{"id":506,"date":"2015-06-20T16:03:46","date_gmt":"2015-06-20T20:03:46","guid":{"rendered":"http:\/\/www.michaelsmithlaw.com\/blog\/?p=506"},"modified":"2023-11-28T13:37:36","modified_gmt":"2023-11-28T18:37:36","slug":"benefit-corporations-and-small-businesses-part-ii","status":"publish","type":"post","link":"https:\/\/www.hpindiana.law\/business-blog\/benefit-corporations-and-small-businesses-part-ii\/","title":{"rendered":"Benefit Corporations and Small Businesses:  Part II"},"content":{"rendered":"<p><a href=\"https:\/\/www.hpindiana.law\/business-blog\/benefit-corporations-and-small-businesses-part-i\" target=\"_blank\" rel=\"noopener noreferrer\">Part I<\/a> of this series briefly discussed Indiana\u2019s new benefit corporation statute as well as certification of a company as a \u201c<a href=\"https:\/\/www.bcorporation.net\/become-a-b-corp\">B Corp<\/a>\u201d by B Lab and some of the possible advantages of certification and of incorporation under the new statute.\u00a0 Part II begins to look more closely at the details of the new law\u00a0and to consider whether it makes sense for small businesses to incorporate under the new statute.<\/p>\n<p>From a corporate law perspective, benefit corporations are, first and foremost, corporations subject to the Indiana Business Corporation Law, just like any other Indiana for-profit corporation.\u00a0 In our view, a corporation is not the best choice of the form of entity for most small businesses.\u00a0 For a number of reasons, including the<a href=\"https:\/\/www.hpindiana.law\/business-blog\/the-difference-between-tax-sta\" target=\"_blank\" rel=\"noopener noreferrer\"> tax alternatives available to LLCs<\/a>, the \u201cpick-your-partner\u201d and <a href=\"https:\/\/www.jdsupra.com\/legalnews\/indiana-llcs-have-charging-order-prote-90806\/\" target=\"_blank\" rel=\"noopener noreferrer\">charging order<\/a> provisions of the Indiana LLC statute, and the fact that <a href=\"https:\/\/www.hpindiana.law\/business-blog\/indiana-limited-liablity-compa\" target=\"_blank\" rel=\"noopener noreferrer\">LLCs have fewer corporate formalities<\/a> that must be observed (which decreases the possibility that the liability shield that protects the assets of owners from the creditors of the business will be disregarded through so-called veil-piercing), we believe that a limited liability company is a better choice than a corporation for most small businesses.<\/p>\n<p>The above advantages of LLCs over corporations are the same \u2013 or even greater \u2013 for benefit corporations.\u00a0 For example, partnership taxation is not an option for benefit corporations; if that is important enough, a benefit corporation is not a viable alternative.\u00a0 In addition, the benefit corporation adds more required corporate formalities on top of those already imposed by the Indiana Business Corporation law, increasing the administrative burden and the possibility of weakening the liability shield protecting the assets of owners from the company\u2019s creditors.\u00a0 In other words, for most small businesses, a benefit corporation will not be the best choice of entity for most small businesses, unless the advantages of incorporating as a benefit corporation outweigh the advantages of organizing as a limited liability company.<\/p>\n<div class=\"read_more_link\"><a href=\"https:\/\/www.hpindiana.law\/business-blog\/benefit-corporations-and-small-businesses-part-ii\/\"  title=\"Continue Reading Benefit Corporations and Small Businesses:  Part II\" class=\"more-link\">Continue reading \u203a<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Part II of this series begins to look more closely at the details of Indiana&#8217;s new benefit corporation statute and to consider whether it makes sense for small businesses.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,12,18],"tags":[],"class_list":["post-506","post","type-post","status-publish","format-standard","hentry","category-corporations","category-limited-liability-companies","category-small-businesses"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Benefit Corporations and Small Businesses: Part II &#8212; Indiana Business Law Blog &#8212; June 20, 2015<\/title>\n<meta name=\"description\" content=\"Part II of this series begins to look more closely at the details of Indiana&#039;s new benefit corporation statute and to consider whether it makes sense for small businesses. &#8212; June 20, 2015\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.hpindiana.law\/business-blog\/benefit-corporations-and-small-businesses-part-ii\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Michael R. Smith\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Benefit Corporations and Small Businesses: Part II &#8212; Indiana Business Law Blog &#8212; June 20, 2015","description":"Part II of this series begins to look more closely at the details of Indiana's new benefit corporation statute and to consider whether it makes sense for small businesses. &#8212; June 20, 2015","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.hpindiana.law\/business-blog\/benefit-corporations-and-small-businesses-part-ii\/","twitter_misc":{"Written by":"Michael R. 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