The legal structure of a voluntary or community group or social enterprise is very important for many reasons and there are a range of ways a group can be set up. All groups need a governing document of one type or another which defines:

• what a group is set up to achieve (its aims)
• how the group will achieve them (its objects)
• who its members are and how it will make decisions
• to ensure that its money is safeguarded and managed effectively.

The type of governing document depends on what legal structure the group adopts. Setting up the right legal structure is crucial as it affects what the group is legally allowed to do and whether it is liable for particular taxes.

Some groups are informal associations with a basic constitution - a set of rules which sets out what it wants to do and how it will achieve this. Others are more formally established and chose to register as a Charity or as a Company of some description or both. A new form of Charitable Company is now available called a Community Interest Company (CIC) and another, the Charitable Incorporated Organisation (CIO) is likely to be a possibility from the summer of 2008.
More formal legal structures are especially important for those with an income above £5,000 a year and groups who take on buildings or start employing staff.

This can be a complicated process and if you are new to this area you will need to seek some expert advice. Your local Council for Voluntary Service or Rural Community Council should be able to help you choose the right legal structure or direct you to other sources of help. You can find out what local support is available from the Getting help pages.