The Twofold Benefits to Forming a B-Corp

    It’s good to be a B-Corp right now. As of April 2013, 12 states have enacted legislation recognizing Benefit Corporations with Oregon prepping to join the roster, as it already counts 25 certified B-Corps under its belt. The growing popularity of this fairly recent class of corporations also provides a twofold recipe for success in 2013 and beyond, by mixing entrepreneurs looking to create a profit with the support of social causes as well as offering up legal protection for the business itself.

    Benefit corporations ultimately work to fulfill three different areas on a voluntary basis -“ corporate purpose, accountability, and transparency. Within these areas, B-Corps create a material positive impact on both society and the environment, make available as required their annual benefit report to the public on their overall social and environmental performance, and consider (also by requirement) the impact of the decisions made on shareholders, workers, community, and the environment. The public service that they fulfill must be a distinguishable social good for society and as a result, entrepreneurs and everyone associated with the B-Corp goes above and beyond in the work they produce.

    For example, if you decide to create a company with a particular social mission in mind -“ such as donating 10 percent of profits to wetlands preservation -“ and you wanted to incorporate your business and raise money through selling shares, you would have to give up some control of your company to the shareholders. By giving up this kind of control, the company focus could shift to producing the maximum amount of profit rather than staying on track with its social mission. But the creation of a benefit corporation ensures your company can continue donating 10 percent of its profits to wetlands preservation, even if that percentage cuts into profits.

    Social causes in place, the legal benefits that come with forming a Benefit Corporation protect both the business and your personal assets. B-Corps are considered to be hybrid corporations, falling somewhere between a standard corporation and a non-profit. By forming a B-Corporation, your personal assets will be protected with liability protection and the business structure itself will be formalized, with a strong foundation set up to take on financing for the business. This foundation works to engender support from investors and customers like the public benefit approach of your business and will be more likely to invest in such. And on an additional level, the benefit corporation does not affect tax status as the company can still elect to be taxed as a C-Corp or S-Corp.

    Now that you know much more about the legal and societal benefits that come with forming a B-Corp, you may want to know how you can go about creating one of your own. The process is still quite similar to the regular incorporation process. A standard Articles of Incorporation will be filed along with a statement that attests your corporation is a benefit corporation and the specific public benefits that your corporation intends on pursuing. Additionally, you can elect to become a B-Corp though you will need to get approval from shareholders and amend your governing documents to do so. Requirements also vary from state to state -“ what passes in California May not in New York -“ and it’s also important to remember that B-Corps are still a new business model not yet available in every state. But that legislation is quickly evolving with additional states outside of Oregon (including Texas and Colorado) still pending with expansion likely to come to all 50 states.

    Based out of Calabasas, Calif., Deborah Sweeney is the CEO of, a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark and copyright filing services. You can contact Sweeney at [email protected].