Some companies wish to do more than just turn a profit. As explained by the Oregon Secretary of State website, a benefit company has the additional goal of enacting a positive change on society through its operations.
As an official business designation, owners of benefit companies must take certain steps to remain in compliance. Both corporations and limited liability companies (LLCs) can use this designation.
Requirements
Benefit companies must adhere to certain third-party standards, which provide rules for legal and operational matters. Companies can also enlist a benefit governor on their board of directors to oversee processes. To establish that your business meets third-party standards, benefit companies must also create and file a yearly report.
Annual reports
Reports begin with comparing your business to the third-party standard you choose. The resulting assessment will inform the annual report you create. You must show how you benefit society through your company. You must also explain why you choose the specific standard you selected.
Reports also contain other information, such as any obstacles encountered as your business tried to meet its goals. Once the report is complete, you must provide it to shareholders of the company.
Tax status
A benefit company is not the same as a non-profit. Non-profits are exempt from federal taxes, but benefit companies are beholden to the tax laws that govern their official entity, whether that is an LLC or corporation.
Rules dictating benefit companies also strive to make businesses accountable for their actions. It is through these measures that business owners can do good for the world while also pursuing their passion.