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VT-F4/Entrepreneurship and Small Business Management/Module Booklet/BIS - A guide to legal forms for social enterprise.pdf
A GUIDE TO LEGAL FORMS FOR SOCIAL ENTERPRISE

NOVEMBER 2011

A Guide to Legal Forms for Social Enterprise Definition of a Social Enterprise The term “Social Enterprise” describes the purpose of a business, not its legal form. It is defined (by Government) as “a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners".

Setting up a social enterprise At the simplest level, a social enterprise can be a sole trader who has decided to donate the majority of the profit he or she makes to a good cause. Social enterprises may however take a variety of legal forms and the process for establishing one will depend on which legal form is chosen. Commonly used legal forms include Limited company, Community Interest Company (CIC), and Industrial and Provident Society. However some social enterprises may also take on an unincorporated legal form such as an unincorporated association or a trust (or a combination of the two).

This emphasises an important distinction between setting up a business (social enterprise or otherwise) – which simply involves the decision to trade in goods and services – and establishing a company (or other incorporated entity) which involves being subject to registration and other legal requirements.

Unincorporated forms If a social enterprise remains unincorporated, as a sole trader or partnership, its profits will be taxed as income of the individuals involved. They would normally be treated as self- employed and be required to use self-assessment to calculate the income tax and national insurance contributions applicable to any profits taken out of the business. Unincorporated associations may be similarly treated for tax purposes, although many are liable for corporation tax on their income and must register with HM Revenue and Customs (HMRC) for this purpose.

All businesses (whether incorporated or not) are required to register with HMRC for VAT if their VAT taxable turnover exceeds £70,000 per annum, and for PAYE and employer national insurance contributions if and when they decide to take on employees. Similarly certain other legal requirements apply to all businesses – for instance those governing business names, record keeping (for tax purposes as relevant), and consumer protection legislation.

Incorporated forms As with any business, there are some key advantages for social enterprises in choosing an incorporated legal form: such forms have a separate legal personality and limited liability for investors. Incorporation is advisable, and often necessary, where businesses are taking

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on significant contractual obligations or raising external capital. A brief overview of the processes for establishing the main incorporated forms, and their applicability for use by social enterprises is set out below.

Limited companies: The most common incorporated form for business is the private company - limited either “by shares”, or alternatively “by guarantee”. The limited company is subject to stricter regulatory requirements than unincorporated forms: greater accountability and transparency to shareholders and to the public is the price to pay for the benefit of limited liability.

In order to establish a limited company the business must register with Companies House, and with HMRC for corporation tax. This “incorporation” process is relatively straightforward. Those intending to incorporate the company must submit a form to Companies House with the proposed company’s details which include, the company’s proposed name, registered office address, company officers, and whether it will be private or public, as well as a statement of capital and initial shareholdings or statement of guarantee. Alongside this they must submit a Memorandum of Association, for which Companies House provide a proforma on their website. They must also indicate if the company is adopting the model Articles of Association provided, or an amended version of these articles, or bespoke articles of their own (although note that the model articles apply by default if no indication is given).

Once a company has been incorporated, Companies House will inform HMRC that a new company has been incorporated, which triggers HMRC to send an information pack to the Registered Office Address of the company. The company is then required to file a paper form to register for corporation tax (if it has taxable income or profits).

The limited company form offers flexibility for various types of business, including social enterprises. It is quite possible for example for the members of a company to include provisions in its articles of association which define its social purpose. It is important to note that it will always be possible for these provisions to be overturned or amended by a special resolution of the company’s members. Note that this may not be an issue if, for instance, the social enterprise company is a wholly owned trading subsidiary of a charity, or if shares are given to other benefitting from the social enterprise.

