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
- 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.