Frequently Asked Questions Regarding Benefit Corporations & Benefit LLCs
Q: What is the difference between a Benefit Corporation and a Benefit LLC?
A: Both are focused on making business decisions that make a social and environmental impact, but one is a corporation and one is a limited liability company. For more information on the differences between a corporation and an LLC, you can check out this article for clarification.
Q: What is the technical, legal benefit of this new Benefit LLC status?
A: The reason passage of the BLLC is significant is in terms of public policy and market positioning.
In terms of PUBLIC POLICY, there are three benefits.
1. It has a competitive economic development and corporate recruiting benefit.
2. 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.
3. 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 BLLC enterprises to:.
1. Be recognized for holding higher standards;
2. Better attract younger employees who seek to create more meaning at work;
3. Expand customer loyalty and market share for growing segment that wants higher value with purchases;
4. Better attract and protect impact investments, a rapidly growing new revenue source for business;
5. Better establish commercial social enterprises who seek a business innovation in tackling social & environmental challenges;
6. Protect owner values that built a great company in sale of business to new owners; and
7. Support, and benefit from, establishing Utah leadership in the global purpose business movement, which is where all business is ultimately going.
Q: What is the new legal benefit or protection for a company that does not have shareholders? Can't a private company owner run a business as he or she sees fit, taking into accounts such impacts as they wish?
A: Yes, the national model BLLC was not created due to a pressing legal need, as was the case with the need for benefit corporations.
Q: What are the commitments to obtain a Benefit LLC status?
A: When you register as a Benefit LLC, you are committing to make business decisions focused on supporting people and the planet, not just 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.
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 HERE.
Q: What are the requirements to maintain status as a Benefit LLC?
A: There are no standard requirements you must meet to maintain status as a Benefit LLC, but you DO need to file an annual report to the state detailing HOW you contributed toward business focused on people and the planet. (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.
Q: Is there an annual minimal requirement for demonstrated community benefit?
A: 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.
Q: Are there any tax benefits for registering as a Benefit LLC?
A: No, your federal tax status does not change as a Benefit LLC. The BLLC 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 BLLC 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.
Q: Do you know how many companies have changed to the Benefit Corporation status created in 2014, and whether that status has any maintenance requirements, including reporting?
A: The benefit corporation law does not have any maintenance requirements beyond what was stated above in the reporting requirement for both benefit corporations and BLLCs. To the best of our knowledge all states require this annual reporting for benefit corporations.
As of 2016, there were over 4,000 Benefit Corporations in 32 states and District of Columbia. We estimate the number is now closer to 5,000 but we have not seen a current count.
As of 2018, only 4 states allow for businesses to become BLLCs. The running count for BLLCs are:
Maryland: about 100 Maryland
Pennsylvania: about 900
Oregon: (We don't have a count.)
Utah: about 14
Q: Who can help me with goals, BLLC reporting, networking, and initiatives toward making my business more purpose-driven and sustainable.
A: We're glad you asked because that is precisely what P3 is here for: to support, educate, and coach you on your journey toward leading in your industry as a sustainable business leader. To get the most out of what we have to offer, look into our MEMBERSHIP PACKAGES.