24th March 2011, 04:13 PM
I'm not sure why you think it would require 25+% of turnover, RedEarth. I can't help you with that, but if its used in that way I suggested it amounts to a credit arrangement negotiated between a company and their bank, so could be anything depending on what both sides are prepared to do. The 10% mark sounds about right and works for most companies.
The point I'm trying to make is that, because someone doesn't understand the financial arrangement of a company of any type, it doesn't make it right or acceptable to cast aspertions on that company's finances. Its an unregulated marketplace with eveything that goes with that. If a company is a charity, it will normally have to fulfill a charitable aim and will be held to that by the charities commission and have to demonstrate its financial solvency through independently auditted accounts. It doesn't mean it stops functioning as a company if its a charity. It does, however, mean that it doesn't have shareholders creaming off any profit and if things get tight it doesn't have shareholders who can be used to inject cash into the company so operates in a stricter financial environment than non-charities.
As far as competition is concerned, charitable status is used by many companies to give them an edge. The important point to remember is that they will have to fufill charitable objectives if they are to be considered a charity with all the VAT allowances etc that come with it and will be monitored by the charities commission as to whether they do or not. If any other company feels that it can justify applying for charitable status to increase its commercial potential, and is willing to take on board the charitable aims and jump through the relevant hoops to get there, there's nothing stopping them. It is often the case that limited companies don't consider this to be worth it though, which is why they don't. Remember, when it comes to accounting, if there are issues with a company's finances they are more likely to be exposed or caught out if they are a charity than if they aren't. Is it possible that this puts some companies off applying for that status?
The point I'm trying to make is that, because someone doesn't understand the financial arrangement of a company of any type, it doesn't make it right or acceptable to cast aspertions on that company's finances. Its an unregulated marketplace with eveything that goes with that. If a company is a charity, it will normally have to fulfill a charitable aim and will be held to that by the charities commission and have to demonstrate its financial solvency through independently auditted accounts. It doesn't mean it stops functioning as a company if its a charity. It does, however, mean that it doesn't have shareholders creaming off any profit and if things get tight it doesn't have shareholders who can be used to inject cash into the company so operates in a stricter financial environment than non-charities.
As far as competition is concerned, charitable status is used by many companies to give them an edge. The important point to remember is that they will have to fufill charitable objectives if they are to be considered a charity with all the VAT allowances etc that come with it and will be monitored by the charities commission as to whether they do or not. If any other company feels that it can justify applying for charitable status to increase its commercial potential, and is willing to take on board the charitable aims and jump through the relevant hoops to get there, there's nothing stopping them. It is often the case that limited companies don't consider this to be worth it though, which is why they don't. Remember, when it comes to accounting, if there are issues with a company's finances they are more likely to be exposed or caught out if they are a charity than if they aren't. Is it possible that this puts some companies off applying for that status?