[sclug] Re: How to set up an Open Source .org non profit 'business'

[Graham]

I have some C++/JavaScript that produces good looking accounts in .csv and .pdf,
but they are not really easy to use. Over tailored, pending a restart!
There's a few bits missing, as its got private data in the .js files,
but if you are interested, they might improve (particularly with your test data!)


I'm only familiar with a trading Ltd company, and a non-trading informal association.
However, from looking around, there are a few varients available to you,
try Citizens Advice, TheWeb, or drop in at the Inland Revenue (conveniently
next to the Back of Beyond). You dont have to register as a Ltd Co,
there are advantages of special constitutions (eg cooperatives, see www.risc.org.uk).

	http://www.hmrc.gov.uk/businesses/tmastarting-up-in-business.shtml
	http://www.hmrc.gov.uk/contactus/helplines.htm

I'd suggest calling the helpline(s). Its luck who you get, and in what mood,
but I've always found them skilled, helpful and keen to work the system!
Where else can you get accountancy grade advice for 0845-penny-a-minute.

If you dont trade at all, such as a 'club', 'residents association', or dead Ltd.
there is a much simplified annual return, shown online,
but if you receive donations, (other than personal gifts), you are trading.

If you are 'self employed', or a small association, its slightly less formal
than a Ltd Co. They might not see the boundry properly, but if you can
clearly mark it out in the accounts, you have a profit/loss sheet,
a list of tools/assets (wide printer), and surplus money that you pay tax on.
You will have SOMETHING LIKE THAT, whatever you do, and if you get it right,
there will be no hidden (tax) surprises down the road.

Almost anyone can be a 'charity', but really, is that what you want?
If donations are a problem, stop taking them. You already have
your own computer equipment, and Web isnt expensive (zero received donation value).
Running a Company is time consuming, and sometimes inconvenient.
If the money is important, what do you want to spend it on?

Most "not-for-profit" organisations do make a profit. 
They might get certain concessions, in exchange for form filling,
but they all have to prepare accounts, and lists of assets,
to some varying standard, as if they were "for-profit".

You dont have to register for VAT until your turnover is more than 58,000.
You dont need an accountant (formally) saving #500 .. #1000 PA.

The annual financial statement for a Small Ltd Co (Small being 10**6)
is a good benchmark of what you will have to complete each year.
If you can produce that, (even if you dont have to), they will be happy.
Then take it into IR offices, to complete the tax returns from that.

It contains a scattered (*) list of categories for sales and expenditure
(eg bank interest is separate from sales turnover). Get a few examples
from the web (search Financial Statements Directors Reports, FRSSE, 
Profit And Loss Account for the year ended, ...) and label each category.
Then every time you have a transaction, put it under a category
(I regret having a different category tree).
You can also make your company year end 2006-04-05, or 2006-03-31,
which makes life a drop easier (split year proportionally over boundries!)

	(*) scattered like a watch put in a bag and hit with a hammer.
	When it came out broken, the surrounding accountants declared it
	perfect, and cloned it indefinitely. Companies Act 1985

All UK TAX returns, and company declarations are summaries.
They never see the list of transactions, nor (scanned) receipts.
Its a system of trust, with occasional visits, when they pick at everything.

Expenditure is written off immediately (printer toner, wages, web, rent), but assets arent.
"Hardware" like office equipment, (maybe repairs if pedantic) are seen as an
exchange transaction. You give #100 of cash, you get #100 of desk asset.
At the end of the year, all assets (including last years) are depreciated by 25%,
compounding simply over time.

If your profit is less than 10K, you will probably pay zero tax.
Above that you pay 20%, distribute as dividend and pay personal income tax (but not NI).
IR35 is for permanent contractors (>12 months), who do have to pay NI on "income".
When its YOUR personal money (tax paid), you can give gifts to people,
but only under the normal rules of gifts, best keep a "receipt".

If your company gives money to someone, you need an invoice/receipt, and they must be
responsible for paying tax on that INCOME, or else you will be (NI is usually less than 20%).
If it is imported to the UK, simply pay VAT on it as import duty, (the receipt is material,
even if the good are email). The sender will need to pay export duty / personal tax.

If you employ someone, you go to the IR and get a P11 calculation sheet,
and deduct PAYE+NI every month, against a table, and submit the total online.
You should also consider 30 hours/week, NMW, Tax Credits, Notice Period, Contract, P45,
and maybe only working 32 weeks a year (no other taxable income).
If you are a director, and not paid, the PAYE forms are few and full of zero's.
If you are a director and paid, its an annual calculation, and easy form,
but best if zero outstanding proportion at year end (hence syncronise with Roman tax year).

If you want a Ltd co to be a litigation firewall, between you and the world,
the product might have to belong to the company, and could be sued away,
which would test the GPL to keep access to the last published version!

Have you considered a future where you might want to make a profit?
A GIS system needs a lot of consultancy, installation, setup,
training, printer drivers, customisations, migrations, rush-job-projects, ...

The program remains OpenSource GPL, and is actively maintained
BECAUSE you are making a profit. In 5 years, the phone might ring
enough to give up the day job ...

Though having said that, my last job is Reading was UNIX support on
a GIS system that tracked where the road had been dug-up for 186k cable.
Their building has 'gone dark'. I was ousted without opportunity to
wallpaper my flat with a map of britains gizzards.

--
   Graham
   gps @ Information-Cascade .co.uk
   www . Information-Cascade .co.uk