Forming an LLC or Corporation
Welcome to Pearson Law. My name is Karl S. Pearson, Scottsdale, AZ business attorney and founder of Pearson Law, PLC.
As the business owner and operator of Pearson Law, I understand the concerns that entrepreneurs and businesses face every day.
Venturing out and starting a business can be an exciting time; after all, it's the culmination of the American Dream. Neglecting the essentials when it comes to forming a company can complicate business operations and impede your success from the start.
I bring both the legal experience and knowledge of Arizona business formation laws to create a strong foundation from the onset.
Choosing a Business Structure
Each form of business has its advantages and disadvantages in terms of liability, taxes, and continuity. An experienced business lawyer can help you determine which type of business is right for you.
- Limited Liability Company (LLC)
- Sole Proprietorship
At Pearson Law, I can help you determine if this type of business is right for you.
Corporations are one of the most common types of entities. Shareholders own the corporation and elect a Board of Directors to provide overall supervision of the company. The Board of Directors appoints officers to run the day to day operations of the company. Officers include a President, Vice-President(s), Secretary and Treasurer.
Limited Liability Company (LLC)
A limited liability company, known as an “LLC,” is now the most popular type of entity for small businesses. LLC’s are hybrid entities that combine aspects of corporations and partnerships. LLC’s have pass-through taxation and allow flexibility in structuring company management. LLC’s do not require as much annual paperwork and have fewer formalities as corporations. Owners also have limited liability like corporations. A member’s liability is limited to the amount of their investment in the LLC.
A general partnership exists when two or more persons operate a business together. Like a sole proprietorship, this type of business structure provides no protection for your personal assets. If the partnership is sued, the partners will have liability for any judgment. For this reason, it may not be wise to operate as a sole proprietor or a general partnership.
You should consider operating your business as a Corporation or a Limited Liability Company. These types of entities protect the assets of the owners.
What is the Difference Between a C-Corp and an S-Corp?
C-Corporations are typically larger companies with many shareholders. Publicly traded companies are generally C-Corporations. A C-Corporation must pay taxes on any profits. Shareholders are also taxed on any dividends they receive from the company.
S-Corporations are smaller companies and are limited to 100 shareholders. S-Corps are a popular choice for business owners as they offer pass-through taxation and limit liability. While C-Corps are taxed at the corporate and shareholder levels, the profits and losses of an S-Corp are passed through directly to the shareholders. Thus, there is only one level of taxation.
Why choose an S-Corp?
- Limited Liability
- Pass-through taxation
- Investment opportunities
- The annual tax filing requirement
To establish a corporation under Arizona Law, you must file Articles of Incorporation with the Arizona Corporation Commission (ACC.)
Articles of Incorporation include the following.
- Company name
- The character of business information is a brief description of what your business does
- Share information
- Known place of business
- Name & address of all company directors
- Statutory Agent
A sole proprietorship is the simplest and most common structure selected to start a business. You do not need to do anything to form a sole proprietorship, but you may be required to obtain licenses and permits.
Examples of sole proprietors include freelance writers, tutors, and financial planners. While many people operate as sole proprietors, doing so is risky. Your personal assets may be at risk if you act as a sole proprietor.
Planning & Preparing to Open Your Doors
Once you have determined which type of business is right for you, Pearson Law can help you get your business started off on a successful path.
From opening bank accounts to obtaining an Employer Identification Number (EIN) from the IRS, there are a variety of operational tasks that need to be addressed.
- Business Formation
- Day to Day Operations
- Licenses & Permits
- Policies & Procedures
Personal, Legal Representation
Representing Arizona businesses of all sizes, as well as individuals, I believe that everyone deserves straightforward answers. Unlike large law firms, at Pearson Law, you can expect personal attention every step of the way.
When Clients hire me, they have direct access to me throughout their case. I will not assign you to an associate attorney with little experience.
When questions arise, and you're not sure where to turn, I can help make sense when forming a business.
I will assess your business and explain your options in terms that make sense and provide a frank assessment of how you should develop your business.
Experienced Business Representation
When it comes to forming a business, your business's health, financial success, and future, at Pearson Law, you can count on knowledgeable strategies to resolve business disputes, litigation, operating agreements, and more with a personal touch.
My goal is to resolve your matter as quickly as possible. After all, lawsuits can damage reputations and cause financial hardships. The bottom line, handling disputes from the start is critical to a business's bottom line.
When you need an experienced business attorney to help you form your business, contact Scottsdale, AZ Business Lawyer Karl Pearson
, to learn what your legal options are or call (480) 820-1800.
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