Arizona Business Law

Although Arizona business law encompasses many issues, the following issues are often of particular importance.

• Structures (partnerships, corporations, limited liability companies - LLCs, limited partnerships - LPs, etc.)
• Employment law
• Property Law (real property, personal property, & intellectual property)
• Secured Transactions
• Negotiable Instruments
• Taxation

Douglas K Cook is an Arizona business lawyer with over 40 years of experience as a practicing attorney. Although Douglas K Cook's office is located in Mesa, Arizona, he represents clients throughout the Phoenix, Arizona Metropolitan area including the following east valley cities: Scottsdale, Paradise Valley, Tempe, Chandler, & Gilbert.

Last Updated on September 1, 2011

Covenants not to compete are used in various situations in attempts to ensure fairness and protect parties to a contract by limiting competition. Such covenants are sometimes held by courts to be unenforceable because they are overbroad in terms of geographical and time restrictions.

Built-in gain, or BIG, is a term used by the IRS to describe gain that must be recognized by a corporation in addition to its shareholders. IRC § 1374. Built-in gain applies to 1) corporations previously taxed under Subchapter C (C-Corporations) of the Internal Revenue Code (IRC) that elect taxation under Subchapter S (S-Corporations) and whose assets appreciated before the election was made or 2) corporations that acquire assets with carry-over basis from a predecessor C-Corporation.

Business succession planning aims to address what will occur when a business' ownership* changes. Such planning can address, for example, what transpires when business owners die, sell ownership interests, transfer ownership to new generations, etc. Life insurance often plays a substantial role in business succession plans, e.g. allowing the decedent's family to retain the business by using life insurance proceeds to pay any estate taxes associated with an owner's death.

Real estate can be the source of substantial liabilities. Under certain circumstances, however, many of those liabilities can be eliminated by properly structuring ownership of real estate in a limited liability entity like a limited liability company (LLC).

To form an LLC in Arizona, two actions are required by The Arizona LLC Act: 1) file articles of organization with the Arizona Corporation Commission and 2) publish notice of the filing of the articles of organization. Filing of an affidavit of publication of the articles of organization with the Arizona Corporation Commission is optional.

On 14 April 2011, President Obama signed The Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011, which repealed substantially broader Internal Revenue Service (IRS) Form 1099 reporting requirements scheduled to become effective beginning in 2012 because of The Patient Protection and Affordable Care Act (PPACA) and scheduled to become effective beginning in 2011 because ofThe Small Business Jobs Act of 2011.

Although S-corporations and LLCs that elect partnership tax treatment are often thought to be very similar in terms of taxation, i.e. they allow pass-through taxation in which the entity itself is not taxed, there are a number of important taxation-related differences between them because they are not taxed under the same provisions of the Internal Revenue Code (LLCs may be taxed as partnerships under Subchapter K of the Internal Revenue Code while S-corporations are taxed under Subchapter S, hence the name "S-corporation").

In good economic times it sometimes seems hard to make a mistake. We no longer live in those times! Good planning and proper implementation of plans is always important, but a challenging economic environment can both disclose unique opportunities and expose critical flaws.

Opportunities abound for those with foresight and patience, as do traps for the unwary. An understanding of applicable law is critical to making the right choices.

Click on the infographic below to learn more about the various types of business entities, e.g. LLC &S-Corporation, in the United States.