Incorporated townships have elected officials; by contrast, unincorporated communities lack elected officials at the town level. When you incorporate your business, you choose one of several legal structures to operate under. However, there are general traits that incorporated and unincorporated businesses share, regardless of where they are … If you run an unincorporated business, you, the business owner, bear all of the responsibility and liability for everything your business does. Learning more about the way these distinctly different business models operate can help you to make the best possible decision for your business. Unincorporated areas are often in remote locations, cover vast areas or have very small populations. Incorporated businesses are independent legal entities, while unincorporated businesses are simply extensions of their owners. Those starting businesses face a choice about incorporating their businesses. The unincorporated joint venture has no predetermined rules established by law or any preexisting paradigm between … Let us help you get started today. This form of joint venture is not popular in the petroleum industry and is generally introduced at a mature stage of the venture. These informal organizations are often used for clubs or to accomplish public interest, political, and charitable goals, such as youth sports teams, scouting troops, homeowners' associations, church groups, and citizens lobbying public officials about a local issue. Rather than look for hard and fast rules, decide the incorporated vs. unincorporated question based on your specific situation. While incorporating often has more benefits than remaining unincorporated, there are a few consequences or disadvantages to be aware of. If you don't completely separate business assets and personal assets — for example, with separate bank accounts — a judge could rule that the corporation or LLC is just illusory. An unincorporated association is any group of two or more people who decide to work together for a nonbusiness purpose. Incorporating offers legal protection that most business structures don't offer, but it's much more cumbersome to run than a sole proprietorship or a partnership. Learning more about incorporation can help you decide if this approach is right for you. Talking to them may give you an idea of the pros and cons. The type of business you operate, your goals, and even your need to protect personal assets will impact your decision. He lives in Durham NC with his awesome wife and two wonderful dogs. You may still be the owner, but by choosing this legal structure you can attain clear financial and tax-related benefits for your organization. No matter which format you choose, incorporating has clear benefits for you and your new business. One of the chief implications of this legal distinction is that owners of unincorporated businesses are generally personally liable for the business’s liabilities, while owners of an incorporated business are generally not liable for the business’s debts. Incorporating your company creates a legal boundary between your business assets and your personal assets. Creating a corporation requires a ton of paperwork; after you're up and running, there's yet more paperwork plus regular board and stockholder meetings. Incorporation can help reduce the amount of risk you personally have to take on. From an abstract, legal perspective, incorporation in the United States means a region is chartered by its state. A small business that starts as a sole proprietorship can later be formally incorporated once it grows. You have several choices for incorporation depending on your current needs, your potential future needs, and even the nature of your business. There are some important areas where incorporated and unincorporated businesses differ. JV company) for the purpose of the joint venture operations. Some key ways that incorporated and unincorporated businesses differ include liability, taxes, costs, and paperwork. Choosing your business structure requires more than just choosing between incorporated or unincorporated because there's more than one option in each category. Incorporating requires a lot of paperwork and money but protects personal assets from business debts.