On this page
- What does incorporation mean?
- How to decide whether your group should incorporate
- Next steps
Deciding whether to incorporate is an important decision for community groups. While incorporation has many beneficial legal consequences, incorporation also brings responsibilities that include reporting to government.
What does incorporation mean?
Incorporation gives your group its own legal identity (the group becomes a 'separate legal entity' from its members). The incorporated group can enter into contracts, sign a lease, employ people, and sue and be sued.
Incorporated groups are incorporated under law (which can be either state or federal) and report to the regulator responsible for their type of structure, for example the Australian Securities and Investments Commission (ASIC).
Incorporated groups follow a particular structure, with group rules (or constitution), members, and a governing body (often called a board or committee).
Being incorporated has consequences for people who are going to be on the board or committee of management of a not-for-profit group, as legal duties attach to these roles.
Given the importance of the decision about whether to incorporate, this may be an issue on which your group may want to seek specific legal advice.
How to decide whether your group should incorporate
We've developed a free fact sheet to help your group consider the incorporation decision.
Our fact sheet explains in more detail what incorporation means and provides a general overview of some of the main differences between an ‘unincorporated' and an ‘incorporated' group, including information on:
- what does it mean to ‘incorporate’?
- what are the advantages of incorporating?
- what are the obligations of incorporated groups?
- checklists to help your group decide whether to incorporate
- you have decided to incorporate, what’s next?
- you have decided not to incorporate, what’s next?
- resources to help your group with next steps
Your group has decided to incorporate
If your group decides to incorporate, you need to decide which type of incorporated entity is right for your group. Taking time to select the most appropriate structure for your group will help the group continue its activities and pursue its purpose while managing potential risk and liability.
Your group has decided not to incorporate
If your group decides not to incorporate, it should:
- Review its decision from time to time. Your group should review its decision to stay unincorporated at least every year and whenever there is a significant change in its activities ― for example, if it employs a paid staff member, receives a large grant, wants to lease property, or grows and wants to take on further activities or seek funding.
- Be aware of the disadvantages of remaining unincorporated. If your group chooses to stay unincorporated, it will not be recognised as a ‘legal entity’ and will not have the benefits of limited liability and perpetual succession.
The content on this webpage was last updated in March 2022 and is not legal advice. See full disclaimer and copyright notice.