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UNINCORPORATED BUSINESS

UNINCORPORATED BUSINESS

Any organisation which is set up via an agreement between groups of people who are a non-profit making group is described as an unincorporated association. An unincorporated association does not need to be registered like a charity or company and setting one up is free.

LEGAL RESPONSIBILITIES OF UNINCORPORATED BUSINESS

Individual members of unincorporated associations are responsible personally for debts and contractual obligations. However, if the organisation does make a profit a company tax return must be submitted and corporation tax must be paid. Corporation tax is in the sum of 20% on all trading profits. As there is no bill issued for this tax, it is the organisation’s responsibility to work out the right amount and to pay on time.

An unincorporated association is considered to be trading if it:

  • Carries on business activities
  • Buys and sells goods with a view to making profits
  • Provides services
  • Earns interest
  • Manages investments
  • Receives income

Advice for Unincorporated Business

Many activities are exempt from Corporation Tax since they are covered by mutual trading, however some other forms of income such as that from interest on investments is taxable. If any unincorporated association believes that they must pay corporation tax it is important to contact HMRC since tax evasion is regarded as an offence. As the rules are regularly changing regarding the payment of taxes, it is important to stay up to date with the law. The best way to do this is to use a qualified and certified accountancy service like The Accountancy Solutions who can ensure that all information is accurate and that you only pay the amount of tax that is necessary. We can also ensure that you comply with the law and do not end up with a financial penalty.

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