Now Available – B Corporations in Arizona

Welcome to Arizona! by Fred Miller from Flickr (Creative Commons License)

Welcome to Arizona! by Fred Miller from Flickr (Creative Commons License)

One of the awesome developments in the Arizona business community for 2015 is that businesses are allowed to form benefit corporations (B corporations) in this state. These are for-profit corporations that have other motives for being in business besides maximizing profits, and their shareholders are aware and accept that the company has dual motives. This motive must be to at least provide a “general public benefit,” meaning the business has a “material positive impact on society and the environment, taken as a whole, as assessed against a third-party standard, from the business and operations of a benefit corporation.” This option became available in Arizona at the beginning of the year.

Given that this is a new type of business entity in this state, I looked to the Arizona Corporation Commission (ACC) to get answers to my questions about B corporations.

What information does a company have to provide to the ACC in the Articles of Incorporation?
To create a B corporation, the incorporators must fill out the same Articles of Incorporation as other corporations in Arizona and pay a $60 filing fee ($95 for expedited processing). Every corporation is required to file an annual report with the ACC. B corporations must file an annual report and an annual benefit report where the company describes what general public benefit it provided. Each report has a separate filing fee.

Can an existing Arizona corporation be converted to a B Corporation? If so, how? Please include information about the associated fee(s).
Yes. An existing Arizona corporation can be converted to a B corporation by filing an Articles of Amendment with the ACC and paying a $25 filing fee ($60 for expedited processing). An Arizona LLC can also be converted into a B corporation under the Arizona Entity Restructuring Act.

Is a B corporation taxed like a C corporation? If so, can a company be a B corporation and file as an S corporation with the IRS?
Traditional corporations are C corporations, and they have double taxation where the corporation pays taxes on its income and the shareholders pay taxes. If the company qualifies, it may elect to be taxed as an S corporation where there is pass-through taxation so only the shareholders pay taxes on the income. Based on my research, a B corporation is taxed as a C corporation, but it has the option, if it qualifies, to be taxed as an S corporation.

I tell all clients to talk to their accountant before starting their business to determine which type of business entity is right for them and to make sure they understand the tax implications. And yes, every business needs an accountant.

Where can people go for more information about B corporations in Arizona?
The ACC created a legislative update that is filled with information and links about B corporations in Arizona. This is a great resource if you’re interested in starting a B corporation or converting your business to a B corporation. If you still have questions after reading this, contact the ACC or a business attorney in your community.

If you’re interested in B corporations but are unsure you want to create or convert your business to one at this time, you can look into being “B Corp. Certified” by B Lab.

If you want to chat with me about this topic, feel free to connect with me on TwitterFacebookYouTubeLinkedIn, or you can email me.

Please visit my homepage for more information about Carter Law Firm.

Reddit’s New Privacy Policy – How Terms of Service Should Be Written

Startup Schwag Bag #2 by homard.net

Startup Schwag Bag #2 by homard.net from Flickr

Are you on Reddit? I love Reddit. It’s a great way to connect with the various online communities that matter to you.

Reddit recently announced that its new privacy policy is going into effect on May 15th. You can read the text of the policy here. Seriously, go read it.

What I love about this policy is how simply it is written. It’s straightforward, well organized, and written in English – not legalese. It’s a policy that Joe Average people can read and understand how the site will use their information. I appreciate that Reddit even said that they want their users to read and understand their policies.

Reddit’s approach should be the standard way that lawyers write a company’s terms of service for their clients’ websites. They should be simple, direct, and be organized in a way that it’s easy for users to understand the site’s rules. They don’t need to be excessively long or use words that no one uses in real life.

A website’s terms of service is a contract between the site’s owners and its users. If you disagree with a site’s terms, don’t use the site. It’s important when you join a website where you will be interacting with others or posting content that you understand your dos and don’ts as well as what the site can do with your information and anything you post.

Some people think it’s ok to simply take another website’s terms of service, change the name of the company to their own, and slap it on their website. This is asking for trouble, especially if you don’t understand the terms that you’re copying. You may be creating rules for your users that you don’t want in place. Reading other website’s terms of service is a good place to get ideas if you want to try to draft your own, but it shouldn’t be a substitute for making sure your terms of service reflect your individual or company’s needs. You never know who draft the terms you’re copying.

I love drafting custom website terms of service. I get to combine my client’s needs with what the law allows and come up with a document (in English) that will work for them. I know it sounds boring to some people, but to me it’s like a big puzzle that I get to figure out.

If you operate a website where users get to post content or interact with each other, please make sure you have a solid set of terms of service that fits your needs. If you can’t afford to hire an attorney to draft your terms of service from scratch, at least have one to review your terms of service or pay for a consultation to discuss what your provisions should be in your terms of service.

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You can connect with me on TwitterGoogle+FacebookYouTubeLinkedIn, or you can email me.
Please visit my homepage for more information about Carter Law Firm.

How To Get a Free Consultation with Ruth Carter

Photo by Don McPhee

Photo by Don McPhee

I’m excited to share that I’ve teamed up with Gangplank in Chandler to offer free legal mentoring services on the first Monday of the month from 1pm until 4pm. I can see 3 people for 45-minutes each every month at no charge.

Hello Beautiful by Gangplank HQ from Flickr

Hello Beautiful by Gangplank HQ from Flickr

My legal mentoring hours are a great opportunity to informally bat around your ideas and questions about your projects and business. Coming to my mentoring hours does not create an attorney-client relationship between us. We won’t have any ongoing obligations to each other unless we decide to create a formal working relationship.

Gangplank provides free collaborative workspaces in Arizona, Virginia, and Canada. They provide the physical and social infrastructure for creative people to launch their startups. These are wonderful places for freelancers and new business owners to work. In Arizona, Gangplank has locations on Chandler, Avondale, and Tucson.

I love working with Gangplank. They have a fantastic group of dynamic people who have an enormous amount of creativity and drive. They have a very informal environment and they do incredible work. It fits brilliantly with my desire to be the approachable lawyer who wears t-shirts.

Skulls & Stripes by Gangplank HQ from Flickr

Skulls & Stripes by Gangplank HQ from Flickr

Gangplank in Chandler is located at 260 South Arizona Avenue. Their events calendar shows their mentors’ availability and also all their other events like their weekly brown bag presentations, hacknights, and workshops. They have a wealth of other mentors too who provide assistance in the areas of business, leadership, marketing, design, finance, and technology.

Gangplank is in charge of scheduling the mentoring hours so please check their event calendar for my availability. You can book a mentoring appointment with me by emailing them at chandler@gangplankhq.com.

Please note: my mentoring hours at Gangplank are not for my ongoing clients with whom I’ve created an attorney-client relationship. These appointments are for people who think they might need a lawyer, people who just want some general legal information, law students, anyone else who wants to chat for an hour.

You can connect with me via TwitterGoogle+FacebookYouTube, and LinkedIn, or you can email me.
Please visit my homepage for more information about Carter Law Firm.