It Helps to Identify the Types of Business Structures When Starting a Business

The decision to start a business is a serious one that comes with many choices. One of the first things you must decide is the way you want to structure your business. There are various types of business structures that are available in Arizona. There are pros and cons to each type of structure, so it is important to choose wisely. It is helpful to seek guidance from an experienced commercial attorney when setting up your business.

Sole Proprietorship

A sole proprietorship is the simplest type of business structure. As the owner, you are the only one responsible for the company. You may do business under another name, which must be filed with the county. As the sole proprietor, you will be able to make decisions on your own, however, you are also generally legally liable for the debts of the company. This type of structure is best for small businesses and does not provide personal protection should your business fail.


Partnerships may be made with two or more parties. Each has an interest in the business. A partnership agreement is advisable to make sure that everyone has the same understanding. In Arizona, it is not necessary to have a written partnership agreement on file, but it will offer some protection should a problem arise. A limited partnership is also available.


A corporation is a legal business structure in which the owners are also shareholders in the company. To create the business, an “Articles of Incorporation” must be filed with the Arizona Corporation Commission. There are two main types of corporations including S and C. They each have different tax implications. Discuss the type of corporation you require with a commercial law attorney before you begin your company.

Limited Liability Company

A limited liability company, LLC, is a business structure that combines some of the characteristics of both a corporation and partnership. Owners, called members, are able to participate in the decision-making functions of the business. An LLC is created by filing an “Articles of Organization” with the Arizona Corporation Commission. An operating agreement should be put into place that defines how the entity will run and the duties, rights, and obligations of the members.

For many, starting a business is the first step towards financial freedom. However, it is essential that you protect yourself and your finances by setting up the business in the best possible way. Contact a skilled commercial law attorney to assist in getting your business started.

This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding Types of Business Structures, or any other litigation matter, please feel free to contact Stockton D. Banfield at 480.461.5356, log on to, or contact an attorney in your area. Udall Shumway PLC is located in Mesa, Arizona and is a full service law firm. We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.