Things to consider when starting a CIC. A simple guide to CIC
We’re here to help you navigate the process of setting up a Community Interest Company (CIC). This type of organization is designed to benefit the community while still allowing you to run a sustainable business. Let’s dive into the key things to consider when starting a CIC and provide you with a simple guide to follow.
1. What is a CIC?
A Community Interest Company (CIC) is a type of social enterprise in the UK, designed to provide benefits to the community while still operating as a business. CICs have a “community interest” focus, meaning they must use their assets and profits to create a positive impact on society.
2. Understand the CIC structure options
When setting up a CIC, you have three different structure options to choose from:
- CIC Limited by Shares: This option allows you to issue shares and distribute dividends to shareholders, albeit within capped limits.
- CIC Limited by Guarantee: This structure has no share capital, and its members guarantee to contribute a fixed amount if the company is wound up. This is a common choice for charities and non-profit organizations.
- CIC Public Limited Company (PLC): A CIC PLC can offer shares to the public, but this option is less common due to its complex nature and additional regulatory requirements.
3. Develop a clear business plan
A strong business plan is crucial for any CIC. It should outline your organization’s objectives, target audience, revenue streams, marketing strategies, and financial projections. A well-thought-out plan will not only help you secure funding, but it will also provide guidance as your CIC grows and evolves.
4. Prepare the necessary documents
To register a CIC, you’ll need to submit the following documents to Companies House:
- Form IN01: This form provides essential information about your company, such as its name, address, and director(s).
- Memorandum of Association: This document outlines the initial subscribers to the company’s shares or guarantees.
- Articles of Association: These are the rules governing the management of the CIC, including its purpose and how decisions are made.
- CIC36 Form: This form demonstrates how your organization meets the community interest test, detailing your company’s activities and how they will benefit the community.
5. Register with Companies House and the CIC Regulator
Once you have prepared the necessary documents, submit them to Companies House for registration. You will also need to pay the required fees for both Companies House and the CIC Regulator. After your application has been reviewed and approved, you’ll receive a Certificate of Incorporation, and your CIC will be officially registered.
6. Set up a bank account and manage finances
As with any business, it’s essential to set up a dedicated bank account for your CIC. This will help you manage your organization’s finances effectively and maintain transparent records. Don’t forget to engage with a reliable accountancy firm, like Yorkshire Accountancy, to support your financial management and ensure compliance with tax regulations.
7. Promote your CIC and secure funding
Once your CIC is up and running, focus on promoting your organization and its mission. Networking, social media marketing, and local partnerships can all help raise awareness and generate support. Additionally, explore various funding opportunities available to CICs, such as grants, loans, and investments from socially responsible investors. Maintaining a strong online presence and showcasing the impact of your work will make your CIC more attractive to potential funders.
8. Keep up with ongoing compliance and reporting requirements
As a CIC, you’ll need to stay on top of your compliance and reporting obligations. This includes filing annual accounts, a CIC report, and a confirmation statement with Companies House. Your CIC report should detail your organization’s activities, community impact, and how you’ve used your assets for the community’s benefit. It’s essential to keep accurate financial records and stay informed about any changes in CIC regulations to ensure you remain compliant.
In conclusion, setting up a Community Interest Company can be an exciting and rewarding process. By following these steps and keeping your organization’s mission at the forefront, you can create a sustainable business that makes a positive difference in your community. As always, Yorkshire Accountancy is here to support you with all your accounting and financial management needs. If you have any questions or need assistance, feel free to contact us at www.yorkshireaccountancy.co.uk.