Not-for-profit organisations can take a number of forms ranging from unincorporated associations to incorporated organisations. Some of the more common are:
Unincorporated charity
The charity is registered with the Charity Commission but not registered with Companies House, meaning that it is not a separate legal entity and the Trustees would be personally liable if any problems were to occur.
Charitable incorporated organisation (CIO’s)
CIO’s provide a means for charities to incorporate and offer the Trustees personal protection whilst allowing them to register just with the Charity Commission, cutting out the need to register and report to Companies House.
Charitable company
A charitable company is one that is set up with special charitable articles and is registered with both the Charity commission and Companies House as a separate legal entity. The annual report and accounts must be submitted to both Companies House and the Charity Commission. A charitable company can register to be exempt from tax for corporation tax purposes – this is a special exemption available to registered charities.
Community interest company (CIC)
This is a special type of limited company which exists to benefit the community rather than private shareholders. The company is registered with Companies House and has to comply with the annual accounting reporting requirements of the Companies Act. This limited company is subject to corporation tax.
This depends on what type of charity you are.
If you are an unincorporated charity or CIO with an income of £250,000 or less you can prepare receipts and payments accounts. These are basically a summary or what has gone in and out of your bank accounts (including cash and sudo bank accounts, eg paypal/card readers and online collection such as stripe) during the year.
When your gross income becomes more that £250,000 you must then switch to accruals based accounts. Accruals based accounts include amounts due to/from the organisation at the end of the financial year, as well as recording the value of physical assets. Charitable companies must always prepare accruals accounts, no matter what the income level.
Your charity will need to have an independent examination if your income exceeds £25,000 but is below £1 million.
If your income falls below £25,000 you may need an independent examination if your charity’s constitution specifies that you need one or an external funder requires one.
If your income is greater than £1 million or you have gross assets of over £3.26 million and income over £250,000 then you will need a full audit, provided by registered auditors. We can advise on the audit process, but cannot undertake audits.