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 (CIO)
- 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 do not plan to make a profit, you can form an ‘unincorporated association’ instead of starting a business
Social enterprises are distinct from traditional charities or voluntary organisations in that they generate the majority, if not all, of their income through the trading of goods or services rather than through donations.
You need to choose the right structure for your charity, depending on whether you need it to have a corporate structure and whether you want to have a wider membership
There are four main types of charity structure:
- charitable incorporated organisation (CIO)
- charitable company (limited by guarantee)
- unincorporated association
Your charity structure is defined by its ‘governing document’ (the legal document that creates the charity and says how it should be run