Although Arizona business law encompasses many issues, the following issues are often of particular importance.
- Business 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
Structures are the legal constructs through which businesses provides good and/or services. Most modern types of structures can provide limited liability protection for owners, while others, e.g. partnerships and sole proprietorships, can not provide such protection.
Because no single type of structure is best suited to all types of businesses, it is important to understand characteristics of each type of structure before selecting one for a particular business.
Is the Arizona LLC or corporation name you want available?Check Availability
Three of the most popular types of limited liability business structures in Arizona are: limited liability companies (“LLC”), limited partnerships (“LP”), and corporations.
Limited Liability Company (“LLC”)
An LLC is a hybrid entity, which combines much of the management and taxation flexibility of partnerships with the limited liability protection of corporations.
Unlike a corporation, which needs a board of directors and officers to satisfy legal requirements, an LLC does not need either a board of directors or officers; rather, the owners of the LLC can simply manage the business if the LLC has been structured as member-managed LLC.
LLCs are also very versatile when it comes to taxation because they can elect to be taxed either as a partnership, a corporation, or as a disregarded entity (if applicable).
Limited Partnership (“LP”)
A limited partnership is most commonly used as an investment vehicle whereby one or more limited partners contribute money to the limited partnership, which contributions will be invested by one or more general partners. Limited partners are generally restricted by both Arizona law and limited partnership agreements from taking an active role in the management of the limited partnership.
Limited partnerships are often used to invest in real property, though manager-managed LLCs are also commonly used for this purpose.
A corporation is the prototypical limited liability entity; however, corporations are becoming less and less popular as a business structure, with at least one major exception: businesses that aspire to become publicly-traded on one of the stock exchanges here in the U.S.
Although many people automatically associate the word “corporation” with double taxation, this is not necessarily the case, nor has it been for decades. For example, small corporations can elect to be taxed under Subchapter S of the Internal Revenue Code so at to remove two lawyers of taxation on business profits.
The body of law associated with employers and employees exists in both federal, e.g. ERISSA, and state statutes as well as federal and state law and can be quite complex.
Employers often face a complex matrix of laws and regulations that affect various aspects of the employer-worker relationship, including hiring, firing, worker classification, retirement plans, and many others.
Depending upon the nature of a business, the specific type of property laws that apply can vary significantly. For example, companies that operate in real estate and real estate-related fields will be significantly affected by real property law on a regular basis, while companies that operate in technology and technology-related fields will likely be affected much more by intellectual property law.
Real property law is generally set forth by the individual states, while the federal government generally sets forth intellectual property law.
Similar to property law, secured transactions are those whereby indebtedness is secured by specific property. Default upon such indebtedness can allow a creditor to seize the property securing the indebtedness in order to satisfy the debt. Perhaps the most common example of a secured transaction is a home loan secured by a deed of trust upon the home.
At its most basic level, a negotiable instrument is an order or promise to pay a fixed amount of money. Perhaps the most common type of negotiable instrument is a check. However, there are many other types of negotiable instruments, including promissory notes, bonds, and certificates of deposit.
Taxes affect nearly every type of business, whether they be taxes upon the net income of the business or taxes associated with the operation of the business, e.g. sales tax.
This brief overview of Arizona business law is by no means comprehensive and is not legal advice. Always seek the advice of a competent professional when making important financial and legal decisions.
Mesa, AZ Office
Our Mesa, Arizona office is in the heart of downtown Mesa. It is located one block north of Main and Center Streets on Pepper Place, at 40 N. Center St. #110, Mesa, AZ 85201.
Steve Cook is a business lawyer at Cook & Cook. Although his main 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.