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If I wish to start freelancing with the sole purpose of providing support services (in this case, IT), to Charities and Nonprofits what are the possible options under which I can provide these services?

If we work under the assumption that I myself don't intend to make any profits out of this venture:

  • Is there a specialised form of business/employment for this purpose?
  • I currently operate as a sole-trader with books showing zero profit. Is this a problem? (It's not faked!)
  • What are the implications on National Insurance, as it is still payable out of my pocket, which means that I am taking a hit for it? Are there exemptions?

Myself and the consumers are based in the United Kingdom, so I'd prefer specific answers, but welcome all constructive points of view.


Another question which addresses similar issues: Donating my work to charitable organizations without incuring legal liability?

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  • But you want to recover your expenses, correct? Otherwise you could just volunteer.
    – Claus
    Commented May 30, 2013 at 20:57
  • @Claus - Yes, that's the problem. In the UK, you pay a set National Insurance, irrespective (AFAIK) of your income. This is where, if I donate my services for a 100% discount, I am now paying the NI out of my own pocket, as I do not have any other income source under this business.
    – bPratik
    Commented May 31, 2013 at 9:40
  • "I currently operate as a sole-trader with books showing zero profit." well at least on continent it would be (UK regulations may be however very different). In Poland, for example, every activity that is not aimed on profit is literally opted-out as company activity, so you would have to register as charity (as a company with costs but without profits you would become immediately a subject of tax authorities' prosecution which could have fatal consequences for you) Commented May 31, 2013 at 16:52
  • @ŁukaszLech - Interesting! See unknowns like these is something that I am worried about! Especially when they come out of something you were doing selflessly! :-/
    – bPratik
    Commented May 31, 2013 at 17:03

1 Answer 1

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The easiest way to actually provide your services to a charity is volunteering for the charity themselves; it's free, and off-the-books. You don't have to declare anything, and you don't have to pay national insurance, which is a plus.

However, if you want to incorporate as a nonprofit in the UK, you need to incorporate as a Company Limited by Guarantee (CLG), and then file articles of association (more here).

Nonprofits in the United Kingdom have to declare their NPO status in their articles of association (you will have to write them from scratch or have a lawyer draft these), and have a set of standards which the organisation will adhere to (how their profits will be spent), which are reviewed by Companies House. There is no specific (i.e. it has no specific document) way to register a non-profit in the UK that isn't a charity. (Another alternative is a Community Interest Company, but I don't know if it applies here)

As for tax itself, you will still have to pay tax as a company, but your taxes are relieved on the following:

  • Charitable income
  • Rental income
  • Interest
  • Capital/Revenue

Provided these are on the list in your articles of association (source).

In my opinion, unless you can make a charity, it's likely better than you simply volunteer, or incorporate as a Private Company Limited by Guarantee and list yourself as the sole guarantor, if you really must incorporate.

You will, however, be able to take out loans and wont be liable for any more than what you put into the business at incorporation. You might want to Check out OnStartups Stack Exchange if you fancy making a company, though.

http://www.charity-commission.gov.uk/ is the site for registering a charity in England or Wales.

Also,

I currently operate as a sole-trader with books showing zero profit. Is this a problem? (It's not faked!)

As a sole trader, you keep all profits anyway, and you aren't audited, so this isn't a problem.

Disclaimer: I'm not a lawyer, but I did go to business school in the UK.

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  • Great answer... I need to read it a again in the evening, then I may have some doubts for you! Thanks!
    – bPratik
    Commented May 27, 2013 at 14:08
  • What's your take on the comments below the question since you answered? :)
    – bPratik
    Commented May 31, 2013 at 17:04
  • @bPratik yes, volunteering for the charities themselves is a good way to provide services to a charity with the least amount of hassle; you'd avoid the company part, but you'd be liable for your actions and you might have less coverage.
    – Amelia
    Commented Jun 1, 2013 at 1:48

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