How to Register as a Non-profit Business

If you are thinking about starting a non-profit company, then you probably have charitable or community-spirited objectives in mind. Unlike the average person looking to start a company, you aren’t necessarily interested in making a profit — you just want to help others. Luckily, there are a number of options open to people looking to set up a non-profit company. We’ll share what different types of non-profit businesses you could start, some considerations to make, and how to legally establish and form your non-profit business to be successful.

What Is a Non-profit Business?

“Non-profit business” is a broad term for all independent organisations whose purpose is something other than to make a private profit for directors, members or shareholders. In other words, it must operate and provide its services without the primary goal of making money. Many different types of organisations can be non profit. Some examples of non-profit organisations include:

Social organisations

Social organisations strive to improve or cater to social causes. These organisations may assist the homeless, provide free legal services or help veterans find work. A social organisation’s earnings typically come from donations or profits made from selling goods.

Community organisations

Most non-profit organisations are considered community organisations. They are businesses to help with causes around the community. They could range from small local groups to larger agencies with branches across the country. These causes could include cleaning up the community, improving neighbourhoods or promoting recycling locally.

Is a Non-profit Business a Company?

Simply put, the answer is no. Non-profit businesses are not a legal structure in and of themselves. Non-profit organisations choose a legal structure based on a variety of factors, including:

• How the organisation will be funded.
• Whether the organisation will be controlled by voting members.
• Whether the organisation will be incorporated.
• Whether the organisation will be charitable.

With these considerations in mind, let’s take a look at the different legal structures you can apply to your non-profit business:

Unincorporated association

An unincorporated association is a membership organisation. It can be whatever its members want it to be and carry out whatever activity you choose. It is the easiest, quickest and cheapest way for a group to set itself up — you just need to write and adopt a constitution. An unincorporated association cannot enter into contracts or own property in its own right and its committee members are personally responsible for its liabilities.

Charitable trust

A charitable trust is run by a small group of people. It does not have a wider membership, so trustees are appointed rather than elected. It cannot enter into contracts or own property in its own right, so its trustees are personally responsible for its liabilities.

Charitable Incorporated Organisation (CIO)

A Charitable Incorporated Organisation (CIO) can be a membership organisation (like an unincorporated association) or be governed by a small group (like a trust). It has its own legal existence, which means it can enter into contracts and have debts and obligations in its own right. It must register with the Charity Commission as soon as it is set up.

Charitable company

A charitable company is a limited company with charitable aims. It has its own legal existence, which means it can enter into contracts and have debts and obligations in its own right. It must be registered with the Companies House (to become a company), and then must also register with the Charity Commission if its income is over £5,000.

Community Benefit Society

A Community Benefit Society is owned by its members, who hold shares and control the organisation on a one-member, one-vote basis. It must benefit the wider community (not just its members). It is one of the few types of charity that is not regulated by the Charity Commission.

How to Register as a Non-profit Business

Almost all charities should register with the Charity Commission if their income is higher than £5,000 per year. Charitable Incorporated Organisations should register even if their income is less than this.

To register your organisation with the Charity Commission, you must complete an online registration form. If you provide all the information and documents required and answer all the questions clearly, the Charity Commission state that they will complete the process within 30 days. Before completing the online form, you should collect all the documents and information that you will need. Alternatively, our professional services at Mint Formations can take all the stress of registering your non-profit business off your shoulders, so you can concentrate on doing what you love the most.

Why Register as a Non-profit Business

Once a charity is registered, the Charity Commission can check to see that the organisation is being run properly. If an organisation is a registered charity, it is recognised as being run for the public good, and this can help with getting funding and other benefits available only to registered charities, such as:

• It can be easier to obtain grants. Many funders give grants only to registered charities, viewing these businesses as more trusted and regulated.
• Registration lets the public know that your group is a legitimate organisation and is being monitored by the Charity Commission.
• You are entitled to tax relief on several taxes and reduced business rates on your premises, and you may reclaim the tax on donations from individuals through Gift Aid.

Ready to start your non-profit business? Work with Mint Formations and we’ll advise you on the legal structure that’s right for your organisation and manage the process of registration for you. Find out more here .

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