The size and scale of social enterprises is big in the UK. More than 100,000 employ over 2 million people.
But, they had to choose a business structure for their social, charitable, or community-based projects. So, before starting a social enterprise to help people and the community, you would need to (either):
- Set up a charity (charitable incorporated organisation from 2013).
- Set up a community interest company (see below).
- Start a co-operative.
- Set up as sole trader, business partnership, or private limited company.
Note: You may be able to form an ‘unincorporated association‘ instead of starting a business. You would need to be setting up a small organisation that does not intend to make a profit (e.g. a voluntary group or sports club).
Social enterprises should:
- Have a clear social or environmental mission set out in their governing documents.
- Generate the majority of their income through trade and reinvest the majority of their profits.
- Be accountable and transparent
- Be autonomous of state and majority controlled in the interests of the social mission.
Community Interest Companies (CICs)
Starting a community interest company is much like running a limited company. The main difference being that the CIC exists to benefit the community, instead of private shareholders.
You would need to apply to Companies House to set up a CIC. Besides that, you must also:
- Include a ‘community interest statement’ that explains what the CIC business is planning to do.
- Create an ‘asset lock’ (a legal promise). It should state that company assets are only used for its social objectives. It should also set limits to any money paid to shareholders.
- Have the company approved by the Office of the Regulator of Community Interest Companies. They act as the community interest company regulator and receive any application by automatic process.
You can read further guidance provided by the CIC regulator and check what forms you must use when setting up a community interest company.
- Community interest companies: guidance chapters.
- Community interest companies: forms and step-by-step guides.
Further Information and Case Studies
You can get extra advice and further information on business structures for social enterprises, including some case studies, from:
The legal forms publication defines a social enterprise by purpose of a business, with primarily social objectives. Working in the public sector means you may be able to start a public service mutual or challenge to run a local service.