legal structures for social enterprise branch of sole business
Which is the best structure or option for a new social enterprise run alongside a business owned by a sole trader?
3 Answers
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Hi Helen,
VentureNavigator has some tools that should help youwith this. There are four relevant assessments, but I suggest that you start at the first one:
- Assessment 1: For-profit business, a charity, non-profit or a social enterprise?
- Assessment 2: Social Enterprise or a For Profit business
- Assessment 3: Company Limited by Share and Company Limited by Guarantee
- Assessment 4: Cooperatives
In addition, please see this list of resources, links and additional information for social enterprises, charities, cooperatives etc.
Phin
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Thanks for that the assessments have helped but my question is about which is the best social enterprise structure as part of a business trading for profit. I have narrowed it down to two but would welcome any comments or information. Thanks
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Hi Helen,
The honest answer is, that without the intimate knowledge that you have of the business, it’s very hard to answer this! There are implications around how closely the activities of the two businesses are related, if they will share resources and if the for-profit business will subsidise the other entity that will determine how the other operation should be established. For instance, there is a very simple situation where the sole trading business sets aside a portion of its profits for a social purpose. However, there may be clear reasons to establish clearly defined separate entities.
Apologies for not being more helpful. As is always the case with these things, if you are in any doubt then it may be best to seek professional advice.
Phin
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