In 2018, Utah became the fourth state to allow a new type of limited liability company that has the purpose of creating a public benefit. With the Benefit Limited Liability Company Act, “Benefit LLCs” give yet another option to businesses that want to make a profit but also want to create social impact.
Previous to this year, Maryland, Oregon and Pennsylvania were the only states with similar bills giving businesses the benefit LLC legal structure option.
P3 Utah Executive Director Steven Klass works with his organization to help companies establish and find success with what social enterprises refer to as a “triple bottom line” —creating profit, helping people and improving the planet. Klass said he sees Utah emerging as an important state for social entrepreneurship.
“Utah is one of the only states to allow business owners the opportunity to form a benefit corporation or a benefit LLC or an L3C (low-profit limited liability company),” Klass said. “We hope that thousands of business owners will make the decision to use these new vehicles.”
Devin Thorpe, a social impact journalist who has contributed almost 500 articles to Forbes, said benefit LLCs in Utah are revolutionary because they require companies to consider the well-being of employees, customers, the community, the environment and the future. Companies are now being held to a higher standard and must be concerned with the triple bottom line, Thorpe said.
Information aggregated from articles at utahbusiness.com and cullinanelaw.com by Michaela Proctor.
Klass worked with a board made up of other social entrepreneurs in Utah to help pass HB 186 in the Utah Legislature. According to Thorpe, this is just one step in the process of accommodating to the growing trend of social enterprises.
“The entire corporate legal field needs to adapt to a world in which there are all kinds of people setting up social enterprises for a variety of reasons and purposes,” Thorpe said. “All of those need to be accommodated with a range of corporate structures.”