Most individuals and enterprises get stuck when it comes to legal structures. There is an element of fear, because it’s legal information and the fear of the unknown.
There is a myth that a social enterprise [or Community Enterprise] has a specific legal structure; this is not true. Social enterprise is not a legal structure, it’s purely and simply a ‘way of doing business.’ See definition here.
There are a number of legal structures that are appropriate for a social enterprise and the right one depends on what you’re trying to do. See a one page Overview of Legal Structures.
There is however a structure that is designed for social enterprises, the Community Interest Company [CIC]. The CIC structure is essentially a limited company with additional restrictions. The CIC structure ensures that the organisation:
- has a community benefit
- is distributing most of its profits for its social purpose and
- is locking the value of its assets into its social [or environmental] purpose.
Whilst the CIC is a structure designed for social enterprise it’s not the only one and isn’t right for everyone. An organisation should consider its strategy [what it is trying to do] first and foremost ‘structure follows strategy’ see Business Planning section.
Once you know your strategy, the structure will most likely identify itself. See a simple structure Structure_Decision_Tree
Below we have identified a number of resources that will help you to consider the legal structure that is right for your organisation. If you are unsure you should consider taking legal or qualified [SFEDI] business advice as to the most appropriate structure for your organisation.
Remember: for organisations in Solihull the Community Enterprise for Success project can provide you with qualified free business advice and guidance email us.
- Gain a quick understanding of the possible legal structures available see ‘legal structures at a glance’ Download Here
- See a slightly more detailed [3 page] overview of legal structures Download Here
- See the gov.uk guidance on legal forms Download Here
- See legal structures decision making tree Structure_Decision_Tree
- See a full guide on Community Interest Companies Download Here
- See a gov.uk guide to setting up a social enterprise Click here
- See Social Enterprise UK’s guide: Start your Social Enterprise Download Here