Understanding Corporation Formation
Corporation formation is an important step for your business, and the Arizona Corporation Commission has strict rules that must be followed. There are also critical differences between the corporate designations for federal taxes versus the designation for Arizona. Therefore, it is important that you know how to correctly classify and form your corporation for both state and federal taxation issues.
Selecting a Business Entity
The first step in creating your company is to select the type of business entity that best suits your business. Such entities include sole proprietorships, partnership, corporations, nonprofit corporations and limited liability companies. The terms “S-Corp” and “501C3” refer to federal designations for certain types of entities, but do not specifically refer to the type of entity you will form under state law. The Arizona Corporation Commission Corporations Division will not tell you which entity to select; therefore, it is best to consult with an attorney concerning liability and taxes issues associated with each entity option.
Name Availability and Securing the Name
You must perform a search on the commission’s website to determine if your desired business name is already in use. If another Arizona company does not use the name you want, you can reserve that name through the same website or register it as a trade name through Arizona’s Secretary of State.
A name reservation is nothing more than that, and you must still submit the paperwork that forms your corporation. Name reservations last 120 days, while trade name holds last for five years. If you are registering a trade name, you do not need to separately reserve your business name. Instead, your trade name request will hold the name for you until you form an entity with that name.
Filing all Corporate Formation Documents
Forming a corporation or an LLC requires that multiple documents be filed with the Arizona Corporation Commission. If you organizing an LLC, you must include your Articles of Organization. If you are organizing a corporation, you must include your Articles of Incorporation.
Next, you must complete the privilege tax applications through the Arizona Department of Revenue and the Arizona Commerce Authority Small Business Services sites. The corporation must also be registered within the city where your business operates, and you will receive a privilege tax license.
Finally, you will need to open a business bank account, and for that you will need an Employer Identification Number (EIN). You can obtain your EIN from the Internal Revenue Service online.
Properly organizing your business for maximum protection and flexibility requires a proper understanding of business entities in Arizona, and the requirements for forming them. Whey you are read to form your company, contact the business attorneys at Udall Shumway, PLC. and schedule a consultation to ensure your company is formed correctly.
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 Corporation Formation, or any other litigation matters, please feel free to contact Roger C. Decker at 480.461.5343, log on to udallshumway.com, 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.