Frequently Asked Questions Regarding Benefit Corporations & Benefit LLCs
What are Benefit Companies?
Utah Benefit Companies (BCs) are triple bottom line sustainable enterprises.
By law, they commit to:
Operate to profit people and planet as well as owners.
Submit an annual report on social and environmental benefits they generate.
Utah is one of only 4 states that offer both Benefit Corporation and Benefit LLC registration and the only state that also allows L3C registration.
In Utah, as of February 2021, there are only:
32 Benefit Corporations 35 Benefit LLCs 96 L3Cs
What are the requirements to becoming a Benefit Business?
Generating positive social and environmental benefits and summarize these annually in a report to the state. (P3 Utah can help you with the report.)
Considering multiple stakeholders when making decisions, including: employees, customers, community, the environment, and the future.
What are the benefits to being a Benefit Business?
Standing out above the competition
Attracting younger employees
Expanding customer loyalty & market share
Attracting & protecting impact investments
Protecting owner values when transferring to new owners
Support & benefit from the larger purpose-driven business movement
How do I convert to a Benefit Business?
Become one of the trailblazers and business leaders as a Benefit LLC or Benefit Corporation.
Utah is only the 4th state in the nation to offer this class of business which allows businesses to recognize their people, the planet, and a profit. Any current corporation or LLC can convert to a Benefit Business, and if you are starting a new business, you can incorporate from the start as a Benefit Business.
We have compiled a downloadable & printable filing guide, as well as Utah's official registration form, that you can access below. If you have any questions regarding registration as a Benefit LLC, please contact Kathy Berg at email@example.com OR by phone at 801-530-6216. You can also access all registration forms from the Utah Division of Corporations here.
What is the difference between a Benefit Corporation and a Benefit LLC?
Both are focused on making business decisions that make a social and environmental impact, but one is a corporation and one is a limited liabilitycompany. For more information on the differences between a corporation and an LLC, you can check out this article for clarification.
What is the technical, legal benefit of being a Benefit Corporation or Benefit LLC?
Benefit Corporation or Benefit LLC status provides legal protection to balance financial and non-financial interests when making decisions—even in a sale scenario or as a publicly traded company. In the case of a Benefit Corporation, this also gives additional rights to stockholders: it gives investors the ability to hold the social and environmental impact of the business in the same importance as profit. This could aid companies in attracting impact investment capital. As a Benefit Business, you are also making a commitment to being more transparent: you are required to submit an annual report to the state and free to the public, detailing how you contributed toward improving your community and environment.
What are the requirements to maintain status as a Benefit LLC or Benefit Corporation?
In addition to the requirements of a regular LLC or Corporation, you will need to file an annual report to the state detailing how you contributed toward improving your community and environment. (P3 can help with this, and will provide a simple form to help you file your annual report.) You also need to make this report available for review by the interested public.
What is the difference between a Benefit Corporation and a B-Corp? Aren't they the same?
While a Benefit Corporation and a B-Corp may sound extremely similar, they are not the same. A Benefit Corporation is an official, state-recognized business registration which has legal standing. A B-Corp is a certification provided to businesses who achieve a high level of sustainability in their operation, similar to LEED certification for buildings, and is a product of B-Lab, a non-profit. A Benefit LLC can receive a B-Corp certification, as well as regular LLCs or Corporations. You can read more about the differences on B-Lab's website, which also has additional information on Benefit Corporations.
What are the commitments to obtain a Benefit Business status?
When you register as a Benefit LLC or Benefit Corporation, you are committing to make business decisions focused on supporting people and the planet, as well as on making a profit. There are no set standards you must commit to. This is all personal, so the social and environmental impact your business has will depend entirely on your efforts. You must also submit an annual report to the state detailing how your business has contributed to social or environmental good.
With regards toward filing commitments, if you're an existing LLC, all you need to convert to a BLLC is 10 minutes, 2 forms, and $37.00. Filing to establish a new BLLC from scratch is the same as for any business, and would cost $70 for filing. You can access our filing guide on our Benefit Business page here.
Is there an annual minimal requirement for demonstrated community benefit?
No. You set your own standards and goals for how your business can benefit the community. You just need to file an annual report that follows an approved third-party format which P3 Utah can help you with.
Are there any tax benefits for registering as a Benefit LLC or Benefit Corporation?
No, your federal tax status does not change as a Benefit LLC or Benefit Corporation. A Benefit Business designation is designed to not require any change in tax or accounting status, other than infer a tracking of social and environmental benefits. This is to allow ease of transitioning into and out of Benefit Business status. The incentives provided to business are primarily marketing related, as the seven that are outlined in answer to the previous question on legal protection.
Do I need to file my taxes differently as a Benefit Business?
No. As your federal tax status does not change as a Benefit Business, you do not need to file taxes differently.
What is the difference between a Benefit Corporation, Benefit LLC, and a Low-profit Limited Liability Company (L3C)?
Benefit Corporations and Benefit LLCs is a legal form of business entity for businesses who strive to generate positive social and environmental benefits and make an annual report of those benefits available for review. A Low-profit Limited Liability Company is also a state designation for a business. An L3C sits between a non-profit organization and a for-profit organization: it is a for-profit, social enterprise venture that has a stated goal of performing a socially beneficial purpose, not maximizing income. Like Benefit Businesses, a L3C works to generate positive social and environmental benefits. Unlike Benefit Businesses, however, an L3C is explicitly required to have a clear mission and is not required to generate a profit, similar to a non-profit. Both Benefit Corporations and Low-profit Limited Liability Companies are recognized by the state. You can find more information about L3Cs through the state's website here.
Where are some benefits to being a Benefit Business?
Being a Benefit Business can be significant in terms of public policy and market positioning.
In terms of public policy, there are three benefits.
It has a competitive economic development and corporate recruiting benefit.
It recognizes the public's desires to more readily distinguish which businesses are striving to generate additional benefits for the community and is ready to be accountable for disclosing those additional benefits.
It implements the legislature's desire for the private sector to lead out in innovating new approaches to address pressing social and environmental challenges.
From a marketing standpoint, there are seven distinct benefits, allowing Benefit Businesses to:
Be recognized for holding higher standards;
Better attract younger employees who seek to create more meaning at work;
Expand customer loyalty and market share for growing segment that wants higher value with purchases;
Better attract and protect impact investments, a rapidly growing new revenue source for business;
Better establish commercial social enterprises who seek a business innovation in tackling social & environmental challenges;
Protect owner values that built a great company in sale of business to new owners; and
Support, and benefit from, establishing Utah leadership in the global purpose business movement, which is where all business is ultimately going.