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Organizational Structures for Socially Conscious Companies

Lucere Legal helps socially conscious small business owners
Categories: Business Formation

Social consciousness at the corporate level has become an increasingly more important point of differentiation for many companies, and some companies today exist primarily to fill a social purpose.  So what is the best business structure for these companies?  There are several from which to choose:

Benefit Corporations.  Minnesota law allows for Benefit Corporations, which require companies that choose this structure to have social and environmental goals that guide operational decision making.  Benefit corporations are required to issue an annual report detailing their progress in meeting these goals, audited by an outside party.

Flexible Purpose Corporations.  Available only in California, this corporate structure exists to provide firms with the flexibility to operate for one special purpose to pursue charitable or social goals.  The FPC is required to issue an annual report with financial statements that outlines the FPC’s special purpose and reports on activities and expenses to fulfill that purpose.

L3Cs.  Low-profit Limited Liability Companies (L3Cs) is a structure typically used to facilitate investments in for-profit ventures with a charitable or social purpose.  Using a L3C makes it easier for socially conscious companies to attract investments from foundations – which the IRS requires to invest five percent of their assets annually to charitable causes — and is legal in nine states:  Illinois, Louisiana, Maine, Michigan, North Carolina, Rhode Island, Utah, Vermont, and Wyoming.

B Corporations.  This is a bit of a misnomer, since B Corps are not corporations but a certification by the nonprofit organization B Lab to meet established standards for social and environmental performance, accountability and transparency.  B Lab has certified more than 760 businesses in 27 countries.

Maryland Benefit LLC.  A Maryland Benefit LLC operates the same as a Benefit Corporation, but does so as a limited liability company.

If you are thinking about starting a socially conscious company, call us at (612) 206-3701 or fill out our contact form today to schedule a small business consultation session.

Image courtesy of suphakit73 / FreeDigitalPhotos.net

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The plain-English guide for Minnesota small business owners

When it comes to business, ignorance isn't bliss; ignorance is risk.

There's a handful of legal topics that business owners should be familiar with, at least on a rudimentary level, to reduce the risk of having something horrible come out of left field.

This book is a legal guide to help you put the most common business legal issues on your radar, with enough information for you to be on the alert for when you may need to get some professional advice.

The intention in arming you with this information is so that you can proceed in business confidently and with fewer legal quagmires.

Do you have a cabin?

The first generation that buys a cabin enjoys it to the fullest and it’s a magical place where happy memories are made and families go for some much needed respite. Unfortunately, without thoughtful planning, the chances of the cabin staying a place of happiness and tranquility into successive generations is very, very slim.

If you haven’t done the planning in advance and made it legally binding, the family members (and their ex-spouses and new spouses) will have to work every detail out for themselves. If they can’t, what is likely to happen is a lawsuit called an action for partition that forces everyone to sell their interest. This lawsuit is expensive, and the costs of litigation will come out of the proceeds of the sale of the cabin, so to add insult to injury to those who wanted to keep the cabin but couldn’t afford to buy the others out, they are footing part of the legal bills in the lawsuit against them. Ouch!

It’s no wonder that family members stop speaking for years after the cabin conflict is “resolved.” You can’t make family relationships perfect, but you can take away much of the fuel for the family conflict fire. That’s what cabin planning does, and it has the nice side effect of giving you peace of mind now.

That’s why Kimberly wrote The Minnesota Cabin Planning Guide and Workbook, and you can get a free electronic copy of her book on our cabin planning website, or you can find it in many county libraries in Minnesota, or you can get it on amazon.com.

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