Understanding social enterprise

Use this page to understand what social enterprises are and their associated legal structures.

A social enterprise is not a legal structure but a way of doing business. The exact definition can vary, but in general they:

• are focused on their mission and exist to tackle social or environmental issues set out in their governing document
• re-invest the majority of their profits in pursuit of their mission
• aim to get the majority of their income needed to operate from trade.

For more information on the definition of a social enterprise, read Social Enterprise Mark’s explanation of a social enterprise.

Find further information on governing documents.

Social enterprises can take on many different legal structures. Some charities operate as social enterprises, so social enterprises can have a charity legal structure.

GOV.UK has more guidance on setting up a social enterprise.

A common legal structure for a non-charitable social enterprise is a Community Interest Company (CIC). A CIC is a special type of limited company which exists to benefit the community. It is not a charity.

The CIC regulator has guidance on setting up a CIC and a webinar to help you determine if this if the right model for you.

Other legal structures for a social enterprise include:

• a private company limited by guarantee or shares
• a cooperative society
• a community benefit society
• a charitable incorporated organisation (CIO)
• a sole trader or business partnership.

Find out more about the characteristics of these different legal structures.

Learn about what to consider when choosing a legal structure.

There is a wide variety of social enterprises operating in the UK, with different legal structures. Below are a few examples taken from Social Enterprise UK.

We suggest getting more information and seeking professional advice when setting up a social enterprise and choosing the right legal structure. Below are a few options for further guidance and affordable professional advice.

Guidance

• Social Enterprise Mark CIC has a collection of webinars on setting up a social enterprise.
• Social Enterprise UK has a guide to help you set up as a social enterprise.
• GOV.UK has pages on setting up a social enterprise.

Advice

• Interface Legal Advisory Service offers legal advice on setting up community interest companies and other voluntary structures. Advice is offered at a reasonable cost, suitable for those with a limited budget.