Community Interest Companies (CICs): A Community Interest Company (CIC) is a form of company specifically created for the social enterprise sector. The CIC form has been growing in popularity since its establishment in 2004, and there are now over 5,500 registered CICs. CIC’s are required by law to have provisions in their articles of association to enshrine their social purpose, specifically an ‘asset lock’, which restricts the transfer of assets out of the CIC, ultimately to ensure that they continue to be used for the benefit of the community; and a cap on the maximum dividend and interest payments it can make. CIC structure provides a clear signal to investors that the enterprise operates for the benefit of the community, and that this social purpose is protected by proportionate regulation. A CIC may convert into a charity, or into a Community Benefit Society (see below), or it may voluntarily dissolve – but once established it may not convert into a standard limited company.

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The process for setting up a CIC is relatively simple. It is essentially the same as that for a limited company except those wishing to register a CIC must also submit a second form comprising a community interest statement, providing evidence that the CIC will meet the community interest test defined in law. This statement is passed by Companies House, which manages the Registration process, to the CIC Regulator prior to registration for review and decision. The CIC Regulator also provides a series of model articles of association for prospective CICs to adopt “off the shelf” to ensure that the process is as straightforward as possible.

Industrial and Provident Societies (IPSs): There are two kinds of Industrial and Provident Society (IPS) – Co-operative Societies (which may be social enterprises) and Community Benefit Societies or ‘BenComms’ whose purpose must primarily be “for the benefit of the community”. IPSs must register with the Financial Services Authority rather than Companies House. This process consists of a short paper-based form to which the society must attach two copies of its proposed rules.

Limited Liability Partnerships (LLPs): A Limited Liability Partnership (LLP) has a separate legal personality similar to a company. Unlike a standard partnership, members of the LLP enjoy limited liability as the name suggests, but the partnership is essentially transparent for tax purposes: non-corporate partners register for self assessment and pay income tax on their share of the profits, while profits shared by corporate partners will be liable to pay corporation tax on this income.

Although not originally designed for the purpose, the LLP form provides a flexible model for social enterprises, particularly where they seek to work in partnership with other organisations or investors, or adopt a mutual model for ownership and control. LLPs have much more freedom than companies to arrange their affairs as they wish – for example in the way decisions are made, and the way in which profits are distributed to members. Thus is order to be a social enterprise an LLP need only decide that, rather than each member taking an equal share of the profits, a majority proportion of the profits will be dedicated to a social purpose.

Two considerations are especially important in drawing up the membership agreement of an LLP social enterprise. First, partners’ salaries are normally treated as profit in the LLPs accounts, whereas in a company they would be treated as operating costs. This can be misleading for investors and others, particularly when the business is starting out and profits after salary costs are limited, because in strict accounting terms a majority of the profits may not be reinvested or distributed for a social purpose. It is therefore crucial that the membership agreement makes the underlying social purpose and the terms of partners’s remuneration extremely clear. Second, as with a company, it is difficult to completely lock the social purpose into the LLP’s membership agreement. Ultimately if all partners resolved to amend the membership agreement they have the ability to do so. However it is of course possible to give partnership status in the LLP to those individuals or organisations benefitting from the social enterprise.

LLPs are straightforward to set up and register: Companies House provide a simple registration form. There is no requirement to submit an LLP’s full membership agreement to Companies House, and the ongoing requirements to file document with Companies House are less onerous than for a limited company.

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© Crown copyright 2011

You may re-use this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence. Visit www.nationalarchives.gov.uk/doc/open-government-licence, write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gsi.gov.uk.

