Advantages of Forming a Benefit Company

benefit company fist bump

You’ve heard of traditional businesses and non-profits, but a benefit company is somewhat the best of both worlds. A benefit company allows a business to consider how their motives and goals will benefit the public while still earning a profit. For companies looking to make a measurable, positive social impact, this is an ideal business formation.

 

Benefit Companies and Social Impact Investing

The private sector has been moving towards greater responsibility in recent decades, and this includes increases in institutional giving and investment in issue-oriented businesses.  These social impact investors are sitting up and paying attention to benefit companies because of the many unique ways they create value for investors and the public at large:

 

  • Aligning values—Many investors like to work with businesses that have mission statements that align with their personal values. Simply, investors appreciate the social impacts that benefit companies make.
  • Sustainability practices—Research proves that businesses that employ sustainability practices save more money and often have a better cash flow. With a proper setup, investors will feel more confident in investing their money in businesses that are well formed and organized.
  • Balance of profit and social gain—The landscape of investment is changing, and there is a huge attraction to do business with people who are focused on more than just earning money.

 

Patagonia, Warby Parker, Eileen Fisher and Seventh Generation are just a few of the more famous examples of successful benefit companies, showing that contemporary business does not have to be solely focused on profit to thrive in today’s market.

 

Benefit Company Reporting Requirements

Laws regarding corporations may vary slightly state-to-state, however, there is typically an annual report requirement that ensures that the benefit company is proving their social impact through environmental and social assessments. The report must be sent to all shareholders and should be published on the company’s website page. Some states may have additional requirements.  Remember, positive social impact is what sets benefit companies apart from regular businesses, so it’s crucial to have metrics and methods to track and measure the work your company is doing for the community.

 

Business Formation Attorney

If you are interested in forming a benefit company, then you should seek the guidance of a skilled business attorney. LawTrades can put you in touch with a seasoned lawyer that can answer your questions and help you with various stages of business development. You may also be interested in a subscription-based legal plan that allows you to have unlimited consultations throughout the year. Other perks include $0 service fee and drastically reduced hourly rates starting at $150 per hour.

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