Social Enterprise

Social Enterprises are businesses set up to tackle a social or environmental need...

The Social Enterprise Accountants

Social Enterprise photo

1. What is a Social Enterprise?

Social Enterprises are businesses set up to tackle a social or environmental need.

The formal definition of a Social Enterprise adopted by the UK Government is “businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or community, rather than being driven by the need to maximize profit for shareholders and owners”.

In simple terms you are still in business to make a profit, but those profits generated are ploughed back in towards your “Social Enterprise Goal”.

Some well known businesses are Social Enterprises such as The Big Issue, the Eden Project and Divine Chocolate.

2. Am I a Social Enterprise?

If you are generating the bulk of your income from trading and use the majority of your profits to further social or environmental goals then your business or charity might be classed as a social enterprise.

3. Why does my Social Enterprise need to make a profit, and what about tax?

Social Enterprises are businesses. They need to make a profit to compete in the market, to ensure their continued survival, and to invest in their social or environmental aims.

For many Social Enterprises, being sustainable - in every sense of the word - enables them to become more independent and to reduce any dependency on public grants. It also ensures they can continue to help provide a solution for a social or environmental problem.

Social Enterprises do not currently enjoy any special tax breaks. However it is essential that your accountant understands both your Social Enterprise and its sources of income so that you only pay the right amount of tax. Here at RNS Chartered Accountants we understand that Social Enterprises need special attention when it comes to tax. We understand tax and we understand Social Enterprises!

4. What are the legal structures for social enterprises?

Social enterprises use a wide variety of legal forms including:

  • Community interest company (CIC). A CIC is a legal form created specifically for social enterprises. It has a social objective that is "regulated" ensuring that the organisation cannot deviate from its social mission and that its assets are protected. For more information on CICs, contact the CIC regulator -
  • Industrial and provident society (IPS). This is the usual form for co-operatives and community benefit societies, and is democratically controlled by their members in order to ensure their involvement in the decisions of the business.
  • Companies limited by guarantee or shares are the most common legal structure for businesses and often considered to be the most flexible, particularly companies limited by shares. While they can ensure they have a social mission written into their Memorandum and Articles of Association, this is not regulated.
  • Group structures and charitable status Tax is an important consideration for some organisations where the retention of surpluses is essential, particularly if they can't take on equity. In these cases the tax breaks associated with charitable status can be an important factor.

It is essential that you get your Social Enterprise trading structure organised correctly from the start. Here at RNS Chartered Accountants we can help you with the structure decision for your Social Enterprise in conjunction with your legal advisors.

5. Does your accountant understand Social Enterprise?

The accurate answer is likely to be no! However, here at RNS Chartered Accountants we do understand Social Enterprise! We recognise the important part they play in both society and the economy, and that they are here to stay. As with any business it is vital that you get the correct advice to ensure continued success, Social Enterprise is no different; the difference is that RNS Chartered Accountants understand Social Enterprise.

Contact Us

For further information or to arrange a free initial consultation contact us on 01724 842713.

Or e mail

bas-logo.png xero-bronze-partner.png sage.png

© 2024 RNS Chartered Accountants. All rights reserved.

We use cookies on this website, you can find more information about cookies here.