A social enterprise is a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the
business or in the community, rather than being driven by the need to maximise profit for shareholders and owners.
They are businesses distinguished by their social aims. Examples of social aims are job creation and training, providing community services
and "fair trade" with developing countries. There are many different types of social enterprises, including community development trusts,
housing associations, worker-owned co-operatives and leisure centres.
Social enterprises may take a number of different business structures - companies limited by guarantee, companies limited by shares and
industrial and provident societies are the most usual.
Please note that from July 2005, a new trading form, the Community Interest Company or CIC, will be introduced. The CIC is particularly
suitable for those who wish to work within the relative freedom of the familiar limited company framework without either the private profit
motive or charity status. Find out about Community Interest Companies on the CIC website.
Set-up
This depends on the business structure of the social enterprise. If it's a limited company or limited partnership it must register at
Companies House. See details of how to register at the Companies House website.
Industrial & provident societies must register with the Financial Services Authority. Find out how to register at the Financial Services
Authority website.
Management and raising finance
Social enterprises often have a democratic management style, with a number of different "stakeholders" taking part in decision-making. These
may include employees, users of the enterprise and specially appointed trustees.
As well as raising money like other businesses, many social enterprises get grants or loans from public organisations.
Records and accounts
These depend on the business structure of the social enterprise.
Profits
Profits are principally reinvested in meeting the social objectives of the enterprise or used to benefit the community.
Tax and National Insurance
Depends on the business structure of the social enterprise. Some social enterprises can claim charitable status, which reduces the amount of
tax they have to pay.
Liability
Depends on the business structure of the social enterprise.
