B Corporation Certification has never been hotter than in the present moment. According to B Lab, the global network for the Certified B Corp movement, there is presently an overwhelming interest being expressed in B Corp Certification. The review process for Certification, at the time of writing this, may be expected to take from six to 10 months to complete.
Why is B Corporation Certification trending with small businesses? Let’s take a look at what small businesses need to know about this Certification.
Are B Corps and Benefit Corporations the Same Entity?
Before we discuss B Corporation Certification, we need to first emphasize that a B Corp is not the same as a benefit corporation. Benefit corporations may sometimes be referred to as a B Corp or B Corporation. However, the core functions of a benefit corporation are not the same as a Certified B Corporation.
A benefit corporation is a legally recognized corporate entity. It differs from a traditional for-profit corporation because it comes with added requirements and duties. Benefit corporations must express in their articles of incorporation that they are committing to a general public benefit purpose. As such, the entity is able to adopt higher standards of purpose, accountability, and transparency. This creates an affirmative duty that directors and officers may uphold and allows for pursuing a specified purpose while earning a profit.
A Certified B Corporation is essentially a form of designation. The process to becoming a Certified B Corporation is a voluntary one. Businesses that undergo the Certification often start out as entities like LLCs or corporations. Certification is a bit like an audit. Through assessment tests and legal requirements, B Corp Certification determines if the business is able to commit to the triple bottom line of people, profit, and planet.
Requirements for B Corporation Certification
What all needs to happen to obtain B Corporation Certification? Here’s a quick look at what to expect in the process.
Taking the B Impact Assessment
How do you know what kind of impact your business currently has on its workers, community, environment, and customers? You may measure this impact with the help of the B Impact Assessment (BIA). This is a free tool that allows you to examine and measure the impact of your business.
The BIA may be examined by taking a quick snapshot, a 30-minute test that offers an overview of what your company does well and practices for where it can improve. Businesses that wish to pursue full Certification, however, will need to take the full impact report. This consists of 200 questions, determined by your company size, sector, and market. A total score of 80 is required across all impact areas to pass the BIA. Upon completion, you may review the results and create a customized improvement plan. This plan will allow you to further improve upon your score and become part of the Certified B Corp movement.
Complete the Disclosure Questionnaire
The Disclosure Questionnaire is part of the BIA. It allows for a public compliant process, conducting background checks and disclosing any sensitive business practices.
Meet Legal Requirements
As you get closer to obtaining Certification, legal changes may be necessary for the business. Some companies, for example, may decide to reincorporate or adopt a benefit corporation status. We advise meeting with a CPA if you have any additional questions about the legal requirements of a Certified B Corp.
Take the Verification Process
The verification process is a multi-step process that allows the business to find out if they have met the 80-point score necessary for Certification. As you complete the BIA and Disclosure Questionnaire, submit both to B Lab. A B Lab Standards Analyst will reach out and confirm your submission.
Schedule an Assessment Review
The assessment review will for Certified B Corp status will be between you and a B Lab Standards Analyst. It is generally a call together and may last up to 90 minutes. The review will thoroughly examine how the company plans to commit to public benefit. Businesses that are approved will pay annual certification fees and sign the B Corp Declaration of Interdependence.
At this point, they are Certified B Corps. Congratulations!
Is a Certified B Corporation Right for My Business?
Prior to beginning the Certification process, it is important that each owner, or member, of the business understands what it means to make this shift. You may not make the decision alone. Leadership must cast a vote to determine if a Certified B Corp is the best decision for their business.
If you have more questions about Certification, speak with a trusted CPA or legal professional. They will be able to provide greater insight into this designation and assist you in determining if it is the next best move for your business.
Deborah Sweeney is the CEO of MyCorporation.com. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best. Follow her on Twitter @deborahsweeney and @mycorporation.
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