How to start a B Corporation

Certifying your company as a B Corporation isn’t a walk in the park. You’ll have to submit to random audits, pay annual fees and alter the legal structure of your company. But there are a lot of instances where it makes sense.

While you don’t get any special tax benefits (unless you happen to be based in Philadelphia), certifying your business as a B Corporation demonstrates to the world that you company is committed to solving social and environmental problems. I also suspect that in the future, consumers as well as local, state and the federal government will start showing B Corporations preferential treatment (and that means earning the designation could be good for your bottom line AND for the wider world).

Before you run out and sign up, though, realize that becoming a B Corporation isn’t as simple as filling out a registration form and paying an annual due. If you meet B Lab’s requirements for earning the designation, you’ll probably have to modify your company’s legal structure to limit management’s ability to bypass B Corporation values. That means giving a lot more power to your shareholders AND your stakeholders. You’ll also have to agree to random audits designed to verify your adherence to B Corporation standards.

If you’re committed to running a company that doesn’t just make you money but makes the world a better place in the process, here are the steps to earning a B Corporation designation:

1) Register for a B Impact Assessment. Since every industry has different social and environmental impacts, you’ve first got to submit information regarding your industry, business size, revenues, employee hours and more to B Lab (the certifying body for B Corporations). After you’ve submitted this information, your company will receive a specific B Impact Assessment form to complete. You can register to receive the appropriate B Impact Assessment form here.

2) Complete your B Impact Assessment. After completing your registration, you’ll be sent a custom username and password that you can use to complete your industry and business size’s specific B Impact Assessment. Before beginning, you may want to assess how transparent you’d like to be with your business practices. B Impact Assessment’s are freely available to the public.

3) Review your survey with a B Lab staff member. You’ll need to walk through all of your Impact Assessment answers with a representative from B Lab so he or she can be sure you correctly answered all the questions on the form.

4) Supply documentation verifying your assessment answers. To get certified, your company will have to supply B Lab with documentation verifying roughly 20 percent of your answers to the survey questions. If you can’t verify key questions on the survey, your certification will be denied.

5) Modify your company’s legal structure. If the results of your survey are approved, you’ll have to modify your company’s legal structure to institutionalize stakeholder interests in your business. B Lab provides a legal roadmap to help you do just that. Visit the page linked above to select the type of corporation you run and the state where you’re incorporated. B Lab will provide you with reference language to help you update your company’s legal structure.

6) Sign your new B Corporation documents. If your company is approved as a B Corporation, you’ll have to sign a term sheet specific to the state where you’re incorporated.

7) Set aside funds to cover your company’s B Corporation certification. Fees for B Certifications vary based on the annual revenue at your company. The cost ranges from $500 a year for a company with less than $2 million a year in sales to $25,000 a year for companies with more than $100 million in sales.

8) Be prepared for random audits. One in five B Corporations (20 percent) are randomly selected for audits every two years. Should your company be audited, you’ll be expected to verify all of the information you submitted while filling out your B Impact Assessment survey. If you fail the audit, your company runs the risk of being publicly de-certified (and no one wants that!).

How much does it cost to become a B Corporation?

At the time of this writing, fees for B Corporation certification are based on your annual sales as follows:

Annual Net Sales Annual Fee
$0 – $1,999,999 $500
$2 M – $4,999,999 $1,000
$5 M – $9,999,999 $2,500
$10 M – $19,999,999 $5,000
$20 M – $99,999,999 $10,000
$100 M + $25,000

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