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B Corp vs Benefit Corporations: What's the Difference?

Author: Becki Ueno
by Becki Ueno
Posted: Jan 19, 2016
benefit corporations

Many people don't know the difference between B Corp and Benefit Corporations. On the face of it, the two look to be almost identical, with the former being a shorter version of the latter, right?

Wrong! If you were to ask any Certified B Corp Attorney in Los Angeles, they'd explain the following differences between the two:

B Corp

According to Triple Pundit, "Certified B Corporations are a new type of corporation which uses the power of business to solve social and environmental problems."

But B Corp isn't an actual corporation. In fact, it's a certification, offered by an NGO known as B Lab. In order to be qualified for a B Corp, a company must:

  • Fill out the Impact Assessment A form
  • Meet certain criteria, both environmental and social
  • Provide support documents for certification
  • Amend company bylaws to include the interests of company stakeholders

These changes will make the company similar to a Benefit Corporation, though not identical.

Benefit Corporation

Triple Pundit states that "Benefit Corporations are a new class of corporation that are required to create a material positive impact on society and the environment and to meet higher standards of accountability and transparency."

Instead of being governed by B Labs, however, Benefit Corporations are entities governed by state legislature. They will need to meet state laws, and they must meet the same requirements listed for B Corporations. The main difference is that the Benefit Corporation will function under the oversight of state laws, and the company must focus on the benefit of the public (hence the "benefit" in the name).

However, you need to know that companies can only be Benefit Corporations in six states: Hawaii, California, Maryland, Virginia, New Jersey, and Vermont. If your company is from one of these states, it can be registered as a Benefit Corporation.

Can a Company Be Both?

The good news is that your social enterprise can be both a B Corp and a Benefit Corporation. The process for obtaining your B Corp certification is usually easier than becoming a state-approved Benefit Corporation, but the paperwork and the company restructuring process is virtually the same. You'll be able to obtain your B Corp certification at the same time as you apply for Benefit Corporation status from the government.

Need help setting up your B Corp or Benefit Corporation? With the best Certified B Corp attorney Los Angeles can offer, and you'll receive the assistance you need to navigate the process as easily and painlessly as possible.

About the Author

Sustainable Law Group is certified B Corp attorney serving profit, non-profit and social enterprises with legal support in West LA, South Bay and El Segundo in Los Angeles.

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Author: Becki Ueno

Becki Ueno

United States

Member since: Dec 04, 2015
Published articles: 7

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