churches starting and running shops - is it a good idea?

By Stephen Matthews | 18 February 2014

churches opening shops

Much like churches, shops come in all shapes and sizes. At one extreme there is the small church bookshop, operating from the church premises most likely after church services and other events have finished. Although there will be some considerations to think through, they are likely to be minimal. At the other extreme, operating a trading shop from commercial premises with the aim of raising funds or furthering the charitable activities of the church will require considerably more thought and planning.

Why do it?

 

Regardless of the size and nature of the proposed shop, the most important question of all to consider is 'why do you want to run a shop, what is its purpose?'. The bookshop might be intended to help church attendees grow in their discipleship and walk with God. A café might be a bridge into the community, raising the profile of the church and providing an evangelical opportunity. A commercial trading operation may seek to help the needy, or may provide funds for the church to use in other ways.

 

The list of what to think about grows longer as the size of the shop increases (see below), but the first and most important question is always 'why does our church want to run a shop?' A casual glance down most town High Streets confirms that many shops fail, so as a church you need to understand why, and also be confident that you have, or can obtain, the necessary skills and experience to make it work.

 

If you can't come up with a solid God-led answer to the 'why' question, or are not confident that you can access the necessary skills and experience, we suggest that you go no further.

 

Some stuff to think about

 

1. Where does it operate from?

If it is in the church, then where does a shop fit?  Often after church services, churches are active places, perhaps with children running around and refreshments being served to facilitate conversation and fellowship.  Yes, you want your shop to fulfil its purpose, but maybe not to the detriment of other activities or ministries, so deciding where it goes needs a little thought...

If it is in the church, then where does a shop fit?  Often after church services, churches are active places, perhaps with children running around and refreshments being served to facilitate conversation and fellowship.  Yes, you want your shop to fulfil its purpose, but maybe not to the detriment of other activities or ministries, so deciding where it goes needs a little thought.

If you are looking outside the church then premises and location are very important.  Using your “why” question as a starting point, we would suggest that you do your homework.  You might want to consider:

1. The community that you are seeking to attract

2. The prominence of any site

3. The footfall within the locality

 

Look and feel is always important and disabled access is likely to be a consideration too.

Remember that if you take on premises that are currently being used for purposes other than as a shop, you will need to get permission for change of use.  Depending upon where you are situated, this may not always be forthcoming.

2. What time to open?

Again, for the church bookshop this is likely to be a relatively straightforward answer however, for an off-site operation, perhaps not so.

Again, for the church bookshop this is likely to be a relatively straightforward answer however, for an off-site operation, perhaps not so. If a trading operation for example, do you want to keep the same trading hours as other shops in the locality? If you do, where are you going to get your staff from? For a café similar considerations apply.  Day time coffee shops are attractive to those at home during the day, breakfast and evening cafes are perhaps more suitable to commuter communities. The same staffing considerations will apply.

3. What about staffing?

Having the right people staffing your shop is important...

Having the right people staffing your shop is important. While Christians in the church may be forgiving if one week the bookshop is not open, this will not be the case for an offsite café or shop which will trade in part on its reliability and is in competition with wholly commercial operations.  Staff can be employees, volunteers or more likely a combination of the two but it is important that the right people are found.  Using people that have commercial skills or experience will give the shop the best chance of success; relying on something akin to the flower rota to staff a shop probably will not.

Whether using employees or volunteers there are aspects of legislation that you need to be aware of and comply with.  These range from insurance, through payroll and minimum wage requirements, to health and safety considerations.  Do not let the amount of necessary requirements put you off, but on the other hand don’t bury your head in the sand, because they will not go away and may come back to bite if not properly dealt with.

www.gov.uk/employing-staff offers a checklist of 6 things to consider when employing staff.  For more detail see www.acas.org.uk/media/pdf/d/m/Employing-people-a-handbook-for-new-firms-accessible-version.pdf which provides a more extensive but useful handbook.

 

4. Should the shop legally be part of the church?

It might be right for some shops to operate as an integral part of the church.

