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What Is A Social Enterprise?
Traditionally, businesses have been set up to make a profit while not-for-profits focus on delivering social benefit. In 2025, social enterprises continue to evolve by blending these two aims – generating financial returns and creating meaningful social impact.
But what if you want to do both?
Social enterprises are dynamic organisations committed to integrating profit-making with community-enhancing initiatives. With innovative models and hybrid structures emerging, these enterprises now enjoy increased recognition and support across the UK.
Starting a social enterprise is an excellent way to create both financial and social value while championing a cause that matters.
However, as with any new venture, the first challenge lies in choosing the right legal structure that not only reflects your mission but also supports your growth strategy and financing needs.
What Is The Right Structure For A Social Enterprise?
In the UK, established legal frameworks exist for both profit-driven and not-for-profit organisations; however, there is no statutory form labelled “social enterprise”. Instead, you must select a conventional legal structure that best suits your dual objectives.
Your choice should complement your purpose, growth strategy and preferred sources of finance – whether that includes grants, impact investments or philanthropic donations. It’s crucial to ask yourself: do you want to make a profit? For further guidance on selecting the optimal structure, our Company Set-Up and Operating as a Sole Trader resources offer valuable insights.
We’ll walk you through some of the most common structures utilised by social enterprises today, including emerging trends and innovative approaches that have taken shape as of 2025.
Private Ltd Company
Many social startups and new social enterprises choose to operate as a Private Limited Company. This is the most common structure for traditional profit-driven businesses, making it a familiar option to investors.
A company is a legally distinct entity, which means that its owners are not personally liable for any business debts. Shareholders own the company and may receive dividends, while directors are responsible for day-to-day management.
This structure is particularly advantageous if you need to raise capital for growth. Moreover, modern Private Ltd Companies can integrate social impact into their governance – for example, through stakeholder engagement and dedicated social reporting. To ensure your enterprise is built on rock‐solid legal foundations, consider reading our guides on Protecting Your Intellectual Property and Setting Out Good Business Terms.
Company Limited by Guarantee
Another popular option, especially for not-for-profit organisations, is the Company Limited by Guarantee (CLG) structure. In a CLG, there are no shareholders or dividends; instead, members unite around a social purpose.
This approach is particularly appealing when seeking government grants and philanthropic donations, as it clearly demonstrates a commitment to a social mission. Recent innovations have even allowed hybrid models within a CLG framework, enabling certain profit-generating activities while remaining firmly rooted in social impact. For additional details on aligning your mission with the appropriate legal form, our Legal Health Check guide may prove useful.
Certifications
Beyond establishing the right legal structure, achieving recognised certification can elevate your social enterprise’s credibility. In the UK and internationally, you can apply for a B-Corp certification, which is administered by B Lab.
As of 2025, many well-known companies – including Ben & Jerry’s, Patagonia and Etsy – continue to hold B-Corp status, validating their commitment to social and environmental performance. Earning this certification can help attract impact investors and partners, as well as reinforce your organisation’s commitment to its values. For further insights on meeting regulatory standards, have a look at our Regulatory Compliance resources.
What To Take Away…
We have discussed the most common legal structures for social enterprises and highlighted new, innovative approaches emerging in 2025. Selecting the right structure will not only affect how you access finance and generate profit, but also determine your decision-making processes and compliance requirements.
Your chosen structure sets the foundation for the type of finance you can raise, establishes whether profits can be distributed and dictates how your social mission is managed. Various regulators impose different reporting obligations based on your legal form, so it is vital that your structure aligns with both your current needs and long-term strategic goals.
For further reading on these matters, explore our in-depth articles on Contract Review and our comprehensive Getting Finance guide, which provide practical advice tailored to the modern business landscape.
This may seem like a lot to consider, but with the right legal advice and careful planning, you can establish a structure that robustly supports both profit and purpose. Social enterprises are at the forefront of driving meaningful change in today’s fast-evolving market, and your legal framework is a crucial component of that success.
We’re here to help you navigate these decisions. If you’d like to book a consultation to decide on the best structure for your social enterprise or to get started with the necessary legal documents, get in touch with us at [email protected].
Our team at Sprintlaw is committed to supporting you as you embark on your social enterprise journey – whether you are launching a small social venture or scaling a larger impact-driven business. To further assist you, our regularly updated resources and insights, including our Intellectual Property and Contracts guides, ensure you stay informed about the latest legal developments affecting social enterprises in 2025.
Finally, keep in mind that the legal landscape continues to evolve. Staying informed through our regularly updated guides and legal insights is crucial for the sustained success of your social enterprise. Be sure to follow our latest updates on our website as we cover new legal developments and strategies tailored for innovative businesses in 2025.
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