This publication is also available on our website at www.bis.gov.uk

Any enquiries regarding this publication should be sent to: Department for Business, Innovation and Skills 1 Victoria Street London SW1H 0ET Tel: 020 7215 5000 If you require this publication in an alternative format, email enquiries@bis.gsi.gov.uk, or call 020 7215 5000. URN 11/1400

VT-F4/Entrepreneurship and Small Business Management/Module Booklet/Referencing Format.pdf
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ICON COLLEGE OF TECHNOLOGY AND MANAGEMENT

Harvard Referencing and Citation Guidelines

Referencing:

This is a method used to demonstrate to the assessors that a learner has conducted a thorough and appropriate literature search. Equally, referencing is an acknowledgement that you have used the ideas and written material belonging to other authors in your own work. As with all referencing styles, there are two parts: Citing and the Reference List. Referencing list format:

This is your list of all the sources that have been cited in the assignment. The list is inclusive showing books, journals, etc., listed in one list, not in separate lists according to source type. The list should be in Alphabetical Order by author/editor/company name, etc. (No bullet

points or numbering)

PRINTED/PUBLISHED SOURCES

Book: by one Author

Author (surname), Initials. (Year) Title of book (Italic). Edition. (only include this if not the first edition) Place of publication (this must be a town or city, not a country): Publisher. Reference List: Where 1st edition

Baron, D. P. (2008) Business and the Organisation. Chester: Pearson. Where 3rd edition Redman, P. (2006) Good essay writing: a social sciences guide. 3rd ed. London: Open University in assoc. with Sage. In text reference:

According to (Baron, 2008) organization structure … Leading social scientist (Redman, 2006; Baron, 2008; Smith, 2008) have noted … Book: by two, three authors The required elements for a reference are: Author, Initials.(Year) Title of book. Edition (only include this if not the first edition). Place: Publisher.

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Reference List: Barker, R., Kirk, J. and Munday, R.J. (1988) Narrative analysis. 3rd ed. Bloomington: Indiana University Press. In text reference for the above examples:

A new theory (Barker and Munday, 1988) has challenged traditional thinking … Book: by four or more authors Author (surname), Initials. et al (Year) Title of book. Edition (only include this if not the first edition). Place: Publisher. Reference List:

Grace, B. et al. (1988) A history of the world. Princeton, NJ: Princeton University Press. In text reference for the above examples: Leading business fellows Grace et al (1988) noted that… Foreign Book Author (surname), initial. (Year) Title of Book [either as given or an English translation in square brackets] Place of publication Publisher Language of translation in round brackets Reference List: Borges, J. L. (1995) [Ficciones] Madrid: Alianza Editorial.

Book: Translated Author (surname), Initials. (Year) Title of book. Translated from (language) by (name of translator) Place of publication: Publisher.

Canetti, E. (2001) The voices of Marrakesh: a record of a visit. Translated from German by J.A.Underwood. San Francisco: Arion.

Multiple Books by same Author published in the same year Author (surname), Initals.(Year a/b/c) Title of book. Place: Publisher.

Reference List: Soros, G. (1966a) The road to serfdom. Chicago: University of Chicago Press. Soros, G. (1966b) Beyond the road to serfdom. Chicago: University of Chicago Press. In text reference for the above examples:

Soros (1966a) mentioned in his …………… According to Soros (1966b) modern literature……….

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Chapter of edited book or Secondary reference for Book and Journal

When an author refers to another author’s work and the primary source is not available

Chapter author(s) surname(s) and initials. Year of chapter. Title of chapter followed by In: Book editor(s) initials and surnames with ed. or eds. after the last name. Year of book. Title of book. Place of publication: Publisher. Chapter number or first and last page numbers followed by full-stop.

References List:

Smith, J. (1975) “A source of information.” In: W. Jones, ed. (2000). One hundred and one ways to find information about health. Oxford: Oxford University Press. Ch. 2. Samson, C. (1970) “Problems of information studies in history.” In: S. Stone, ed. (2002). Humanities information research. Sheffield: CRUS, pp. 44-68. In text reference for the above examples: (Smith, 1975) (Samson, 1970)

N.B. You are advised that secondary referencing should be avoided wherever possible and you should always try to find the original work

Journal Articles

Author (surname), Initials. (Year) Title of article. Full Title of Journal, Volume number (Issue/Part number), Page number(if single page then use ‘p’ if more than one page use ‘pp’) References List:

Boughton, J.M. (2002) The Bretton Woods proposal: an in-depth look. Political Science Quarterly, 42(6), pp.564-78.

