Creating a 'Not for Profit' Company

Creating a 'Not for Profit' Company

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I have a client which offers courses for youth training and obtains EC/Government funding. They are profitable.

They have identified a range of additional course, they can provide with a substantial line of funding, available only to a 'not for profit' company.

Thinking of transferring some staff and overheads to a separate entity and forming a guarantee company. But will this suffice?

Thanks

Dean

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By Taxi
14th Dec 2005 20:22

Not sure that I entirely agree with that last posting.
You can set up a not for profit company quite easily with shareholders, you ensure that the mem and art says that it is not for profit and also that it cannot distribute its profits.

It can of course pay people, like its directors or employees and pay suppliers etc. Remuneration is normally agreed by the board, and as they do tend to be set up by do-gooders is not excessive.

I would think that any owner manager who does vote and pay himself excessively might be in contravention of the mem and arts, and any funding or whatever would be quickly lost.

I have seen them used in all sorts of walks of life from VAT schemes to grant funding etc.

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the sea otter
By memyself-eye
14th Dec 2005 15:58

Plenty
NFP's are owned by a voluntary board with no shareholders. Who will you get to do this and why would they?
The relationship between your 'for profit' business and the NFP would be querried by the grant funding authority.
There are also implications for staff transferered - contracts etc.
Not For Profit does not mean "Not there to make a profit" It means it cannot be distributed to individuals as dividends.

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By User deleted
16th Dec 2005 00:03

An LLP can be used.
HM C & E , as they then were , have agreed that an LLP which precludes the distribution to its members of it profits will qualify as "not for profit" in this context.They will allow the LLP to discharge the tax due by its members.
They appear to ignore what happens if the LLP is subsequently dissolved-having your cake and eating it?

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