Starting and Running a CIC: What You Need to Know About Accounting and Compliance

Paul Edwards
Aug 4
3 min read

So, you’ve got a brilliant idea to help your community and you’ve decided to form a Community Interest Company (CIC). Amazing!

Starting a CIC is a fantastic way to create real social impact while running a business with a clear purpose. But like any company, there are rules to follow especially when it comes to finance, reporting, and staying compliant.

At Strength in Numbers, we love supporting CICs, and this guide will walk you through the key stages:

Setting up your CIC
Running it day-to-day
Getting ready for year-end accounts

Let’s dive in.

Step 1: Setting Up Your CIC

Hands marking sketches with a pink highlighter on a desk. A smartphone and colored pens in a holder are nearby, creating a creative workspace.

Starting a CIC is a bit more involved than setting up a standard limited company but it’s worth it if your goal is community benefit.

Here’s what you’ll need:

A clear community purpose: This is what sets you apart from a regular business.
Memorandum & Articles of Association: You’ll need specific versions tailored for CICs.
Form IN01: For company registration.
Form CIC36: This explains your community aims.
A board of directors: At least one, ideally more.
CIC Regulator approval: Before you get up and running, your CIC must be approved by the CIC Regulator.

Once approved, you’ll be registered with Companies House and receive your company number just like any limited company.

Step 2: Running Your CIC The Right Way

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Running a CIC is about balancing purpose with performance. You’re still a business, and good financial habits are essential.

Key things to stay on top of:

Separate business bank account: Always keep personal and CIC funds apart.
Accurate bookkeeping: Track every penny especially when dealing with grants, donations, or restricted funds.
Payroll and pensions: If you employ staff, you’ll need to run payroll and enrol employees in a pension scheme.
VAT: Depending on your income, you may need to register, even if you’re a CIC.
Asset Lock: Profits must be reinvested into the community or passed to another asset-locked body (not private shareholders).

If you're using tools like Xero or QuickBooks, make sure your chart of accounts reflects grant income, donations, and restricted funds correctly.

Step 3: Getting Ready to File Your Accounts

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CICs must file two things every year:

Annual Accounts
CIC Report (a special report explaining how your activities benefited the community)

These are submitted to Companies House, and the CIC report also goes to the CIC Regulator.

What your accounts must include:

Profit & Loss
Balance Sheet
Notes to the accounts
Director’s Report (if applicable)

You’ll also need to file a Corporation Tax Return (CT600) with HMRC even if you made no profit.

And remember the deadline is 9 months after your year-end (for accounts) and 12 months for the CT600.

Common Questions CIC Directors Ask

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“Can we pay ourselves a salary?”

Yes, directors can be paid a reasonable salary for their work. Just be sure to keep proper records and ensure pay is fair and in line with your CIC’s mission.

“Do we need an accountant?”

You’re not legally required to have one but it helps massively. CIC accounting can be tricky, especially if you receive grants, restricted funding, or need to demonstrate impact.

“How can we prove community benefit?”

Through your CIC report. This is your chance to shout about your impact, who you helped, how, and what difference it made.

Final Tip: Don’t Leave Accounts to the Last Minute

CIC directors are legally responsible for filing accounts, and missing deadlines can lead to penalties or even being struck off the register. A good accountant will help you stay organised and compliant all year round.