A society registered with the Financial Conduct Authority, owned by the members. The members of the society participate economically in the society, usually either as workers or consumers. Each member has one vote at the AGM, even if they have more than one share. Unlike with a company, the shares are not transferable and can only ever be refunded at par (usually £1). The shares can never be worth more than what was paid for them.
Must prepare accounts in accordance with:
- Co-operative and Community Benefit Societies Act 2014
- FRS102 (section 1A if applicable)
- Subject to corporation tax
- Can pay interest on shares; the interest is tax-deductible for the company but taxable on the recipient (unless it is a consumer co-operative)
- Can have a non-profit aim as its main objective, and aims should be consistent with the 6 Co-operative Principles
- Limited liability
- High audit threshold – unlikely to need an audit
- Exempt from the Financial Services and Markets Act 2000, so can advertise for loan investment from the public
- Favourable tax treatment of interest or dividend payments
- Not listed at Companies House. This creates problems for credit reference agencies and it is often not possible to get a decent credit rating. Listed instead with the Financial Conduct Authority.
- More expensive to create than a limited company
- If income is more than £90,000 in the previous year, then the accounts must be signed off by a “reporting accountant” who must be a registered auditor. This seriously limits the pool of accountants available.
- Accounts preparation, and accountants report under Section 85 Co-operative and Community Benefot Societies Act 2014
- iXBRL tagging of accounts and submission to HMRC with Corporation Tax return CT600
- Payroll (if employing people)
- VAT advice, if necessary
- Book-keeping, if required