Can a CIC make profit?
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.
Can directors of a CIC be paid?
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.
Do CICs pay corporation tax?
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 CIC companies 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.
Can a CIC pay dividends?
CICs are free to operate more “commercially” than charities. For example, CICs limited by shares can pay dividends to shareholders, subject to the 35% dividend cap.
How many directors are needed to set up a CIC?
two directors
Number of directors A CIC limited by guarantee should have at least two directors (trustees). Some banks or funding bodies will prefer there to be at least three.
Is a community interest company a charity?
Legal forms. CICs must be limited companies of one form or another. A CIC cannot be a charity, an IPS or an unincorporated organization. CICs are more lightly regulated than charities but do not have the benefit of charitable status, even if their objects are entirely charitable.
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.
How much tax does a CIC pay?
Unlike a charity, a CIC is not entitled to any specific corporation tax exemptions. Accordingly, a CIC’s profits are fully taxable unless it can be shown that the terms of the contract are such that, in tax law, the organisation does not amount to a taxable trade.
How many directors should a CIC have?
Number of directors A CIC limited by guarantee should have at least two directors (trustees). Some banks or funding bodies will prefer there to be at least three.
Can CICs receive donations?
Yes, social enterprises can accept donations. Their treatment depends on the legal structure the social enterprise has and where the donations came from (individuals or businesses) and whether the donation is money, services, goods or other items.
Does a CIC need an accountant?
Accounting for CICs These accounts are important because it shows how much corporation tax your company owes. It also shows financial transparency and attracts possible investors.