What is a CIC – Community Interest Company
Author: Russell SmithJanuary 27, 2016
Introduced in 2014, there are now about 10,000 CICs in operation.
CICs are diverse. They include social and community enterprises, social firms, mutual organisations such as co-operatives, and large-scale organisations operating locally, regionally, nationally or internationally.
A CIC is a business with primarily social objectives who re-invest their cash surpluses back into the business rather than being driven to maximise profits for shareholders like a private limited company.
CICs are involved in a wide range of social and environmental issues and operate in all parts of the economy.
A CIC is usually a limited company by guarantee i.e. the main owner is paid by a salary and not dividends but it is possible to be a CIC and a limited company by shares. However, it does have to be a limited company and can’t be a charity.
The reasons to set up are CIC are:
– You could find it easier to get funding
– Your target customers are either CICs or Third sector as this could be a good selling point if you are a CIC
– Your primary aim is to reinvest your surpluses into the organisation i.e. you are not solely in business to make money.
One very important note about CICs, even though they are effectively not for profit, you are still taxed on your surpluses. The only way to get out of paying corporation tax is to become a charity.