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Category: Business

Articles of Incorporation: Getting Your New Business Off the Ground

Articles of Incorporation

 

 

If you’ve chosen to organize your business as a corporation in Arizona, there are a number of steps you must take to launch your new enterprise. The Articles of Incorporation is one of the first – and most important – legal documents you must prepare and file with the Arizona Corporation Commission.

 

 

 

 

 

All states require new corporations to file Articles of Incorporation with the appropriate state authority. Although the requirements vary slightly from state to state, Articles of Incorporation generally serve the same purpose in all jurisdictions:

  • Create the corporation
  • Set forth the corporation’s basic purpose
  • Establish a corporate name (and prevent similar names)
  • Identify shareholders, members, and a Statutory Agent
  • Authorize stock and/or provide authority

Like most states, Arizona gives prospective business owners access to a downloadable Articles of Incorporation form found on the Arizona Corporation Commission’s website. New business owners should be mindful, however, that the choice of entity is a huge decision that involves much more than filling out a form or two. Significant tax implications and business planning issues are just two of the decisions that require the help of an experienced business attorney. In fact, the Commission’s website explicitly advises potential business owners to consult with an attorney before completing any of the forms available on its website.

Articles of Incorporation: Required Information

The Arizona Articles of Incorporation form is a three-page document that requires business owners to submit rudimentary information about their corporate entity. This form requires the following information about your business:

Entity Name

Giving your corporation a name may seem like a straightforward exercise, but it’s very important to secure the exact name for your new business. Your business name must be unique – otherwise, the state will reject your Articles of Incorporation. You can check the availability of your desired business name on the Arizona Corporation Commission’s Electronic Document Filing website.

Character of Business

Include a brief, general statement describing your business’s purpose.

Shares

List the class and total amount of each class of stock your corporation is authorized to issue.    With a limited liability company, instead of issuing shares you will provide the names of the members of the company.

Arizona Known Place of Business

This is the corporation’s principal place of business – in other words, where the business conducts its daily operations, sales, and/or functions. Also, the form requires you to list whether the known place of business is the same as the address of the Statutory Agent.

Directors’ Names and Addresses

As the heading suggests, listing the name and business address of every corporate director is required. For a limited liability company, you will provide the contact information for the members.

Statutory Agent

A Statutory Agent is an individual, attorney, or business authorized to accept official communications on a corporation’s behalf. In most cases, communications are limited to mail; specifically, Statutory Agents receive lawsuits, subpoenas, and other court documents on behalf of the corporations they serve.

Certificate of Disclosure

For a corporation, any corporate officer, director, trustee, or incorporator with at least a 10 percent share in the corporation or a 10 percent ownership interest must complete a Certificate of Disclosure form. This form asks questions about an individual’s record of any criminal convictions or financial misconduct.

Incorporator’s Name, Address, and Signature

For a corporation, you must list the name and address of every incorporator. In many cases, there will be just one incorporator. Additionally, each incorporator must sign the Articles of Incorporation form.

© 2014 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved

This website has been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.

Key Steps When Starting A Business

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The Importance of Timeliness When Starting a Business

For the majority of entrepreneurs and new business owners, time is a precious commodity. Finding time – and managing an existing schedule – is a challenge. When launching a new business, however, it is critically important to follow a proper timeline. Failure to execute the new business start-up steps in the correct order can cost a fledgling enterprise much-needed funds. More importantly, waiting until the last minute to handle important tasks can seriously jeopardize a business’s likelihood of success.

By working with an experienced business attorney, a new business owner can stop worrying about the legal details and focus on running their business. The following are some of the initial steps that should not be left until the last minute:

Creating a Unique Business Name

There are several considerations that contribute to choosing a business name. For a variety of reasons, business owners must choose a name that is not too similar to an existing Arizona business name. The name should not infringe on an existing federal trademark. Ideally, it should also be available as an Internet domain.

