Are There Different Types Of Corporations That Can Be Formed?
Many people have heard of an S-Corporation or a C-Corporation. These designations actually come from the Internal Revenue Code and refer to a specific subsections of code that determine how those corporations will be treated for tax purposes. That is the first level of distinction of different types of corporations that you can form.
In addition to that, Arizona has recently come up with an additional type of corporation — the Benefit Corporation — which allows a person who is forming a company that intends to serve the public good to make that designation on the front end. That benefit can come from sustainability practices, charitable purposes or the like. This is different from a nonprofit corporation, which is what many charities use, and the charities designate themselves as a nonprofit, which means they can accept donations and they are not taxed on their income. Perhaps the most famous of this type of company is the shoe company, Tom’s. They set up a business model where for every pair of shoes that is purchased by their customers, they donate a pair of shoes to a needy person. So they served a charitable purpose, but they were still a for-profit company. That is a fairly typical example of the type of a business model this new type of corporation would have. If they intend to not only be in business for themselves, but also to be in business for the public good, then they can choose this new type of corporation, which not only provides them additional protections, but also imposes additional responsibilities.
When Should Someone Use An LLC Over A Corporation?
An LLC is a very good idea for someone who is forming a small business, or a startup that does not have any employees or has very few employees. The LLC structure, as established by the Arizona statute, allows the company to operate without any sort of ongoing administrative burden (like annual meetings, a board of directors, or other similar requirements that would be required of a corporation.
With an LLC, once the company is formed, and you have received the approval notification from the Corporation Commission, and you have published the required notices in a newspaper of general circulation in the county where the LLC is located, then there is not really any other ongoing administrative burden to maintain the company itself.
Do I Need An Attorney To Form An LLC Or Corporation?
You do not necessarily need an attorney to form an LLC or a corporation. People form LLCs and corporations all the time, without an attorney. However, if the business owner wants to get it done correctly and quickly, then using an attorney is definitely wise. It is not that complicated, but it can seem overwhelming to a new business owner. If a business owner chooses to do it himself or herself, there is always the possibility that a step may have been missed or an important factor may not have been considered. Hiring a business attorney to form the business will give you the assurance that things have been handled properly in the formation of your business.
For more information on Types Of Corporations In Arizona, a consultation with a business attorney is your next best step. Get the information and legal answers you are seeking by calling 1-480-582-1287 today.