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 information on What is 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.

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.

Find out more about setting up a CIC on GOV.UK.

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.

Find out more 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 information to help you set up as a social enterprise.
• Read setting up a social enterprise pages on GOV.UK.

Advice

• Inspire2Enterprise can advise individuals or established businesses on how to set up a social enterprise.
• 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.