Unincorporated Enterprises

An unincorporated enterprise is a producing business that has not been constituted as a legal entity separate from its owner. Its assets and liabilities legally belong to the owner or owners, and the enterprise normally forms part of their institutional unit in national accounts. This definition concerns legal and institutional status, not the enterprise's size or degree of formality.

Statistical characteristics

National accounts generally place household-owned unincorporated enterprises in the household sector because the business and its owner are not separate institutional units.

• Their productive assets belong to the owner, and the owner is personally responsible for the enterprise's liabilities.
• Their surplus is generally recorded as mixed income because returns to the owner's labour and capital cannot be separated reliably.
• Common forms include sole proprietorships, ordinary partnerships and other household enterprises that lack separate legal personality.

Important exception

An unincorporated enterprise with complete accounts and sufficient economic autonomy may be treated as a quasi-corporation. For national accounting purposes, a quasi-corporation is classified with corporations even though it is not legally incorporated.

Classification and measurement

Statistical surveys may classify these units as own-account enterprises, which operate without regularly hired workers, or as establishments employing at least one hired worker on a fairly regular basis.

• Unincorporated status is not identical to informality, because a unit may hold tax, local or labour registrations without becoming a separate legal entity.
• Their output, value added, employment and mixed income are often estimated through specialised enterprise and household surveys because comprehensive corporate financial statements are unavailable.