Before the first transaction transpires, a significant amount of work goes into establishing a business in Arizona. Ensuring that your legal requirements are met is essential to start on a fulfilling path in business ownership. What requirements should you meet to create a new business?
Establish a Business Structure
How an Arizona business is designated or structured will affect significant details about your business, such as taxing, personal liability, and fundraising abilities. Consider these factors when choosing a business formation in Arizona. The federal tax designations can include the following:
- Sole proprietorship
- Limited or general partnership
- Limited Liability
Arizona requires that you form either a corporation or a nonprofit corporation. You will also want to ensure the availability of the business’s name and secure the trade name if it is available.
File the Appropriate Paperwork
Each new business must file for a business license, formation documentation, state tax application, and federal identification numbers. Other documentation may be required depending on the county or city your business will reside in. The most efficient way to thoroughly meet Arizona’s new business requirements is to work with a Phoenix business and commercial law attorney to fulfill all your legal obligations.
Establish an Operating Agreement
Documenting the responsibilities of each partner when more than one owner is involved details the contributions each person should make. It will outline the fiduciary duties of each partner concerning the business.
A well-drafted operating agreement when forming an Arizona business will establish guidelines for handling disputes or the steps to take if a partnership buyout should occur. Financial agreements should always be put in writing to prevent misunderstandings or future disagreements.
Open a Business Account
A business account ensures that personal and business spending are kept separate and that bookkeeping is accurate. A business account proves to the IRS that you are operating a business and not participating in a hobby. It is easier to prove this in some companies than others, but having an obvious audit trail should you be audited is essential to avoid extensive paperwork.
Plan for Tax Payments
Taxes are a part of a business that are unavoidable. Appropriately estimating the taxes the company will owe allows you to set aside funds, and paying every quarter is optimal. A failure to pay taxes on a business’s income can result in a loss of licensing.
Correctly Classify Workers
If your business requires hiring workers, ensure they are correctly classified. Differentiating between an employee and an independent contractor is imperative. Their classification will affect your taxes and establish what is expected of you as an employer.
Correctly classifying workers will also ensure that you are not held accountable for back wages or forced to pay penalties. Additionally, Arizona workers’ compensation insurance should be in place in the event of a work-related injury.
Set Your Arizona Business Up for Success
Starting a new business in Arizona demands that essential legal requirements are met to be successful and in compliance with state and federal regulations. The most critical need for any business is to seek sound advice from an experienced Phoenix business and commercial law attorney. The Law Offices of William D. Black has consistently supported new and growing businesses in Arizona, making his advice sought after in significant business decisions.
If you are starting a business in Chandler, Gilbert, Scottsdale, Tempe, or the Phoenix area, schedule your consultation with William D. Black to pave the way for a successful business future.