It might be right for some shops to operate as an integral part of the church.  This will mean that the governance and operation of the shop rests with the church trustees and that the financial records of the shop will form an integral part of the church accounts.  For other shops, it might be right that they are set-up as separate legal entities entirely separate from the church having their own governance structures and accounting records.  Two aspects help contribute to making this decision; rules regarding trading and concerns about image.

Guidance is provided by the Charities Commission setting out when and how charities may engage in trading.  Although it is mostly directed at trading to raise funds it does explain when a separate trading company should be established to carry on such activity.  The guidance states that trading subsidiaries must be used for non-primary purpose trading that includes significant risk.  The whole guidance can be found at us tax www.charitycommission.gov.uk/publications/cc35.aspx .

In parallel, HMRC also issues guidance to explain the various tax rules relating to trading within charities.  This can be found at www.hmrc.gov.uk/charities/guidance-notes/annex4/sectiona.htm#1 .

The image consideration is not concerned with the legality of trading, but rather the more intangible issue of what the shop says about the church.  You will need to consider whether the shop should carry the church name; what this says to the local community; how it plays into the perception and purpose of the church.

5. Skills, qualifications, licences and other legal requirements

Certain trades will require skilled and qualified staff to operate; others might require licencing or perhaps other legal checks to be undertaken...

Certain trades will require skilled and qualified staff to operate; others might require licencing or perhaps other legal checks to be undertaken.  Cafés will need to meet food and hygiene regulations; activities involving looking after children will require a child safety policy and the possibility that staff and volunteers are vetted using a Disclosure and Barring Scheme (DBS) check www.ccpas.co.uk , and premises playing background music will need a music licence www.ccli.com .  You are not able to rely on the fact that your church has a music licence, as licences tend to be location specific.

Health and safety, risk assessment and other legal requirements might also come into play.  Make sure that any shop complies with consumer law and sells goods of an appropriate quality.  For example, selling electrical goods or furniture (particularly second hand) requires goods to be checked beforehand and certified as safe.

6. Accounting and tax considerations

It is important that the financial trading activity of the shop be properly accounted for...

It is important that the financial trading activity of the shop be properly accounted for.  For larger offsite shops that will often operate as a separate legal entity, records will have to be maintained independently from those held for the church.  A small on-site bookstore may be accounted for within the finances of the church, perhaps as a sub-account.  The accounting treatment will follow the legal and image considerations covered under 4 above.

Tax can be quite complex and particularly for larger shops seeking a degree of professional advice before you go too far down the line is likely to be appropriate.  At a very broad level, charity shops often benefit from being exempted from corporation tax and are zero rated for VAT on the sale of donated (although not new) goods.  HMRC issues guidance that relates both to direct and indirect taxation.  This guidance can be found at www.hmrc.gov.uk/charities/tax/trading/exemptions.htm for direct taxation and for indirect taxation at www.hmrc.gov.uk/charities/vat/intro.htm

Charity shops might also benefit from a reduction in non-domestic business rates.  Eligibility for this reduction will depend upon what the shop is selling and also how it is structured.  Your local council should be able to tell you more about this.Â

Normally, donations of goods for sale do not qualify for Gift Aid as this can only be applied to gifts of money.  However, there is an arrangement that exists which is often referred to as the “Retail Gift Aid Schemeâ€Â in which the charity acts as an agent for its supporters, selling goods on their behalf in the hope that the donor will then donate the sale proceeds.  Details of how this scheme operates can be found at www.hmrc.gov.uk/charities/gift_aid/rules/retail.htm

 

Conclusion

If the answer to your opening 'why' question is a solid God-led yes, and if you believe that you have the necessary skills and experience; then however daunting the practical aspects might appear to be, they can all be tackled with care, a little research, and a great deal of enthusiasm.

comments:

There are currently no comments on this post

leave a comment:

Your comment will have to be approved by a site administrator before it is shown on the site so please be patient.