Frequent question: What is a community interest charity?

A community interest company (or CIC) is a special form of non-charitable limited company, which exists primarily to benefit a community or with a view to pursuing a social purpose, rather than to make a profit for shareholders.

How does a CIC work?

A CIC is a special type of limited company which exists to benefit the community rather than private shareholders. To set up a CIC , you’ll need: … an ‘asset lock’- a legal promise stating that the company’s assets will only be used for its social objectives, and setting limits to the money it can pay to shareholders.

What are members of a CIC?

A CIC can be formed with any number of members (it can be a single member company or involve a wide membership) and can have a mix of stakeholders, so that investors can be involved and can be paid dividends or performance-related interest.

Should I set up a charity or a CIC?

Charities can claim relief on most income and gain, and on profits from some activities. They can also claim back tax previously paid on any income they receive – such as the income tax paid on donations. By contrast, CICs don’t get any tax breaks, even if their objects are entirely charitable.

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What are the disadvantages of a CIC?

Disadvantages: The CIC has to comply with the same formalities and ongoing compliance as a limited company, such as the formalities of incorporation, filing accounts, and maintaining the company register. CICs are also subject to further obligations, such as ongoing reporting to the CIC regulator.

Can a CIC pay its directors?

2. CIC Directors may be paid for their services. … However, many CICs will be actively trading businesses that need good directors if they are to be successful. Such CICs will usually need or wish to remunerate their directors in order to ensure that they achieve their full potential to benefit the community.

How are community interest companies funded?

A Community Interest Company (CIC) limited by guarantee with no share capital (CLG) has no shareholders. … CLGs usually raise funds through grants or donations, rather than from shareholders.

Can a CIC take donations?

CICs are taxed in the same way as normal companies. They are subject to corporation tax and VAT and a CIC that makes donations to charity can deduct this as a charge when calculating its profit for corporation tax purposes.

How do community interest companies make money?

A community interest company (CIC) limited by guarantee is a ‘not for profit’ company, this means that it does not operate for private profit. Any profit generated is used to grow and develop its business which is benefiting an identified community, or goes directly to benefit that community.

What is the difference between a member and a director of a CIC?

Shareholders and directors have two completely different roles in a company. The shareholders (also called members) own the company by owning its shares and the directors manage it. Unless the articles say so (and most do not) a director does not need to be a shareholder and a shareholder has no right to be a director.

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Can a CIC pay staff?

A major advantage of CICs is that their directors can be paid a salary, which means that the founders of the CIC can retain strategic control of the enterprise by sitting on the board as paid directors.

Does a CIC need an accountant?

Accounting for CICs

Copies of statutory accounts should always be sent to: Companies House, HMRC, all shareholders and those who attend the company’s general meetings.

How much does it cost to set up a CIC?

Enabling you to register your company name with Companies House, register with HMRC for Corporation Tax and gain approval from the CIC Regulator to form a CIC , all at the same time. The filing fee for an online incorporation for a CIC is £27 and is payable by card or PayPal.

Can a CIC own property?

The CIC or charity can own property, and rent space to the other. One of the other reasons why you might want both is because part of your work is charitable, and part of it isn’t – so it wouldn’t qualify to be delivered within the charity.

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