Social enterprises

Social enterprises are businesses. They trade, sell goods and services in order to achieve social, cultural, community and/or environmental benefits.teamwork partnership and social connection

Whilst a significant number of social enterprises are also registered charities they are different from charities.

We advise social enterprises on a range of areas including:

Regardless of its legal form, the constitution of a social enterprise will state that profits made from its business activities are reinvested in the enterprise, or directly channelled into the community, group or social objective the enterprise has been set up to support.

Social enterprises are constituted and managed from day one in an accountable and transparent way to ensure the community the enterprise has been set up to serve has a clear and unambiguous insight into how the SE’s profits are invested.

One of the other main differences between social enterprises and other SMEs is that in the event of wind-up or dissolution, the assets of the social enterprise must be reinvested into another organisation with similar aims and objectives.

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Social enterprises and legal forms

Community Interest company (CIC). What is a CIC? > read moreIcons 15

Companies limited by guarantee or limited by shares – the most common structure for businesses. however whilst they can ensure that their social mission and objectives are contained within their Memorandum and Articles of Association, social enterprises using this legal form are not regulated.

Unincorporated Association – this is the simplest form that non-profit organisation can take. It doesn’t cost anything to set one up and you don’t need to register it. However, members are personally responsible for any debts and contractual obligations.

Scottish Charitable Incorporated Organisation – a SCIO allows a charity to be incorporated but still regulated by OSCR >find out more about SCIOs

Registered society – this is the usual form for co-operatives and it is democratically controlled by its members.

According to the Social Enterprise in Scotland Census 2019, company limited by guarantee was the most popular form of social enterprise (42.5%) with the largest growth being in Community Interest Company

Choice 2

Good financial management and Good Governance – Social Enterprise workshops

We are delighted to announce that we will be continuing to work alongside Glasgow Social Enterprise Network (GSEN) offering six free workshops for GSEN members across 2020.

Getting to grips with the finances: Find out more and book

This session has been designed to give directors and managers from social enterprises the understanding they need to: improve their financial knowledge and confidence; make more effective decisions; and to know which bits of the business are working (and profitable) and which bits are not (and making losses) and to develop corrective actions to get back on track.

Good governance: Find out more and book

Good governance is fundamental to a social enterprise’s success. It should facilitate excellent performance and promote a culture where everything and everyone is working towards achieving the enterprises’ vision and objects, but it is not an end in itself.

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Choice 3

Services and advice for Social Enterprises – how can we help?

Financial ManagementMACO TPL business finance chart

  • Reviewing the robustness of the financial systems, controls and reporting.
  • Identification and focus on KPIs appropriate to the social enterprise.
  • Understanding future cashflow needs/variables/source of future funding.
  • Calculating accurate budget forecasts for the enterprise and individual business units.
  • Developing the financial, management and forecast information required for the social enterprise’ business plan / grant applications and producing management accounts.
  • Helping the Directors to understand what impact any changes or deviations will make to their forecasts. We’ll pinpoint the sensitive points and areas of potential risk so that the appropriate controls and KPIs can be set up to monitor going forward.

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Key Financial Controls, Procedures and Financial Systems

  • We can review your current internal controls, systems and management reporting and provide you with an assessment report, which highlights strengths, weaknesses and our recommendations for improvement.
  • Working with the directors to create procedures and systems in the organisation for managing various functions and operations.
  • We can review your current accounting system, software and applications to ensure they are fit for purpose and meet your requirements.
  • We can provide recommendations on suitable software and applications that will enable the you to focus more on running & managing the enterprise as opposed to the administration and day to day financial management. And we’ll help you set it up the software, train your office staff and prepare them to operate the software themselves with on-going support from us.

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Financial readiness, preparing for investment and tax

  • We can providing an initial sounding board if you are seeking funding, or if you are funder looking to invest in a social enterprise.
  • We help you to get investor ready e.g. preparing the SE business plan, financial projections over the investment period (and often beyond) and helping you to prepare the funding pitch.
  • Sourcing and securing funding: debt, equity, grants, alternative finance and micro finance schemes.
  • Deal structuring to ensure that investment structure fits the organisations objectives.
  • Tax impacts of the investment on both the individual funders and the social enterprise receiving the investment.
  • Maximising the available tax reliefs e.g. Social Investment Tax Relief, Enterprise Investment Scheme and Seed Enterprise Investment Scheme, R&D Tax Credits and remuneration planning.

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  • Advice on all applicable taxes (Corporation Tax, PAYE, VAT), thresholds and allowances e.g. capital allowances, as well as providing with advice on the legitimate ways the social enterprise and the directors can minimise their annual tax bill.
  • Advice on self-assessment and likely impacts of changing regulation, legislation and developments such as Making Tax Digital.
  • Employer taxes including salary sacrifice and setting up employee benefit schemes
  • Our personal tax team work closely with our financial services team (Martin Aitken Financial Services – independent financial advisers) to provide a joined up personal finance and investment advisory service.

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  • Directors responsibilities and if a charity, trustee responsibilities – setting up policies, introductory packs for new directors/trustees, refresher training sessions.
  • Social enterprises and charity governance – organisation purpose, leadership, board behaviour, control and effectiveness (taking into account the Scottish Governance Code for the Third Sector)
  • Establish the good foundations that will enable the SE to be sustainable and resilient.
  • Getting the right principles embedded into the organisation is crucial e.g., regular board meetings; assessing finances, risk and KPIs; reporting and internal communication; decision making and how decisions are arrived at and communicated;
  • Financial controls – devising and implementing classic financial controls; establishing a risk register and monitoring on a regular basis; any additional committees required e.g. for projects, finance, audit, legal and looking beyond finance – reputational risk.
  • Are they are unforeseen or people or macro risks that could impact negatively on the SE?
  • Financial accounting, audit requirements (or Independent Examination if charity and turnover/assets are below the audit threshold), trustees annual report – providing annual audit, governance and risk assessment is our raison d’etre.

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