Limited company

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Notes on setting up Hackspace 'LTD by shares' vs 'LTD by guarantee' vs 'CIC'

  • Companies limited by shares (private limited company, otherwise known as a LTD) can be created within 24hrs through companies house but CICs take 2-3weeks as there's some extra checks required. Companies limited by Guarantee (CLGs) are through paper application only if done through companies house. They can be bought as ready made companies, then the articles changed afterwards.
  • It's possible to convert a ltd company to a CIC but you have to pay the registration fee twice.

from talking to NHCVS (a local funding advice organisation for community groups), funders are skeptical of CIC and it can actually be a hindrance for getting funding.


Overly simplified comparison:

Unincorporated association

Used by many groups before taking on a lease

+very easy to set up through one click orgs

+no reporting required

-can't take on a lease


LTD

Same as a few hackspaces

+ easy to set up

- difficult to be taken seriously as a not for profit


CLG

Most common structure for hackspaces

+ tax efficient for 'trades between members'

-more onerous to setup than a PLC


CIC

Used by some hackspaces

+ Assets locked to being used for communities benefit

+ tax efficient

+ may be easier to get 'community' bank accounts

- slow to setup

- annual report required to demonstrate community impact (although fairly straight forward)

- actual puts off some funders


Charity

Not used by any hackspaces

+ easy to get funding

+ tax benefits

- requires significant documentation

- requires majority of activities to be for benefit of others, not members


Most benefits community groups may be able to get (free bank accounts, rates relief, grants etc) seem to be based on the actual good done within the community, the company structure pays a small part. The constitution or Articles of Association may also be used to decide on eligibility.

Other Hackspaces

  • London Hackspace: CLG
  • Lancaster And Morecambe Makers: CLG
  • Nottinghack: CLG
  • Leeds Hackspace: CLG
  • Cardiff Hackspace: CLG
  • Lincoln Hackspace: CLG
  • Swansea Hackspace: CLG
  • Oxford Hackspace: CLG
  • Teeside Hackspace: CLG
  • Cheltenham Hackspace: CLG
  • Leicester Hackspace: CLG
  • Cambridge Makespace: CLG
  • Newbury and District Hackspace: CLG
  • Ipswich Makerspace: CLG
  • Manchester MAkespace: CLG
  • Newcastle Makespace: LTD & PLG?
  • Makespace Liverpool: LTD
  • Makespace Sunderland: LTD
  • Sheffield Hackspace: CIC
  • Leigh Hackspace: CIC
  • Fizzpop Makerspace: CIC
  • Swindon Makerspace: CIC
  • Coventry Makerspace: CIC

Note: Many Hackspaces appear to have followed London's lead and gone with a CLG structure, and even copied their articles of association, sometimes with little understanding of the consequences. They are generally happy with the decision though..

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