Why choose a Benefit corporation?
A Benefit corporation or B corp is a for-profit company that legally sets a company’s societal and environmental mission as a core business objective. Benefit corporations are required to create a measurable positive impact on society and the environment, taking into consideration the impact of their decisions not only on shareholders, but all stakeholders including workers, community, and the environment. A Benefit corporation is becoming the entity type of choice for corporations that provide clear and material public benefits in addition to making profits. Businesses of all sizes may consider converting to Benefit corporations or creating new spin-off Benefit entities. Likewise, many attorneys are now specializing in Benefit corporations.
B corp advantages
Starting a B corporation typically provides a number of advantages:
- Differentiation. By offering unique social benefits a B Corp can stand out among competitors.
- Flexibility. Entrepreneurs and investors can pursue social goals as well as a healthy bottom line.
- Protection. Benefit corporations offer the tax benefits and personal liability protection of traditional corporations.
- Competitiveness. A social mission is attractive to many consumers, employees and investors.
- Attracts Talent. More employees are drawn to companies that create a positive impact on society.
- Attracts Investment. Both the for-profit and non-profit worlds view socially responsible companies as an attractive investment case.
- Societal Impact. B Corps offer a positive vision of how to do business in a better way by improving life in their communities.
How do you form a Benefit corporation?
In order to register a business as a Benefit corporation, Articles of Incorporation (sometimes called a Certificate of Incorporation), must be filed with the state and the necessary filing fees paid. Currently 27 states permit the formation of Benefit corporations. As of November 1, 2014, these states are AR, AZ, CA, CO, CT, DC, DE, FL, HI, IL, LA, MA, MD, MN, NE, NH, NJ, NY, NV, OR, PA, RI, SC, UT, VA, VT, WV. Many other states are considering Benefit corporation statutes, so expect the list to grow in the coming years. Call to Get started.
Key Benefits of forming a B corporation
Electing a B corp allows a company to align business success and profits with social values while retaining the liability protections of traditional corporations. Along with gaining greater flexibility when choosing a business structure, B corps differentiate a business from the competition by promoting social good which is attractive to many consumers, employees and capital investors from both the for-profit and non-profit worlds.
After incorporation, a company can earn recognition as a Certified B Corporation from the non-profit organization, B lab. The certification indicates that a company meets the rigorous standards of social and environmental performance, accountability, and transparency. A company does not need to be certified by B Lab in order to be a Benefit corporation, but if certification is obtained, the Benefit corporation’s credibility is strengthened and reinforced. B Lab, a nonprofit organization dedicated to using the power of business to solve social and environmental problems, has been the leading organization pushing Benefit corporation legislation forward at the state level.