Foreign Journal

Author (surname), initials. (Year) Title of article [square brackets] Journal title Edition Page number Language of translation (round brackets) References List:

Caballero, D. (2003) [Policing without borders] Cambi16. 1(668) pg. 24 (in Spanish)

Report

Author (surname), initials. (Year) Title of report (underline or italicise) Publisher Report code and number (in brackets) References List:

Dearing, R. (1996) Review of qualifications for 16 – 19 year olds: quality and rigour in A Level examinations. London: SCAA Publications (COM/96/467)

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Annual Report:

Corporate author, Year of publication. Full title of annual report (if available), Place of Publication: Publisher.

Marks & Spencer (2004) The way forward, annual report 2003-2004, London: Marks & Spencer. For an e-version of an annual report. The required elements for a reference are: Author or corporate author, Year. Title of document or page, [type of medium]Available at: include web site address/URL(Uniform Resource Locator)[Accessed date]

Marks & Spencer (2004) Annual report 2003-2004. [Online] Available at: http://www- marks-and-spencer.co.uk/corporate/annual2003/[Accessed 4 June 2005]. Theses Author (surname), initials. (Year) of submission. Title of theses (underline or italicise) Degree statement Degree-awarding body References List:

Hounsome, I. W. (2001) Factors affecting the design and performance of flexible ducts in trench reinstatements. Unpublished Ph.D. thesis. Napier University.

Newspaper

Article with author

Author (surname), initials. (Year) Article Title (underline or italicise) Name of Newspaper Date (day, month, year) Page number References List:

Ward, L. (2004) Diploma plan to reward lower and higher abilities. The Guardian.18th February, p.4.

Article without an author

Title of publication Year of publication (in brackets) Title of article (underline or italicise) Day and Month Page number References List:

The Guardian (2004) HSBC CEO has come down at last. 23rd November, p. 10.

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ELECTRONIC SOURCES

Electronic Book (e-book)

Author (surname), initials. (Year) Title of book (underline or italicise) Name of e-book supplier [Online] Available at: URL (Date accessed) References List:

Krug, B. and White, S. E. (2004) EBay secrets: how to create Internet auction listings that make 30% more money while selling every item you list. Amazon [Online]. Available at: http://www.amazon.com/exec/obidos/tg/detail/ (Accessed: 16 August 2004).

Articles in Electronic Journal

Author (surname), initials. (Year) Title of article (in quotation marks) Title of journal (underline or italicise) Volume, issue, page numbers Database Name [Online] Available at: URL of collection (Date accessed). References List:

Haliday, J. (2004) 'Ford dealers test custom cable ads', Advertising age,75 (42), pg. 6. Proquest [Online]. Available at: http://proquest.umi.com/ (Accessed: 23 November 2004).

Article in Internet Journal Database

Author (surname), initials. (Year) Title of article (underline or italicise) Title of Journal (underline or italicise) [Online] Volume, issue Available at: URL of web page (Date accessed). References List:

Lloyd, J. (2001) Blessed are the pure in heart: globalisation. New Statesman, 23 April [Online]. Available at: http://www.findarticles.com/p/articles(Accessed: 23 November 2004).

Online Material in the Internet without Date

Author (surname), initials. (Year) Title of article (underline or italicise) [Online], issue [Online] Available at: URL of web page (Date accessed).

References List:

Lloyd, J. (No Date) Blessed are the pure in heart: globalisation [Online]. Available at: http://www.findarticles.com/p/articles (Accessed: 23 November 2004).

Online Material from Internet without Author’s Name

Name of the Organisation, (Year) Title of article (underline or italicise) [Online] Available at: URL of web page (Date accessed).

