I. Social-Minded Entities

Socially-Minded Entities
New entity types have emerged in recent years which combine aspects of a non-profit or socially minded business with aspects of a for-profit business.  Two such entities are the Low Profit Limited Liability Company (L3C) and the Benefit Corporation (B Corp).  These entities are not recognized in all states.  The social mission of the business is integral to the legal structure of both the L3C and B Corp.

The L3C was designed to allow greater flexibility for companies to raise capital for socially beneficial or charitable purposes by allowing some profit from which to provide a return to investors.  However, the IRS has not provided guidance on the tax implications of an L3C and the entity type itself is the subject of much debate.  It is recommended that you talk with an attorney before deciding whether this entity is a potential choice for your socially-conscious endeavor.

The B Corp is essentially a corporation formed for a social or environmental purpose.  Like the L3C, this entity has not been adopted by most states.  If you are interested in the B Corp, seek advice from your attorney.