Could Your Business Become a Benefit Corporation?
Businesses not only want to make money, but they want to impact their community in a decidedly good way. And social entrepreneurship is on the rise. Many states are starting to recognize a new class of companies: benefit corporations.
California, Hawaii, Virginia, Maryland, Vermont, and New Jersey have all passed B Corp legistlation.
Several other states have pending legislation.
A benefit corporation is essentially a company that has a social or charitable goal built into its business model. For example, a company where part of the profits are given to philanthropic efforts. Or one with a focus on environmental impact.
A typical corporation will prioritize money. A benefit corporation will weigh finances, but since their social, environmental or philanthropic goals are "built in," directors may also consider these impacts in business decisions, reports Inc.
There are benefits to becoming a B Corp. Businesses can help differentiate their brands and they can promote their mission. There are also opportunities for press and publicity. And there are ways B corps can save money through partnerships.
Not all companies, however, can fit into the benefit corporation umbrella. Expect a higher level of transparency and legal accountability.
And benefit corporations need to have that social component. Not all companies will qualify. Does your company specialize in fair trade goods? Organically-sourced goods? Donation to charities? If so, you may already have a social component.
But if your business is a standard operation, it's likely becoming a B Corp won't be in your best interest. And benefit corporations need to be careful: even with a social "mission," your business needs to be competitive. "No one is going to invest in your company or buy your product just because you say you are one of the good guys," Jay Coen Gilbert, B Lab co-founder, told Inc.
Related Resources:
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Small Business Corporation FAQ (FindLaw)
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What is an S Corporation? What are its Benefits? (FindLaw's Free Enterprise)
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Choosing a Business Structure: the Corporation (FindLaw's Free Enterprise)