How to register a Social Enterprise Company

Company Bureau can help you to figure out how to register a social enterprise in Ireland. The purpose of a social enterprise is to provide solutions to a social, environmental, cultural or economic problem. These companies are often innovative and find creative ways to add value in the communities they serve. Social enterprises are trading companies that provide products or services at affordable rates in order to raise funds that are re-invested into the business’s mission. It is common for these companies to seek a combination of government funding and philanthropist donations to achieve their goals.

Social enterprises are everywhere in our communities and can include a large variety of businesses such as; care organisations, creches, leisure centres, recycling companies, and youth centres. Many governments recognise the positive impact that social enterprises make on the economy while improving the lives of local people, so funding and supports are available to registered companies.

What is a Social Enterprise Company?

The definition of a social enterprise can differ depending on the country they are registered, but the European Commission defines a social business as one that:

  1. Strives to achieve social impact rather than generating profit for owners and shareholders
  2. Operates through the production of goods and services in an entrepreneurial and innovative way
  3. Utilises surpluses mainly to achieve its social goals
  4. Is managed by social entrepreneurs in an accountable and transparent way that involves its workers, customers and stakeholders that are affected by the business activities

Is a Social Enterprise the same as a Charity?

This depends on the company’s objectives; some social entrepreneurs may want to register the company for Charitable Status because the profits will be tax-exempt. Owners would need to register a social enterprise as a Company Limited by Guarantee (CLG) to be eligible for Charitable status. CLG companies do not have shareholders to distribute revenue because the profits are reinvested in the company and further initiatives that benefit the community.

The difference between a social enterprise and a charity is:

  • Charities are typically involved in fundraising activities such as street collections, raffles, and other fundraising events to generate donations.
  • Social Enterprises typically have the same vision or mission as a charity, but they will generally focus on trading in order to generate profits.

How to Register a Social Enterprise

It is important to define the objectives of the company, this will help the owners to choose the most appropriate business type. Depending on the operations and objectives of the company one of the following options would be the most appropriate structure to register a social enterprise:

  • Company Limited by Guarantee (CLG) – There are no shareholders who collect dividends, all funding and profits must go back into the company. Only a CLG can apply to Charitable Status. Learn more
  • Designated Activity Company (DAC) – These companies outline and define a specific type of business in their Constitution. This company can be Limited Liability with a Share Capital or a Company Limited by Guarantee. Learn more
  • Limited Liability Company (LTD) – This is the least common option for this type of ventures because LTDs have shareholders, who would need to be made aware that they will not receive dividends in return for their investment. Learn More

Social enterprises are similar to regular business ventures because they charge for the goods and services, they provide in order to generate revenue. Regardless of the company type used to register a social enterprise, surpluses are usually retained by the company and invested to further pursue its social objectives.

Social Enterprises are extremely important for communities because they can provide effective solutions to ongoing problems and reduce the strain on people of adversely affected by issues in those communities. For more information about how to register a social enterprise in Ireland contact the experts at Company Bureau, call 01 646 1625 or complete our contact form. Alternatively, if you are ready to proceed with your company formation please click here to select your company type and complete the online order form.

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