set up as a business or as a charity..?

Deals_2

i am thinking of setting up a business but as it could be set up either as a charity or to make profits . i really tyring to understand the difference. if the company were to make money anyway i would be happy to invest into some schemes anyway. thanks for any advice.

marvin

Deals wrote: »

i am thinking of setting up a business but as it could be set up either as a charity or to make profits . I really trying to understand the difference. if the company were to make money anyway I would be happy to invest into some schemes anyway. thanks for any advice.

Your options are
1. Straight forward for profit company - donate all profits to a separate charitable trust.
2. Set-up a charity remembering if you intend to earn a living from this then best you are not a trustee but then you lose control of that charity to other people who could sack you.
3. Set-up a section 30 (not for profit) Company which is really the incorporated version of a charity and the same rules apply. The main difference is the rules on auditing of accounts. It used to be that section 30 companies also had to be registered charities or be taxed on surpluses but this has now all changed, I am told.
4. A CIC (Community Interest Company) this is a mix of 1 and 3. It is a for profit company with a community interest and it has a 50/50 split. 50% of profit can be used for shareholders 50% has to be used for investing in community interest.
I would say to anyone setting out today CIC is the way forward because attracting quality trustees in an unpaid capacity is very difficult these days with a CIC you can attract quality people by offering them a profit motive.

fengirl_2

It also depends on how you are going to raise your money. If you are going to rely on grants and donations to start the org off, a CIC may not be appropriate as it can never be charitable. An association or Company Limited by Guarantee can be charitable if the objects are worded correctly.
Whatever you do, it can't be one person's job - you need a board of trustees or directors taking an active role.
You need to speak to your local CVS and Co-operative Development Agency to discuss your options.

oldtoolie

A business is a legal entity formed to make profit for the owners. The business is required to pay business taxes, keep accounts and obey the law. What the owners do with the profits is up to them.

A charity is a legal entity formed to benefit the public good, specifically the list of charitable objectives which are part of charity law. Charities receive various tax reliefs in return for carrying out public benefit. Charities must state in their founding documents which of the charitable objectives they are addressing and how they will do it. Charities must keep comprehensive accounts and report on their efforts to achieve charitable objectives. Charities must have an independent usually unpaid board of trustees who are legally responsible for seeing that the assets of the charity are used toward the charities mission. Charity employees cannot be trustees and can be sacked by the trustees.

So if you have a business idea -- start a business. If it is a fundraising concept -- start a business and market the idea to charities.

Please don't start a charity because you think it might be a nice little money spinner. Not that you might be thinking of that, but unfortunately, some people do that. And it really annoys me.

soolin

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