A Benefit Corporation is a relatively new type of business structure in Florida. Unlike traditional corporations that are largely focused on obtaining the highest possible profit margin, Benefit Corporations, although for-profit, devote a greater amount of their attention and resources to advancing important social and environmental issues. Therefore, they serve as a middle ground between for-profit and not-for-profit corporations. In Florida, the issues and causes promoted by a Benefit Corporation must ultimately have a general or specific public benefit.
What Is a General Public Benefit?
In Florida, the general public benefit promoted by a Benefit Corporation must, when taken as a whole, have “a material, positive effect on society and the environment.” General public benefits include but are not limited to: having an environmentally-friendly business operation, working alongside charities and donating a percentage of all profits to them, and engaging with vulnerable communities and providing them with valuable opportunities.
What Is a Specific Public Benefit?
Unlike a general public benefit, a specific public benefit is more narrowly tailored to achieving a stated objective. In Florida, some of the specific public benefits a Benefit Corporation may engage in, include the following: providing beneficial products or services to low-income individuals, promoting economic opportunity for individuals beyond creating jobs, taking efforts to protect or restore the environment, improving human health, and promoting the arts and sciences.
How to Create a Benefit Corporation?
The first step in forming a Benefit Corporation is choosing a business name. The name must be unique, meaning that there cannot be any other corporation in Florida with the same name. Once the business name has been chosen, the Articles of Incorporation must be filed with the Florida Division of Corporations. A Benefit Corporation must expressly identify the corporation’s general and/or specific public benefit. Third, the company must have a set of bylaws outlining detailed information about the Benefit Corporation. Lastly, a Benefit Corporation must file its Annual Report with the Florida Division of Corporations. Unlike the Annual Report of a for-profit corporation, a Benefit Corporation’s Annual Report must include detailed information regarding how the corporation pursued its general and/or specific public benefit, any obstacles that impacted the corporation’s public benefit, and information regarding the entity that was used to create the third-party standard for the Benefit Corporation.
What Are the Advantages of a Benefit Corporation?
Perhaps the greatest advantage of creating a Benefit Corporation is the positive reputation and warm public reception afforded to such businesses. Given their focus on important environmental and social issues, Benefit Corporations are viewed as more ethical by the public than traditional for-profit corporations. With this improved reputation comes additional benefits, such as attracting qualified employees and maintaining high morale amongst the workforces. Many prospective employees are seeking to work for companies that stretch beyond the confines of traditional corporations, and instead place a greater emphasis on improving their communities and combating environmental degradation. As a result, when employees work at Benefit Corporations, they are more likely to have high morale since they know that their efforts are contributing to the company’s larger public benefit objective. Ultimately, this creates a work environment that is highly productive and has low turnover rates.
What Are the Disadvantages of a Benefit Corporation?
Given that a Benefit Corporation is first and foremost focused on promoting the public good, they tend to have lower profits than traditional corporations. However, this is not often a serious concern for shareholders in a Benefit Corporation, given that they know that the main objective of the company is serving the public before joining the business. Benefit Corporations also have higher levels of formalities and paperwork, making them more cumbersome to operate.
