Setting up a social enterprise

Believe it or not, there is no legal definition of what constitutes a social enterprise. A social enterprise is defined by its activities, not by its legal structure. So certification for social enterprises are limited in scope. The most popular way to get recognised as a social enterprise is by getting B-Corp certification, although this route may be too costly for some.

You must choose a business structure if you’re starting a business that helps people or communities (a ‘social enterprise’). 

If you want to set up a business that has social, charitable or community-based objectives, you can set up as a: 

• Limited Company 
• Charity, or from 2013, a Charitable Incorporated Organisation 
• Co-operative 
• Community Interest Company (CIC) 
• Sole trader or business partnership 

If you’re setting up a small organisation like a sports club or a voluntary group and don’t plan to make a profit, you can form an ‘unincorporated association’ instead of starting a business. 

Community interest companies (CICs) 

A CIC is a special type of limited company which exists to benefit the community rather than private shareholders. 

To set up a CIC, you need to apply to Companies House, and: 

• Include a ‘community interest statement’, explaining what your business plans to do 
• Create an ‘asset lock’- a legal promise stating that the company’s assets will only be used for its social objectives, and setting limits to the money it can pay to shareholders 
• Get your company approved by the community interest company regulator - your application will automatically be sent to them 

The CIC regulator has guidance on CICs, including the forms you need to set one up.  

Source: GOV.UK

Contains public sector information licensed under the Open Government Licence v3.0.