What is a B Corporation
What is a B Corporation?


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What is a B Corporation?

One of the major responsibilities of a for-profit Corporation is to increase shareholder value. For most Corporations the pursuit of shareholder value is done without regard for specific benefits to the public. The only benefits that matter are those that benefit the shareholders, who are the owners of the Corporation. For-profit Corporations often face pressure to abandon social goals in order to increase their bottom line.

Nonprofit Corporations are formed to provide some kind of public benefit but may be restricted in their ability to raise capital when they need to grow.

In the last few years some states have created a new kind of for-profit Corporation which has a legal responsibility to include some kind of public benefit in their Corporate operating requirements. A Corporation of this kind is called a Benefit Corporation or a B Corporation.

B Corporations are a hybrid between a for-profit and nonprofit Corporation. Operating capital is easier to raise for a B Corporation and the B Corporation is legally required to provide some kind of public benefit.

B Corporations do not have any special tax breaks or benefits. B Corporations are taxed just like any other Corporation is taxed.

To qualify as a B Corporation, a Corporation must have an explicit social or environmental mission, and a legally binding fiduciary responsibility to take into account the interests of workers, the community and the environment as well as its shareholders. A B Corporation must also publish independently verified reports on its social and environmental impact alongside its financial results. Some states require that the report must be filed with the Secretary of State.

Some examples of the specific public benefit that a B Corporation must provide, among others, include:
  • Providing low-income or under served individuals or communities with beneficial products or services
  • Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business
  • Preserving the environment
  • Improving human health
  • Promoting the arts, sciences or advancement of knowledge
Currently a little over half of the states have laws that allow for the formation of a B Corporation. It is probable that in the near future all states will have legislation which allows the legal creation of B Corporations.

We can help you form a B Corporation in any state which currently has provisions for B Corporations.
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