Elspeth, Three Left Feet's founder, company director and creative producer, is back! This time she's throwing down the business jargon you need to know if you fancy starting a creative company.
Welcome back to my ‘So you wanna start a theatre company’ blog series!
The question of the hour is: what type of company are you going to be? Now, I’m not talking about deep philosophical outlooks or creative truths here (although that may well affect your choice!) If you want to get serious up in here, you’ll need to set up a company, officially. That means registering with Companies House and doing all the gross businessy stuff.*
There are a variety of different types of businesses out there and, therefore, several avenues you can go down. Here are the main three:
This is what the businesses with that little 'Ltd' tag following their name are. So what does this actually mean? Ironically, being a limited company means you are the least limited in what you can do. You don’t have to submit any reports about your operations like you do with some of the other two options, and you don’t need to produce your own governing documents. Your work doesn’t have to have a social benefit. You could be solely focused on the art for art’s sake.**
You’re just required to register your company with Companies House. This is super straightforward and it’ll only cost you £12. All you do is simply go onto their website, fill in all your details and - bad-a-bing bad-a-boom – within 24 hours you’ve got yourself an officially registered company! You also have to make the very serious decision of whether you want to be Theatre Company Limited or Theatre Company Ltd – this is nail-biting stuff, people.
Limited companies can be limited either by shares or by guarantee.
LIMITED BY SHARES***: the company is owned by shareholders who each have a stake in the business by ‘buying in’ – think Dragon’s Den style.
LIMITED BY GUARANTEE: the company is owned by guarantors and is a distinct legal entity from its owners… honestly, I don’t entirely understand this one but it’s unlikely this would be your best option anyway.
CIC – Community Interest Company
A CIC is a special type of limited company which exists to benefit the community rather than private shareholders. This is a fab option if you aim to solely produce work that will have a social benefit because as a CIC, as you must submit an annual report outlining how each of your activities has benefitted the community. This option gives you access to a lot of arts-related funding sources that aren’t available to limited companies which is definitely a big bonus! Once more, you will need to officially register your Community Interest Company with Companies House. You can also change from a limited company to a CIC but you can’t change back!
Finally, you can become a charity. This is an option that many arts organisations opt for. As an example, The Dukes Theatre is a registered charity. From speaking to people who have done it, I have heard that registering as a charity can be quite a long process, taking some people a year or more to complete. I have no personal experience in this area but this is what gov.uk has to say...
There are 6 steps to setting up a charity:
Find trustees for your charity - you usually need at least 3.
Make sure the charity has ‘charitable purposes for the public benefit’
Choose a name for your charity.
Choose a structure for your charity.
Create a ‘governing document’.
Register as a charity if your annual income is over £5,000 or if you set up a charitable incorporated organisation (CIO).
Like CICs, charities are also eligible for a lot of arts-based funding sources that Limited Companies are not. Don’t worry, there are also plenty of funding and grant opportunities for limited companies to look into (and not just arts-specific ones!) but it is important to be aware that sometimes you won’t be eligible.
I encourage you to do your research into all of the options before you make any final decisions – there’s a whole hive of information available online, so google away! Regardless of what you plump for, you will need to submit annual accounts to HMRC. If the thought of this makes you go bleahfuhrvahreksucuh, I’m with you sista.
Tune in for my next ‘So, you wanna start a theatre company?’ instalment soon, where I’ll talk all about money money money!****
*Sorry not sorry.
**Which is a COMPLETELY valid choice! Don’t get me started on the problem of having to constantly justify the value of creative work… maybe that’s a blog post for another day.
***Three Left Feet are a company limited by shares.
****How uncouth! *gasp*