- Limited Liability: No
- Taxation: One Level
- Ownership: More Than One Partner
- Typical Complexity / Cost: Low
- Capital Structure: Limited Though Partnership Agreement May Provide Some Flexibility
- Ability to Take Public: No
- Employee Compensation Methods: Very Limited, However Some Ability Via Contracts
When a business has not been organized as one of the business entities described above, it is often referred to as an “unincorporated entity,” typically meaning that it is not registered with the Texas Secretary of State. An unincorporated entity with a single owner is usually referred to as a sole proprietorship, and when there are two or more owners, a general partnership. Unlike the entities described above, unincorporated entities do not provide limited liability to their owners, meaning, the owners of the business are often fully liable for all of the businesses liabilities and obligations. For this simple fact alone, it is almost always inadvisable to operate as a sole proprietorship or general partnership. The risks associated with doing business as an unincorporated entity will be explored in detail in future posts.