References List: Marks & Spencer (2010) Marks and Spencer’s Corporate Strategy [Online]. Available at: http://www.m&s.co.uk/corporate/ (Accessed: 23 November 2004)

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Email

Name of sender and email address, (Year) Message or subject title from posting line. [type of medium] Recipient's name and email address. Date sent: Including time. Available at: URL (e.g. details of where message is archived). [Accessed date].

Jones, P. (jones@jones.com), (2005) Mobile phone developments. [email] Message to R. G. Schmit (r.g.schmit@syy.ac.uk). Sent Monday 7 June 2005, 08:13. Available at: [Accessed 7 July 2005]. N.B: Permission should be sought before these sources are quoted. Copies of such correspondence should be kept, as these may need to be submitted as an appendix in an academic submission

Images from the Internet

Author (surname), initials. (Year) Title of image (underline or italicise) [Online image] Available at: URL (Date accessed) References List:

Marshall, J. (2000) Cathedral clock. [Online image]. Available at: http://www.westminstercathedral.org.uk/art/art_cathclock.html (Accessed 23 November 2004).

OTHER SOURCES

Computer Programme Author (surname), initials. (Year) Title of programme (underline or italicise) Version (in brackets) Form, i.e. Computer programme [in square brackets] Availability, i.e. distributor, address, order number (if given)

References List:

Sanders, B. and William, B. (2001) Java in 2 semesters. (version 2) [computer programme] Microsoft Inc. New York.

Atlas

As for books, using the title page to find the information

References List: The times atlas of the world (2004) London: Times Books.

Video / Film Title of programme/film (underline or italicise) Year of distribution (in brackets) Director [Videocassette] Place of distribution: distribution company

References List All about Eve (1977) Directed by Joseph Mankiewiez [Film]. United States: Twentieth Century Fox.

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Television programme Title of programme (underline or italicise) Year of publication (in brackets) Name of channel Date of transmission (day/month/time)

References List

Coronation Street (2004) ITV1, 25 November. 19.00hrs.

Audiocassette/CD/DVD

Author (if available, if not use title first) Year of publication (in brackets) Title of recording (underline or italicise) [Audiocassette] Place of publication: publisher. References List

Buenos: world Spanish (1995) [Audiocassette or CD or DVD]. London: BBC Books.

QUOTATIONS AND CITING INSIDE THE TEXT

Citation: When you use another person’s work in your own work, either by referring to their ideas, or by including a direct quotation, you must acknowledge this in the text of your work. This acknowledgement is called a citation. It is important that information taken from another author’s work is properly cited and referenced, giving credit to the original author. This includes the use of direct quotations as well as summaries, paraphrased information, statements and conclusions. If you do not cite information in the correct way you will be accused of plagiarism. This allows the reader to find the source of all the ideas including direct quotations that are presented in your work in the list provided in the Reference List. The information given at this point should be the author, and the date of the publication. The aim is to keep it short so that it does not detract from the text. There are a range of ways of presenting this and situations that might dictate the style.

You can incorporate references and quotations in a number of ways. The following examples use the Harvard Referencing.

Short quotations of a sentence or two are enclosed with quotation marks (“…”) and included in the main text.

Short Quotation

In this example, you are making a direct quote. Up to two lines can be included in the body of the text and must include the page number.

Smith (2003, p. 11) states that “Harvard referencing has to be done accurately”

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Longer Quotation

This should be indented in a separate paragraph. If part of the quotation is omitted, then this can be indicated by three dots.

Cottrell (1999, p. 10) in discussing plagiarism states that, plagiarism is using the work of others without acknowledging your sources of information or inspiration. This includes: using words more or else exactly as they……….

N.B: Longer quotations are separated from the text, placed in their own paragraph and do not need to be enclosed in quotation marks. Avoid long quotations as they will be picked up by (Turnitin) as plagiarism. Long words for quotation should be avoided but it is acceptable to include them if they are presented in the following way.

