Lisa Garrison, Attorney, Smith Moore Leatherwood
At the firm of Smith Moore Leatherwood LLP, Lisa Garrison maintains an active business litigation practice advising and representing clients in anything from claim appeals to multiple jury trials, but she also has an active presence with companies that have socially beneficial missions. Lisa serves as the founder of the firm’s “Benefit Corporation Team” or the “B Team” which focuses on exploring and serving the legal needs of aspiring or existing “benefit” or “B Corp” companies – for-profit businesses that seek to better the world through identified social missions and by focusing on sustainability and TPL/3BL (the “triple bottom line” pillars of profits, people, and planet).
Today, we’re discussing with Lisa how the “B Team” came to be at Smith Moore Leatherwood LLP and the assistance it provides Benefit Corporations in need, the financial advantages that come with forming a B Corp, and why every entrepreneur needs to read up on the pros and cons of Benefit Corporations before starting one up.
Jay Coen Gilbert, B Lab Cofounder
When we first started taking a closer look at benefit corporations, we were really building off of the momentum that began with B Lab, the nonprofit that pushes for Benefit Corporation legislation and certifies B Corps. Little did we know, we’d be interviewing Jay Coen Gilbert, one of the three cofounders of B Lab, on our blog! We were so excited, we added a few extra questions in today’s interview where Jay tells us about the benefits forming a B Corp brings to society and the environment, and that for all companies, it’s most important to take the first step and see where you stand.
1. What’s the source of your passion and inspiration that drove you into your leading role in the Benefit Corporation movement?
B Lab’s three cofounders, Bart Houlahan, Andrew Kassoy and I (Jay Coen Gilbert), all share a passion for using market forces to address society’s greatest challenges. We’ve worked in business for most of our careers and hope to harness the amazing talent, passion and resources we’ve seen there to make a better world. Ultimately, we founded B Lab to serve those entrepreneurs who are using business as a force for good.
With all this “B Corp” buzz in the air, it’s time to get one thing straight: the Benefit Corporation and the “B Corp” are not created equal. The terms are often used interchangeably, and it’s not necessarily wrong to say “B Corporation” or “B Corp” to informally describe a Benefit Corporation either. People understandably confuse the two, since both similarly aspire to cement a social or environmental purpose in a company’s mission and corporate governance structure.
But there is still a key difference between the pair: the benefit corporation is a legal entity recognized under a state’s corporate laws, while the “B Corporation” (or B Corp) is a certification conferred upon a company by a certifying organization. A company can be a B Corp without being a Benefit Corporation – and vice versa – but it’s important to know that while these two sound similar enough at first glance, they actually function fairly differently from one another.
By Greg Lindberg, 1800Accountant.com Writer
Decision-making is a huge part of being an entrepreneur and, eventually, a start-up business owner. One of the decisions you have to make during this often challenging process is to settle on a specific business entity to operate. An S corporation is one option you can go with. 1800Accountant.com, a partner of MyCorporation, recommends understanding the following information about how S corporations are structured and taxed before choosing to set one up.
The term “S corporation” originally took on its name from Subchapter S of Chapter 1 in the federal Internal Revenue Code. In general, an S corporation does not pay federal income taxes at the corporate level. However, this does not mean it is exempt from paying taxes altogether. The difference with this type of business entity is that it elects to have its profits, losses, deductions, credit, and all other activities passed through to the shareholders who are invested in the company. These shareholders must report this financial activity on their personal income tax returns.
One of the main reasons we chose to start this blog was to help explain the facets and aspects of business that typically get overlooked. To help us do this, we decided that, every Tuesday, we are going to post a new “Business Basics” piece to discuss subjects that readers, despite being aware of, may not know much about. With that in mind, one of the first subjects we are going to look at is the Benefit Corporation.
What is a Benefit Corporation?
For the last installment in our series on the tax treatment of entity types we’re going to cover the Partnership. If you’ve been keeping up with our posts, this will seem eerily familiar. Why? Because the LLC is typically treated just like a Partnership!
The four considerations we’ve been covering are:
- Pass through of gains
- Pass through of losses
- Transfer of assets to the entity, and
- Transfer of assets from the entity
No one will argue with this little piggybank – money plus money is more money. In fact, that’s the best part of paying taxes – It means you’ve made money! But did you know the type of entity you select can affect your taxes?
As we mentioned last Friday, we’re doing a series on four tax considerations that may help you pick the best business type for you and help your business become more tax efficient. The considerations are: Continue reading