3 Questions to Ask (and Answer) When You Start an Arizona Business
When you start an Arizona business, you have many issues to address in the process of getting your company off the ground. It’s easy to get caught up in the operational details, lose sight of the big picture, and fail to address longer-term concerns. There are three basic questions that can keep you on the right track as you establish and grow your business.
Question #1: What is the best choice for the legal structure of my business?
One of the most critical decisions that a new business owner makes is determining the legal structure for the business. The choice can make a significant difference for taxation and liability purposes, as well as for other important reasons.
By default, if a new business owner takes no steps to choose an entity type, the business operates as a sole proprietorship. While that may be acceptable for a short period of time, Arizona law allows for other types of structures that may be more advantageous for tax purposes and provide more legal protection for the owner. You may choose a sole proprietorship, partnership, Limited Liability Company (LLC), or corporation. Within the types, there are some additional variations and decisions to make, such as whether you should choose S Corporation tax status for an LLC.
Choosing the best type of legal structure for your business involves taking into account a wide range of considerations. After you settle on the entity type, you likely have to take specific steps to formalize the business structure. A knowledgeable business lawyer helps you make certain that you choose the best entity type and that you fulfill all the requirements for formalizing your business structure. Your lawyer also can help you choose and register the name for your business.
In some cases, you may need certain business licenses or permits. Specific laws or regulations may apply to your operations as well. Your lawyer ensures that you are aware of all legal requirements and helps you take the necessary steps to comply with them. Establishing a working relationship with a business law attorney early on helps you get started on a solid foundation by addressing all initial legal issues. That professional relationship also will be invaluable when legal concerns arise as your business carries on and grows.
Question #2: How can I make certain that my business contracts protect my rights and minimize my liability?
In addition to addressing Question #1 above, which is a top priority, you can take additional steps to protect yourself and your business by making certain that all your business contracts fully protect your legal rights and minimize your legal liability.
For every transaction that occurs in your business, the contract terms will define your legal rights and your legal obligations (liability). While all business contracts should be written, a contract may also arise from verbal communication or a series of documents exchanged by the parties to the transaction.
Your business will have two types of contracts. You generate some agreements. Others are provided by another party. They need to be treated differently.
Contracts you generate include basic forms you use to give estimates, submit proposals, provide products or services, hire employees, or complete other tasks. These documents establish your rights and liabilities. Your business attorney should review all the forms and agreements that you generate and use in your business, to make certain that you protect your rights and minimize liability.
Often, an outside party provides you with a written agreement to sign, usually to procure supplies, services, or something else you need in your business. If you rent property, the lease falls into this category. Since the other party wrote the agreement, the legal terms are likely more favorable to them than to you. Even if you think you cannot negotiate the contract terms, you should have your attorney review every outside agreement with you before you sign it, to make certain that you fully understand the terms. Your lawyer may even be able to help you negotiate more favorable terms before you sign.
Question #3. How can I protect my business and my family in the future?
When you are busy running your business, you probably won’t think about future contingencies that could adversely affect the continuity of the business — but you should. A key concern should be what will happen if you are suddenly unable to run the business, temporarily or permanently. To address that issue, you should create a business succession plan to provide for continuation of the business by giving another person (or persons) authority to run the business in your absence. Alternatively, you can provide for an orderly sale or dissolution of the business.
You should also consider the impact of future business contingencies on your family. If you do not have a succession plan in place, and something happens to you, the legal and financial consequences for your family could be devastating. To avoid that possibility, your estate plan should address your family’s security and financial future if events in your life make it impossible for you to continue running your business.
When you count on a business lawyer for help setting up and running your business, your attorney can also help you address succession issues for your business and security for your family. Putting those protections in place provides you with peace of mind about the future, so you can focus on running and growing your business, rather than on what might affect your business and family in the days and years ahead.
Schedule a Free Consultation With an East Valley Business Law Attorney
In our business law practice at Peterson Law Offices, we help new Arizona businesses establish a solid legal foundation by choosing the right structure, addressing contract concerns, and protecting the business in the future. We know that small businesses, whether new or established, often do not need a full-time lawyer but do need reliable, responsive legal counsel throughout the lifecycle of the business. Whatever business concerns you have, our goal is always to help your business succeed, grow, and thrive, while minimizing legal problems you encounter and finding the best solutions for the issues that do arise.
Your initial consultation is always free of charge. We welcome inquiries from clients throughout the East Valley, including Queen Creek, San Tan Valley, Gilbert, Mesa, and Chandler. Schedule your free initial consultation by calling 480-878-5998 or using our online contact form.