B Corporation: What It Is & How to Become One

The term “B Corporation” causes a lot of confusion. Many entrepreneurs think it’s a business structure like an LLC or corporation, but it’s actually a certification from the nonprofit B Lab — like a “Good Housekeeping Seal” for socially responsible businesses.

the short answer: If you want to signal serious commitment to social and environmental responsibility (and can handle rigorous standards), pursue B Corp certification. If you just want to do good business without the paperwork and scrutiny, focus on your mission without the formal certification.

Quick Comparison: B Corporation vs. Benefit Corporation vs. Traditional Corporation

B Corporation Certification Explained

A B Corporation (or “B Corp”) is a certification awarded by B Lab, a nonprofit organization. Think of it like LEED certification for buildings or Fair Trade certification for coffee.

To become a B Corp, your business must:

Score at least 80 points on B Lab’s impact assessment (covering governance, workers, community, environment, and customers)
Meet legal accountability requirements
Pay annual certification fees
Undergo verification and recertification every three years

The Real Pros and Cons

Pros:

Marketing differentiation — consumers increasingly care about company values
Attracts purpose-driven employees and customers
Network access to other B Corps for partnerships and knowledge sharing
Some investors specifically seek B Corps

Cons:

Expensive and time-consuming application process (typically 6-18 months)
Ongoing compliance requirements and fees
Less operational flexibility — you’re accountable to stakeholders beyond shareholders
Rigorous recertification every three years

Best for: Established businesses (usually $1M+ revenue) with genuine commitment to social/environmental impact and resources to maintain certification requirements.

Benefit Corporation Explained

A Benefit Corporation (sometimes called a “B Corp” — confusing, right?) is an actual legal business structure available in about 35 states. It’s a type of corporation that legally commits to considering stakeholder impact, not just shareholder profit.

How It Works

When you form a Benefit Corporation, your corporate charter includes language requiring directors to consider:

Shareholders
Employees
Customers
Community
Environment

This gives legal protection to directors who make decisions that benefit society even if they don’t maximize short-term profits.

Taxation

Benefit Corporations are taxed exactly like regular C corporations — double taxation on profits (corporate tax, then personal tax on distributions).

Real Pros and Cons

Pros:

Legal protection for mission-driven decisions
Attracts impact-focused investors and customers
May qualify for certain grants or tax incentives (varies by location)
Simpler than B Corp certification

Cons:

Not available in all states
Complex reporting requirements
May limit some business decisions or growth strategies
Still relatively new — less understood by investors and customers

Best for: Startups and early-stage companies planning social impact from day one, especially those seeking impact investors.

The Certification Process — This Is Where It Gets Real

Becoming a B Corp isn’t like filing paperwork with your state. B Lab’s assessment covers five areas:

Governance (18 points possible)
Your company structure, mission, and stakeholder engagement

Workers (30 points possible)
Compensation, benefits, training, workplace environment, worker ownership

Community (40 points possible)
Local community engagement, diversity, suppliers, job creation

Environment (30 points possible)
Environmental management, facilities, materials, emissions, water/waste

Customers (18 points possible)
Product/service impact, ethical marketing, customer stewardship

You need 80 points total. Most companies score 50-60 on their first try.

The Timeline and Costs

Assessment phase: 3-6 months of self-evaluation and documentation
Verification: 3-12 months of B Lab review (they’ll want financial records, employee surveys, customer data)
Annual fees: $500 (under $150K revenue) to $50,000 (over $1B revenue)

B Lab verifies about 15% of responses randomly, plus any questionable claims.

Real-World Examples: Who Benefits From B Corp Status

Patagonia leverages B Corp status to justify premium pricing and build customer loyalty around environmental values.

Warby Parker used B Corp certification during rapid growth to maintain culture and attract talent.

Ben & Jerry’s was a B Corp before Unilever acquisition (you can lose certification through ownership changes that don’t align with B Corp values).

Kickstarter chose Benefit Corporation structure specifically to resist pressure for an IPO that might compromise their mission.

Which Path Should You Choose?

Go for B Corp Certification if:

Your business generates $500K+ annual revenue (you can afford the process)
Social/environmental impact is central to your business model
You compete in markets where values-driven branding provides advantage
You have time and resources for extensive documentation and reporting
You’re willing to maintain standards permanently (de-certification hurts more than never trying)

Consider Benefit Corporation structure if:

You’re forming a new business with social impact goals
You want legal protection for stakeholder-focused decisions
Your state offers specific benefits to Benefit Corporations
You plan to raise money from impact investors
You want accountability without third-party oversight

Skip both if:

Your primary goal is profit maximization
You don’t want external accountability for social impact
Your business model doesn’t align with B Corp values
You can’t commit long-term to maintaining standards

Can You Change Your Mind Later?

Becoming a B Corp: Any legal entity can pursue certification (LLC, corporation, partnership), but you need an existing business with track record.

Becoming a Benefit Corporation: Most states allow conversion from traditional corporation, but you’ll need shareholder approval and amended articles.

Losing certification: About 5% of B Corps lose certification annually — usually from not meeting standards during recertification, not paying fees, or ownership changes.

For International Founders

B Corp certification is available globally, but Benefit Corporation structure only exists in certain U.S. states. International founders often form Delaware C Corps (for investor familiarity) then pursue B Corp certification.

Some countries have equivalent structures:

UK: Community Interest Companies (CICs)
Canada: Community Contribution Companies (British Columbia)
Italy: Società Benefit

Frequently Asked Questions

Do I need to be profitable to become a B Corp?
No, but you need operating revenue and at least one full year of business operations.

Can LLCs become B Corps?
Yes, any legal structure can pursue B Corp certification. The underlying entity doesn’t change.

What happens if I don’t recertify?
You lose B Corp status and can’t use the certification in marketing. Some companies choose not to recertify due to cost or changing priorities.

Do B Corps get tax breaks?
Not directly from B Corp status, but some jurisdictions offer incentives to Benefit Corporations or businesses meeting certain social criteria.

Can I be both a B Corp and Benefit Corporation?
Yes, some companies pursue both for maximum legal protection and marketing benefit.

How long does B Corp certification last?
Three years, then you must recertify. About 90% of companies successfully recertify.

What’s the failure rate for B Corp applications?
B Lab doesn’t publish rejection rates, but most companies need 6-18 months to reach certification standards. Companies scoring below 50 points are encouraged to improve before formal verification.

Can venture-backed companies be B Corps?
Yes, but it’s complex. Some VCs specifically target B Corps, while others worry about fiduciary duty conflicts. Notable VC-backed B Corps include Warby Parker and Kickstarter.

The Bottom Line

B Corp certification works best for established businesses genuinely committed to stakeholder capitalism. It’s expensive, time-consuming, and permanent (in terms of reputation risk). But for companies where mission drives customer loyalty, talent attraction, or investor interest, the benefits justify the costs.

Benefit Corporation structure makes sense for new businesses planning social impact from day one, especially those raising impact capital.

Most businesses should focus on building sustainable operations before pursuing either option. Good business practices matter more than certifications.

Whether you’re interested in B Corp certification, forming a Benefit Corporation, or just starting with a traditional LLC or corporation, BusinessFormations.com handles the formation process in all 50 states. We’ll help you choose the right structure, file with the state, get your EIN, and set up compliance systems. [Get started here](https://www.businessformations.com/get-started/) and we’ll walk you through the entire process.