Separating Personal and Business Accounts

Many first-time business owners make the mistake of relying on personal credit to launch a new business. Understandably, they do not always have access to business credit as a means of funding a new business. By pledging personal assets, however, they expose themselves to business creditors. A business attorney can help a new business owner find a solution that does not put the business owner’s personal credit and assets at risk.

Planning for Intellectual Property

Copyright and trademark law is complex. Business owners must ensure they do not violate other businesses’ work, while at the same time guaranteeing they protect their own efforts. This is where the help and knowledge of an experienced business attorney is invaluable.

Drafting Business Contracts

Many business owners are tempted to create their own contracts or rely on agreements they pull from the Internet. Although this may initially seem like a money-saving step, it can be a critical and costly mistake in the long run. Arizona courts construe ambiguous contracts against the drafting party. Harford v. National Life & Casualty Ins. Co. (1956), 81 Ariz. 43, 45, 299 P.2d 635, 637; see also, Sears Roebuck and Co. v. Avery (2004), 593 S.E.2d 424 (North Carolina applying Arizona law). Business owners who create confusing, misleading, or simply incomplete contracts just to save a little money could end up losing a significant amount of funds should a dispute later develop.

© 2014 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved

This website has been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.

Five Things To Consider When Starting a New Business

 

If you’ve recently launched a new business or you’ve been contemplating starting your own company for some time, chances are you’ve put a considerable amount of thought into how you plan to achieve your dreams of business ownership. Most entrepreneurs are driven, energetic people who devote considerable time and effort to strategy and planning.

Despite the best intentions, however, the majority of new business owners fall victim to the same mistakes when starting out. Although this is by no means an exhaustive new business checklist, it is a solid overview of some of the most common things people neglect when starting down the road to being their own boss.

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1. Business Structure Is Crucial

The way you structure your business is arguably the most important decision you will ever make as a business owner. The corporate structure of your business has far-reaching tax and personal liability implications that can make or break a fledgling business. Unless you plan on operating as a sole proprietor, the options generally come down to organizing as a limited liability company or as a corporation. Both entities involve complex legal analyses that require the in-depth knowledge of a business attorney who understands the pros and cons of each structure and how each could support your business. In summary, corporate structuring is not a decision to be made on a whim.

2. A Credit Line or Alternate Cash Flow

Cash flow is the lifeblood of business. Even a small start-up operating from a basement office has overhead costs. Late-paying customers or a series of unexpected expenses, may cause a drought in your cash flow. Having a backup funding source, such as a business line of credit, is crucial to keeping business finances afloat while waiting for income to begin flowing back in.

3. Profitability Takes Time

Most business experts recommend saving at least one year’s salary before launching a new business. Other advisers suggest saving for a minimum of two years before going out on your own. You shouldn’t rely on turning a profit right away. With money in reserve, you can focus on building your new business for the long term rather than worrying about how you will pay your everyday living expenses.

4. Employer Regulations

Hiring an employee is a monumental step that goes well beyond shaking a candidate’s hand over a resume. Employers must comply with the variety of federal and state regulations that govern everything from workers’ compensation insurance and income tax withholding to Social Security tax and OSHA regulations. Failure to observe the myriad of laws that govern the employer-employee relationship can result in severe (not to mention expensive) penalties for employers.

5. The Importance of Well-Drafted Legal Documents

Most business owners prepare for start-up costs. They have a plan for buying equipment, renting a location, and paying for advertising. Surprisingly, however, many new business owners cut corners and omit working with an attorney who can help them protect everything they are working so hard to build. When you’re starting your own business, that often includes personal assets as well as property owned by the business. From creating solid, operating agreements, personalized contracts and commercial lease agreements that anticipate contingencies to insulating your personal assets from the reach of business creditors, a business attorney will work one-on-one with you to reduce the long-term costs of doing business. Your operating budget may function on a shoestring, but your legal budget should be more robust. Your business will reap the benefits in the long run.

© 2014 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved

This information have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.