1. Get Your Business Set Up for Trading

Before you can start delivering services or trading, you'll need to ensure your CIC is operationally ready. Key steps include:

• Open a Business Bank Account:
• Choose a bank that offers accounts tailored to CICs or social enterprises.
• Provide your company registration details, proof of identity for directors, and proof of address.
• Register for Taxes:
• Register with HMRC for Corporation Tax, PAYE (if you employ staff), and VAT if your turnover exceeds the threshold.
• Keep detailed records of income, expenses, and employee wages to comply with HMRC requirements.
• Insurance:
• Arrange public liability insurance, professional indemnity insurance, and employer’s liability insurance where applicable.
• Contracts and Agreements:
• Create terms and conditions for your services or sales.
• Develop contracts for staff, volunteers, or contractors to ensure clear roles and responsibilities.
• Data Protection and GDPR Compliance:
• Register with the ICO (Information Commissioner’s Office) if you are handling personal data.
• Establish clear data protection policies and procedures.
• Licences and Permits:
• Depending on your activities, you may need additional permissions, such as a fundraising licence or premises licence.
• Bookkeeping System:
• Set up a reliable system to record income, expenses, and transactions. Software like Xero, QuickBooks, or FreeAgent can simplify this process.

2. Meet Your Legal Obligations

To maintain your CIC status and avoid penalties, it's essential to stay on top of your legal duties:

• Annual Accounts:
• Track all your income, expenses, and financial transactions using accounting software such as Xero, QuickBooks, or FreeAgent.
• Prepare a profit and loss statement, balance sheet, and notes to accounts. An accountant can help ensure these meet statutory requirements.
• Submit your accounts to Companies House within nine months of your financial year-end.
• CIC Report:
• Explain how your CIC has benefited the community, with examples of activities and outcomes.
• Include details about directors' pay and dividends to demonstrate funds are being used responsibly.
• Submit this alongside your annual accounts.
• Confirmation Statement:
• This confirms your company details are accurate.
• File this with Companies House every 12 months. It can be done online for a small fee.
• Financial Records:
• Use cloud accounting tools or spreadsheets to log income, expenses, and receipts.
• Set aside time each month to review records and ensure everything is accurate and up to date.

3. Establish Strong Governance

Good governance is key to building a stable and effective CIC. Consider the following steps:

• Form a Reliable Board of Directors:
• Choose directors with diverse skills and experience to oversee different aspects of the organisation.
• Arrange a formal induction so new directors understand their legal responsibilities.
• Develop Clear Policies:
• Create policies covering financial management, safeguarding, data protection, and conflict of interest.
• Ensure these policies are available to staff, volunteers, and directors.
• Record Meetings and Decisions:
• Schedule regular board meetings (quarterly as a minimum).
• Use clear agendas, record minutes with decisions and action points, and keep these records safely for future reference.

4. Take Control of Your Finances

Careful financial management will help your CIC grow and deliver impact. Focus on:

• Budgeting and Forecasting:
• List all your expected income and expenses for the year.
• Break this down monthly for better visibility.
• Regularly compare actual income and spending to your budget, and adjust forecasts where needed.
• Building Reserves:
• Aim to set aside 3-6 months’ worth of operating costs as a reserve fund.
• Open a separate savings account for your reserves to keep the funds secure.
• Regular Bank Reconciliation:
• Use accounting software to compare bank transactions to your records each month.
• Investigate and resolve discrepancies immediately to ensure your accounts are accurate.

5. Create Sustainable Income Streams

Your CIC can earn money in various ways:

• Trading:
• Identify services or products that align with your mission and generate income.
• Develop a pricing structure that covers costs and provides a fair profit.
• Grants and Funding:
• Research suitable grants through platforms such as Funding Central or Charity Excellence Framework.
• Carefully read grant application criteria and tailor your proposal accordingly.
• Donations and Fundraising:
• Build relationships with potential supporters.
• Organise fundraising campaigns, events, or sponsorship opportunities to boost income.

6. Promote Your CIC

Raising awareness about your work helps attract supporters, funders, and volunteers. To build your profile:

• Develop a Website and Use Social Media:
• Create a clear and engaging website with information about your mission, services, and impact.
• Post regular updates, success stories, and project milestones on social media platforms like Facebook, Instagram, or LinkedIn.
• Highlight Success Stories:
• Share case studies that illustrate how your CIC is improving the community.
• Include real-life examples with testimonials or quotes from beneficiaries.
• Network Actively:
• Attend industry events, community gatherings, or business groups to build relationships.
• Engage with local stakeholders to identify potential partnerships and collaborations.

7. Track Your Impact

To demonstrate your CIC's value, you’ll need to measure and report your impact. Focus on:

• Outputs:
• Keep records of the services or activities you deliver, such as the number of training sessions held or beneficiaries supported.
• Outcomes:
• Identify the positive changes resulting from your work, such as improved skills, employment rates, or wellbeing.
• Impact Evidence:
• Collect data through surveys, interviews, and testimonials to showcase your achievements.
• Develop an annual impact report to demonstrate your progress to funders and stakeholders.

8. Seek Expert Support

Navigating the complexities of managing a CIC can be challenging. Consider seeking professional help to ease the process:

• Specialist Accountants:
• North West Numbers CIC can support you with financial planning, tax reporting, and preparing your annual accounts.
• Legal Advisors:
• Consult legal professionals for guidance on governance, contracts, and data protection to safeguard your organisation.
• Peer Support:
• Join CIC networks or online forums where social entrepreneurs share insights, resources, and advice.

Final Thoughts

Running a CIC is both rewarding and challenging. By managing your governance, finances, and impact effectively, you'll give your organisation the best chance of achieving its mission and making a meaningful difference in your community.

Need guidance on managing your CIC's finances? Contact North West Numbers CIC for tailored support designed specifically for social enterprises and not-for-profits. Book a free consultation at https://calendly.com/nwnumbers/virtual-chat