Frequently Asked Questions
what is a benefit corporation?
A benefit corporation is a for-profit corporation with a purpose. Benefit corporations commit in their founding documents to being sustainable and socially-conscious enterprises. Instead of being purely profit-focused like the traditional corporation, benefit corporation leadership is also free to consider the impact of its actions on society and the environment, even when it may not completely maximize profit.
why would i choose a benefit corporation for my business?
Benefit corporations are great for founders who are committed to a cause but still want to operate their business as a for-profit entity. Being a benefit corporation puts customers, business partners, and employees on notice that yours is a conscientious company that is committed to ethical and sustainable business practices. If you're a startup, you can rest easy knowing that in the event you sell some or all of your company, the commitment to sustainability will be built into the company's founding documents so it can't easily be changed by any new owners.
why haven't i heard of benefit corporations? are they new?
Benefit corporations are relatively new. Maryland was the first state to authorize benefit corporations in 2010. Even now, benefit corporations are only authorized in two-thirds of the states. Even if your state doesn't recognize benefit corporations, though, you can still form one in a state like Delaware and then simply register to do business in your home state. So no matter where you are, let me help you take advantage of this exciting new business form.
what are some examples of benefit corporations?
Some of the world's best-known brands are benefit corporations: Etsy, Warby Parker, Ben & Jerry's, and Patagonia have all committed to operating sustainably and ethically. Whether you operate an existing company or are an entrepreneur looking to build the next "do-good" company, structuring as a benefit corporation is a bold declaration in your commitment to a better world.
is being a "b corp" different than being a benefit corporation?
Yes. A benefit corporation refers to a company's legal structure as a corporation with a special provision in its governing documents giving directors the power and the obligation to consider the societal impact of their decisions. By contrast, b corp status relates not to legal structure but rather is a certification granted by the nonprofit B Lab. All types of businesses, not just corporations, can become b corp certified if they meet B Lab's requirements.
why would i choose to be a benefit corporation instead of becoming a certified b corp?
Good question! Although any type of business can get a b corp certification, there's nothing legally binding about achieving that status. Most entrepreneurs like the idea of making a legal commitment to being socially-conscious that can't easily be changed if the company is sold, ensuring that sustainability will be a core value of the company even after the founding team is gone. Plus, becoming a benefit corporation is often times less expensive than getting B Lab certification.
can a benefit corporation also be an s-corp?
Yes. Although benefit corporations are structurally slightly different than traditional corporations, they are taxed just like c-corps. Consequently, benefit corporations can take advantages of all the tax elections available to c-corps, including S-elections.