For socially minded entrepreneurs, the terms “Certified B Corporations” and “Benefit corporations” are often used interchangeably, but did you know there are some key differences between them? Understanding the distinction can help you decide which path may be right for your business.

A Certified B Corp is a certification granted by non-profit B Lab located right here in Philadelphia. B Lab offers third-party assessment and certification to for-profit businesses in areas of social and environmental sustainability. Certified B Corps meet rigorous standards of sustainability across all areas of business activity, and must receive a quantitative score of 80 or higher out of 200 points. You may have seen the “B logo” on products you purchase or company websites you visit.

A Benefit corporation is a new alternative to forming a legal business entity. You are probably familiar with traditional entities such as an LLC or S Corp, and now the Benefit Corp entity is currently an option in 20 states. This entity allows companies to legally structure their by-laws and form a board of directors in a way that requires consideration of the corporation’s purpose to create general public benefit.

While there are many commonalities between Certified B Corps and Benefit Corporations, a few key differences are:

  • Benefit corporation is a legal status available only in 20 states, while the Certified B Corp designation is available in all 50 states and internationally.
  • An Annual Benefit Report must be published by Benefit corps, filed with the Department of State and made available on the company’s website. As an example, here’s a link to the reporting requirements for PA.
  • A Certified B Corp is a third-party certification offered by B Lab based on their assessment tool. There is no third-party standard required to incorporate as a Benefit corporation.

It’s important to note that as a business owner you can choose to incorporate as a Benefit Corp and also become a Certified B Corp. They are not mutually exclusive designations; however the requirements for pursuing them are not identical.

Turn to us for help in navigating these considerations. We are atypical accountants that want to encourage and support the efforts of businesses pursuing good in their areas of influence.