A company is a corporate body registered with Companies House. Companies are subject to the Companies Act 2006.

folders being carried

The term 'incorporated'  means that a company has a separate legal identity to the directors.  The advantage to the directors is that it is the corporate body that holds property, makes contracts, employs staff etc. and not the individual directors. Directors only have limited liability if they act within the law, if they follow their duties under company law, and if applicable their responsibilities under charity law. You should be aware that Companies House is a firm regulator of companies and there are fines if deadlines are not met for filing accounts and other matters.

It is important to understand that there are circumstances in which directors could be made liable for the debts of the company. Examples include: fraud; criminal offences; fraudulent trading; negligence; acting outside the objects of the company; continuing to trade when aware that the company is insolvent. 

Incorporation as a company

Incorporation allows an organisation to limit the personal risk to individuals. This section considers the risks that may influence a decision to incorporate and the steps to take if your organisation wishes to incorporate. See also: Choosing a legal structure.

The usual triggers for incorporation as a company are:

  • Taking on a lease
  • Buying a freehold property
  • Taking on employees
  • Raising finance
  • Entering into contracts
  • Risk management

Remember that if you need to register as a company you should do this before you register as a charity! The company will be registered with the Charity Commission.

Steps for incorporating

Prepare Memorandum of Association

Prepare Articles of Association

A minimum of three directors to sign if you intend to register the company as a charity also.

Complete Form IN0I: Application to register as a company

All of these documents, together with the relevant fee, then need to be sent to Companies House.

All forms and instructions are available from the Companies House website.

Unincorporated charities

If your organisation is an already a registered unincorporated charity then the procedure you need to follow is more complicated.

Basically, you would be setting up a company, registering the company as a charity and then dissolving the existing unincorporated charity.

Voluntary Action Sheffield (VAS) have a helpful 'Guide to incorporating existing charities' which is available from the Voluntary Action Sheffield website.

Company Responsibilities

Many of the tasks and responsibilities that companies are responsible for are required by company law.  This is enforced by Companies House.  Some of the essential responsibilities of companies are outlined below.

Companies need to carry out a long list of administration tasks after forming a company and there also administration tasks that have to be carried out throughout the year. Some of the jobs include creating: a register of directors; a register of company secretaries; a register of members; a register of trustee interests and a legal charges register.

Voluntary Action Sheffield (VAS) have a helpful guide which includes details of the tasks involved in running a company, 'An Introduction to the Legal Aspects of Setting Up and Running a Charitable Company Limited by Guarantee' is available from the VAS website, see part 3 of for the guidance on "Running the Company."