Why register as a CIC rather than a charity?

Charities can only be established for charitable purposes, whereas a CIC can be established for any lawful purpose (apart from political causes) as long as its activities are carried out for the benefit of the community.

Here’s more detail on the differences between a CIC and a charity:

CIC Charity
Recognised by funding bodies
Subject to official regulation
Funded by sale of products or services
Funded by donations or grants
Allowed tax concessions
Company accounts must be audited
Directors (trustees) can be paid
Dividends can be paid (‘limited by shares’ only)
Minimum number of directors 1 3
Minimum annual turnover £100 £5000

Sale of products or services

CICs can permanently trade – something charities can’t do. This means that your main source of income could be the products or services you sell. As this isn’t possible for a charity, your CIC could be the trading arm of a charity, or it may be appropriate to set up as a CIC rather than a charity if you know that you will need this option.

Number of directors

A CIC limited by shares can have just one director and shareholder. 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.

Minimum turnover

There is no actual stated minimum turnover for a CIC, but it is not allowed to file dormant company accounts. If there is no activity within the first two years of trading, the CIC Regulator might recommend that the company be closed.

Register a CIC
Register a charity

Facebooktwittergoogle_plusby feather

2 Comments

Julie

I need advice about registering a charitable company by guarantee, CIC or CIO.
Could I speak to somebody to make clear what are the differences. Thanks. Regards

Reply

Leave a Reply

Your email address will not be published. Required fields are marked *