Benefit Companies, Benefit Corporations, B Corps: Anybody Confused?

Photo by    Jon Tyson

Photo by Jon Tyson

Well, join the club.

It’s the most common question we get. And yes, there is a difference. But the good news is that all have something in common.  Each of these business models is designed to focus on the triple bottom line (the 3 P's) of People, Planet, Profit.

We call it ‘Biz for the Greater Good.’ It’s about Putting Soul into Business and there is a strong business case for this model, as described in our book.  

But let’s get back to those differences. You see, each business model caters to a different type of company, and it’s important to understand what works best for the growing number of socially conscious, cause-driven entrepreneurs and businesses in our marketplace today. 

What are Benefit Companies and Benefit Corporations?

Benefit Corporations and Benefit Companies, now available in 34 States, are almost the same.  

They both represent a similar business incorporation structure, passed and approved by their respective legislative bodies with one major exception. Benefit Companies, only available in Maryland and Oregon, allow LLCs to adopt this business structure, in addition to being an opportunity for “C” and “S” corporations. (Thus, the slight change in name). 

However, both Benefit Corporations and Benefit Companies provide the same legal protection to businesses, allowing them to dedicate resources and profit for the greater good of the community and environment, not just to shareholders. Many Benefit Companies and Benefit Corporations practice the 3 P’s and fulfill the requirements, yet never go through B Lab evaluation process for certification as a B Corps, but they are still dedicated to the same principles.

Benefit Corporations and Benefit Companies are well-suited to small entrepreneurs, as well as to mid-sized companies. Both business entities require:

·         Filing with the respective Secretary of State’s office with a simple amendment to either Articles of Incorporation or Articles of Membership

·         Being certified by an approved third-party reviewer that validates the business is aligned with the triple bottom line

·         Creating a ‘Benefit Report’, annually in some states, that documents activities that support the company’s adherence to the principles of the triple bottom line.

What are B Corps?

B Corps are businesses that meet the robust standards set forth by B Lab, a nonprofit organization wholes tagline is “measure what matters.”  They may or may not be a Benefit Corporation or Benefit Company filing as a legal structure with their Secretary of State’s office, which would allow them legal protection to consider the interest of all stakeholders, not just shareholders. (NOTE:  some state B Corps communities are now requiring this.)

So, put simply, B Corps are companies that have chosen to pursue a rigorous, comprehensive evaluation to meet the highest standards associated with the values of the triple bottom line.  To earn B Corp status, a business must accumulate adequate points through a lengthy and robust survey administered by B Lab every year.

Needless to say, it takes time, effort and dollars to go through the B Lab evaluation. Some startups find it difficult to initiate the B Lab evaluation process and it may be best-suited for more established, larger companies, as many questions ask about a company’s human resource policies and infrastructure that accompanies more established business.

However, although the B Corps standards are high and their tool is used as a road map for improvement, it is often worth striving for as a business grows and becomes more sophisticated. It can be a strong differentiator and brings high market value and cache. We often suggest that companies on this journey start with ‘level one,’ becoming a Benefit Company or Benefit Corporation first, and then as they grow and evolve, move on to ‘level two’ and start the B Lab Assessment on the path to becoming a certified B Corp.

In sum, whether a Benefit Company, Benefit Corporation, or B Corp, businesses are joining this powerful movement that is gaining attention and advocates throughout the country as well as new customers and loyal employees.

For additional information about the distinctions between these entities go to:


MaryAnne Harmer