proof of non profit

proof of non profit

Didn't find your answer?

Hi i am wondering if someone can help,

to regsiter with a certain company we need to prove we are a non profit company how do i do that?

we are a private company limited by guarantee. in the memorandum of association point 5 says that the income and property should only be supplied to the objects of the company.

the objectives are: promotion of education services to the general public. the promotion of commerce,art,science, education, religion and charity.

i have sent them all this but still says they need proof of non profit status, how do i find that and if i cant find it how do i change it so the company is non profit?

any prompt replies would be greatly appreciated as needs sorting straight away.

Thank you

Replies (6)

Please login or register to join the discussion.

avatar
By zebaa
12th Dec 2012 19:21

How about sending the short version of the accounts? Or ask them what they want by way of proof.

Thanks (0)
By Mouse007
12th Dec 2012 19:37

No Shareholder Distributions

In the memorandum there should also be a clause stating profits or surpluses can not be distributed  to the shareholders by way of dividend.

Another clause should specify what happens in the event the company is wound up. The assets should go to another not for profit organisation - not the shareholders.

I would suggest that these two clauses (together with your point 5) mean the company is not for profit for the shareholders.

Thanks (0)
By coolmanwithbeard
12th Dec 2012 22:50

Not for profit?

Hi

 

Not for profit is a US term for charities generally. As you are limited by guarantee there will be no distributions as no shares but it may still be that directors can take huge salaries have company cars etc etc. Or supply services via another company in which they can draw profits. In education to be an eligible body for VAT purposes the rules state that the directors cannot benefit - which includes supplying the services of their other profitable company.

If you are a charity then either you will have registered with the charity commission or, if your income is under 5K, HMRC so that no Corporation Tax is paid. If you have done neither then you may not be not for profit. If you have registered with either then proof of this registration should suffice.

Even trading companies of charities can be liable to tax - they usually pay none as profits are covenanted to the principal charity.

In conclusion you cannot declare yourself not for profit - you have to have a reasonable and tested basis to make that claim.

 

Mike

Thanks (0)
Replying to Tornado:
avatar
By JANINE X1
12th Dec 2012 23:26

thanks, i think i will have to get onto our accountant tomorrow and see if he knows anything.

unfortunately i havent been with the company long and though the memorandum would be sufficient as no shares holders says no profit and if the company is to be wound up and profit/property is to be distributed to a company that has the same objectives as ours.

the company is question was set up but has been dormant in the passed which is why i am finding it hard to find this ''proof''

 

Thanks (0)
By coolmanwithbeard
13th Dec 2012 09:10

Profit

Hi

You are really under a misapprehension that assumes no shares is no profit. Many companies limited by guarantee make a healthy profit and pay Corporation Tax and VAT as any other business - it's just that those profits are not distributed to shareholders (as there are none) and so it is retained within the company.

 

What you say the company will do could be profitable and really it is down to why you do it that will say whether you are a charity or not, you would have to demonstrate public benefit.

 

You need to understand the requirements of this company  - if they would make you a grant I assume they would want to be sure it's spent on what they say it should be.

 

M

Thanks (0)
Replying to Ruddles:
avatar
By neileg
13th Dec 2012 10:02

Not quite right

coolmanwithbeard wrote:
You are really under a misapprehension that assumes no shares is no profit. Many companies limited by guarantee make a healthy profit and pay Corporation Tax and VAT as any other business - it's just that those profits are not distributed to shareholders (as there are none) and so it is retained within the company.

This is a common misapprehension. A company limited by guarantee can distribute profits because it has members. Dividends are not the only form of distribution. Of course if the memo & arts prohibit distribution that's different.

Thanks (0)