Citations (inside the text)  If the originator’s name occurs naturally in the sentence, the year of publication

should follow in brackets. Example Smith (2003) found that…or, In a recent study Smith (2003) argued that…

 If the author’s name would not naturally be included in the sentence add the author’s

name and year of publication in brackets i.e. Example

Management theories have become much more diverse (Anderson, 1996)

 For publications by two authors: Example

In a recent study (Smith & Jones, 2003) it was argued that…

 If you are referring to a particular page or section of a work and the author’s name

would naturally be included in the sentence the date and page numbers follow in brackets i.e.

Example

In a recent study Smith (1996, p.26) argued that….

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 If the author’s name will not normally be included in the sentence all information is given in brackets i.e.

Example

In a recent study (Smith, 1996, p.26) it was argued that…

 In cases where the name of the author cannot be identified, the item should be referred to by title:

Example

Figures in a recent survey (Tourism trends, 2003. p. 12) showed that…

 In cases where the date of an item cannot be identified, the item should be cited:

Example

The earliest report (Smith, no date, p. 231) showed that…

 If the author and date are unknown:

Example

 When you refer to a corporate publication e.g. a company report, use the Company

Name: Example

A survey (Tourism trends, no date) showed that…

The recession affected………..(Hanson Trust plc, 1990)

VT-F4/Entrepreneurship and Small Business Management/Module Booklet/Unit 9 Ent and Small Bus Mgmnt Assignment Brief Feb 2018 ZH.pdf
ICON COLLEGE OF TECHNOLOGY AND MANAGEMENT Pearson BTEC HND in Business

Unit 9 Entrepreneurship and Small Business Management (RQF) Assignment Brief

Session: February 2018

Programme title TNA67 Pearson BTEC HND in Business (RQF)

Unit number and title Unit 9 Entrepreneurship and Small Business Management

Unit Type Optional

Unit Level and Credit Value

Level 4 15 Credit

Assessor (s) Prof Zakir Hossain, Dr Reza Aboutalebi; Mr Tony Doherty, Mrs Kavita Seth, Mr Chris Dampare

Issue Date 3 March 2018

Final assignment submission deadline

11-16 June 2018

Late submission deadline

18-23 June 2018

The learners are required to follow the strict deadline set by the College for submissions of assignments in accordance with the BTEC level 4–7 submission guidelines and College policy on submissions.

Resubmission deadline TBA

Feedback

Formative feedback will be available in class during the semester.

Final feedback will be available within 2 weeks of the assignment submission date.

General Guidelines

 The work you submit must be in your own words. If you use a quote or an illustration from somewhere you must give the source.

 Include a list of references at the end of your document. You must give all your sources of information.

 Make sure your work is clearly presented and that you use correct grammar.

 Wherever possible use a word processor and its “spell-checker”.

Internal verifier Prof Zakir Hossain

Signature (IV of the brief) *

zakir@iconcollege.ac.uk Date 1/3/18

mailto:zakir@iconcollege.ac.uk
Assignment Brief – continued

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ICON College of Technology and Management Pearson BTEC HND in Business (RQF)

Unit 9: Entrepreneurship and Small Business Management Session: February 2018

Coursework Recommended Word limit: 3,000–4,000

This Unit will be assessed by assignment. You are strongly advised to read “Preparation guidelines of the Coursework Document” before answering your assignment. ASSIGNMENT Assignment Context and Scenario: You have been approached by a growing UK-based small business enterprise of your choice to

help them introduce a new business/branch in the UK with an objective to diversifying products and

services as part of innovation.

You are required to write a report on exploring the range of venture types which are of

entrepreneurial. You need to assess the impact of the proposed business in the local and

national economy. You are to identify the key aspects of an entrepreneurial mindset after a

thorough assessment. You are also required to identify the environmental factors and examine

how those factors foster or obstruct entrepreneurship. This report should be submitted to the

manager of your chosen small business enterprise.