Lesson 2: Starting a Responsible Business

What You’ll Learn: Corporate social responsibility is an evolving business practice that incorporates sustainable development into a company’s business model. It is not enough for companies to generate a profit anymore. Today’s customers want to do business with companies that also demonstrate good corporate citizenship. This module will walk you through the process of creating a business that has a social purpose and mission.

Starting a Responsible Business (continued)

Getting Started

Yvon Chouinard didn’t start out to found Patagonia. He spoke out regularly about the environment, taking a strong stance for Yosemite Valley way back in 1988. He also put his money where his mouth was. When he started Patagonia, he pledged to donate 10% of pre-tax profits to small nonprofits dedicated to environmental preservation. Later, that pledge was raised to 1% of total sales.

Now, you may never be Patagonia. You may be content to be a small business on main street supporting a local food bank. The beauty of a Social Purpose Corporation is that the structure scales nicely for companies large and small. And if you do end up being the next Patagonia, you don’t have to change anything about your structure down the road.

Once you settle on a purpose, it’s time to get organized. The steps are pretty straightforward, and it’s important that you do them in the right order. Otherwise, you may have to waste time backtracking because you thought you could do something later that is required in a step earlier in the process.

 

    1. Decide on your business name.
    2. Create an account on the Secretary of State’s website. You may want to talk to an attorney before going further since there are specific requirements regarding the formation of a Social Purpose Corporation that are a little more complex than a basic sole proprietorship or partnership. For example, you will need a registered agent, someone who lives in Washington who will receive all the official notifications about the business.
    3. Create your articles of incorporation. This is where you can articulate what your social or environmental purpose is.
    4. When you file, you will receive your Unified Business Identifier, commonly referred to as the UBI Number. This is used by other state agencies such as the Department of Revenue or Employment Security Department to track your business.
    5. You will need to create bylaws, which cover how you will conduct the business of your corporation. You will also need to be sure that you are filing the correct forms that create a Social Purpose Corporation as opposed to a C or S Corp or LLC.
    6. Once you have your Unified Business Identifier (UBI) from the state, you can file for your federal employer identification number (EIN) with the IRS. You will need this to file taxes and open a bank account.
    7. Depending on your type of business, you might need additional business licenses and permit. The Business Licensing Wizard is an excellent place to start your research. You’ll also want to check with the county and/or city your business is in for additional licenses and tax filings.
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