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A social enterprise business is one that is set up for reasons other than just the usual profit related motive of ‘normal’ businesses. If you decide that a social enterprise business is the kind you are most interested in setting up, there are various forms of these businesses that you could become incorporated as. These include Community Benefit Societies; social enterprises as registered charities, Community Interest Companies and Charitable Incorporated Organisations. While you may need to gain professional advice before setting up your social enterprise business, this article will attempt to explain the nature of the various kinds of the businesses.

Community Benefit Societies (often referred to as BenComs) are incorporated industrial and provident societies (IPS) who run their businesses solely for the benefit of their local community. Any profits that are generated by the business are not shared out among members or shareholders, as would traditionally be the case in a standard business, but redistributed directly back into the community.

Unlike some forms of social enterprise business, such as unincorporated associations, Community Benefit Societies must submit annual accounts. BenComs can be registered as charities, providing the objectives are purely charity based, in which case they would become known as an “exempt charity” and will have to report to the Federal Services Authority (FSA) rather than the Charity Commission. Community Benefit Societies are legally allowed to generate funds by selling shares in the business to members of the general public. Although similar in set up in many ways, BenComs should not be mistaken for another kind of IPS – co-operatives – which are set up to serve their members and do not have to be social enterprise businesses. Registering as a BenCom can cost between £40 and £950 pounds per annum.

Social enterprises as registered charities are allowed if the sole objective of your business is an exclusively charitable one that is in the benefit of the general public. Businesses that extend financial help or provide education to those in need are among the kinds of social enterprise businesses that can become registered charities. Registered charities are much more restrictive than other forms of social enterprise businesses, however, and even company directors or trustees who help with administration and management of the company are not allowed to receive financial compensation for their efforts.

Community Interest Companies (CICs) are small companies whose primary function is to provide services to the community, or some section of the community. Their primary defining characteristics are an asset lock – which prevents the company from moving its assets or profits for less than their total monetary worth – and a community interest statement – an official document outlining the purpose of the social enterprise business, and how you intend to go about implementing it.

Charitable Incorporated Organisations (CIOs) are a new form of social enterprise business which will come into effect early in 2010. New organisations and existing charities that wish to convert to this form will be able to do so in England and Wales. They will be more like traditional companies than other charities, they will be separate legal identities, and have asset locks like CICs.

Running a social enterprise can be as tough as any business, but it can also be one of the most rewarding experiences one can have.

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