Oro Valley Incorporation Lawyer | LLC & Business Formation Attorney
Starting a new business can be exciting. From a legal and tax perspective, it’s important to choose the best legal format for your business, and to minimize the inherent conflicts that can develop if there will be more than one owner.
Selecting the Best Business Form for Your Needs
Arizona offers a number of different business forms, including:
- Corporations. A corporation can elect to be taxes as a subchapter “S” corporation (in which the income of the corporation is not taxed at the corporate level, but is instead taxed at the owner level), or a “C” corporation (in which the income of the corporation is taxed at the corporate level).
- Limited Liability Companies. LLC’s can also be taxed like a “C” corporation, or, if there is a single owner, as a single member LLC (in which the sole owner is personally taxed on the income of the business).
- Professional Corporations. Professional corporations are available to those providing primarily professional services, such as physicians, accounting firms, engineering firms, and law firms.
- General Partnerships.
- Limited Partnerships.
- Sole Proprietors.
If a business form is not selected and the appropriate formation documents are not filed, the business will be considered by default a sole proprietorship if there is only one owner, or a general partnership if there is more than one owner. Since these business forms have potentially unlimited liability to the owners, it is usually best to conduct business under another form where liability to the owners will be limited.
The Best Business Form for You Will Depend Upon a Number of Factors
Key factors in the choice of entity decision often include:
- How many owners will there be?
- Is the company likely to sell equity interests later to raise additional capital?
- Will there be non-owner employees, and if so, how many?
- What types of benefit plans may be provided to employees?
- In what types of business will the new company be engaged?
- Is the business likely to have an accounting loss for tax purposes in the early years?
- Will the company be purchasing significant assets?
These are only some of the factors that will influence the choice of entity decision. When I learn about your business and circumstances, I can advise you as to what form of business may be the best for your needs.
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I’m a native Midwesterner, having lived most of my life in Minnesota. I would look forward to meeting you, and learning about how I may be of service to you.
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