There are many steps that you must take and documents that you must create when starting a business. Taking the time to prepare your business in the beginning can have huge payoffs later on and help you avoid disasters. Below is a list of general items that you should include in your business planning toolbox.
- Trademark Application
After deciding on a name for your business, you should immediately check with the Arizona Corporation Commission (“ACC”) and the Arizona Secretary of State to see if the name/trademark is available. If it is available, you should register it. Registering your trade name is not legally required to do business in Arizona, but it is the accepted practice. There could be legal consequences if you choose a name that is already being used.
Next, you should purchase a website domain name before someone else buys it. Domain names are entirely separate from the ACC and Arizona Secretary of State process. Your name is the symbol of your business, and it is essential that you take steps to protect it.
- Business Formation Documents
There are different types of businesses that you can start in Arizona, each with specific legal documents that are required to form the entity. Some of the business entities that you can create include: 1) limited liability companies (“LLC”), 2) sole proprietorships, 3) general partnerships, 4) limited partnerships, and 5) C corporations, and 6) S corporations. An business planning attorney Phoenix, AZ can discuss the pros and cons of each and help you choose the best option for your situation.
Each entity comes with its own required legal documents. For example, to form an LLC under Arizona law, you must file Articles of Organization with the ACC. Whereas, to create a corporation, you must submit Articles of Incorporation to the ACC.
- Operating Agreements
If you are forming an LLC, you should have an operating agreement in your business planning toolbox. An operating agreement is a legal document that outlines the ownership structure and operating procedures for the LCC. An operating agreement can address such topics as:
- How ownership is divided;
- Who the members are;
- Which members have voting power and how much voting power;
- The amount of capital each member has invested;
- How profits and losses will be divided among members; and
- The process for buying out and/or replacing a member.
Operating agreements are encouraged by Arizona law and help to prevent and resolve conflict between members.
- Shareholder Agreements
If you are forming a corporation, you should include a shareholder agreement in your business planning toolbox. A shareholder agreement is a legal document that describes how the corporation should be operated and outlines the rights and responsibilities of the shareholders. Shareholder agreements can address such topics as:
- Pricing of shares;
- Buy-back of shares;
- Right of first refusal of shares;
- Management and shareholder obligations; and
- What to do in the case of deadlock and disputes.
- Contract Drafting
Often when people start a business, they fail to draft a contract with an attorney before taking clients and/or buying and selling products. Some people believe it is sufficient to rely on a handshake. Or if they do have a contract, it is often a template form contract that they found online. But failure to have a written agreement drafted by an experienced business planning attorney can lead to miscommunication and ruined relationships.
A written contract for buying and selling products can include details such as:
- The date of the order;
- Acceptance and delivery requirements;
- Amount ordered;
- Warranties; and
- Payment details.
Whereas, a written contract for offering or receiving a service can include such details as:
- The date the service is to be provided;
- The scope of the work; and
- Payment terms.
A precise and detailed contract drafted by an experienced attorney is essential to both prevent conflicts from arising and also to protect your business and your interests if a dispute does arise.
- Succession Planning
A major event that all business owners must plan for is what will happen when one of the owners dies, retires, or is otherwise unable to continue making decisions. You may want to dissolve the business, keep your interest within the family, or transfer your interest to another partner. Whatever you decide, you must have a Phoenix attorney draft documents to protect your wishes and plan for the future.
Phoenix Business Planning Attorney
Nicole Pavlik is an experienced business planning attorney based in Phoenix, Arizona. Call Nicole Pavlik Law Firm today at 602-635-6176 to schedule a free consultation and discuss your business planning needs.