business will be classed as a general partnership if you run it with at least one other person with a common view to sharing in the business\u2019s profits. <\/span><\/p>\n\n\n\n

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<span class="yoast-text-mark" data-preserver-s="">&gt;All unincorporated businesses are alike in that the business itself is not capable of owning any assets or being responsible for the business's debts. Instead, this responsibility falls to the owners. <\/span><\/p>\n<\/div>\n\n\n\n

Are There Different Kinds of Incorporated Businesses?<\/span><\/h2>\n\n\n\n

It is worth emphasising that there are multiple different types of incorporated businesses. <\/span><\/p>\n\n\n\n

The most common one is the “private company limited by shares”, commonly called a private company or private limited company. <\/span><\/p>\n\n\n\n

There are other kinds of incorporated businesses, including:<\/span><\/p>\n\n\n\n