There are advantages and disadvantages in conducting your business under any type of business form. It is best to contact an experienced business lawyer for a consultation to discuss the specifics of your business. When we have a full understanding of the business you are planning to create, we will be in a position to assist you in selecting the most advantageous business organization.
Types of Formation
Issues to consider when choosing an appropriate form of business entity include: (1) whether a business failure or reversal would result in the loss of the business owners’ personal assets; (2) the anticipated life span of the business; (3) the tax consequences of the business; and (4) the number of parties involved in the business.
A sole proprietorship is a business owned by an individual or an individual and his or her spouse. It is not a separate legal entity. Should the business suffer reversals or failure, the assets of the owners of the business are subject to the business debts conditioned upon the exemption laws in Arizona. To do business under a business name a certificate listing the proprietor’s name, address and the business name should be filed in the county where the sole proprietorship does business.
A partnership is a business organization owned by two or more individuals and/or their spouses who come together to share profit. A general partnership is a business organization in which all partners may bind the other partners to partnership obligations. A limited partnership is one where the general partners are responsible for operating the business and the limited partners (usually investors) have less liability because, by definition, do not participate in the operation of the partnership. A Partnership Agreement should be executed and signed by all parties, regardless of the type of partnership formed. In addition to filing a certificate of partnership with the county recorder’s office.
A corporation is an organization that affords its owners more protection protects because it is a separate entity from its owners. The owners are called shareholders. The corporation is managed by its directors and day-to-day management is conducted by its officers. A corporation is formed by filing Articles of Incorporation with the Arizona Corporation Commission as well as a number of other tasks. A properly prepared and organized corporation will protect the business owners from many of the liabilities that are found in a partnership or sole proprietorship through its tax benefit. A corporation has the ability to exist perpetually, meaning it can exist beyond the life of its owners.
A limited liability company is similar to a corporation however it is taxed as a partnership. This form of business ownership is most conducive to real estate ventures but other business ventures can also benefit.Speak With An Experienced Business Lawyer.
Contact our office or call 602-277-4441 to speak with one of our experienced Arizona business organization attorneys at Platt & Westby, P.C.