Arizona law allows a business to incorporate and be identified as its own legal entity. As a separate entity from the owners, the business is then considered to be operating on its own when it buys and sells property, assents to contracts and exercises legal rights. A business looking to incorporate in Arizona must file with the Secretary of State in accordance with established guidelines.
Benefits of Incorporation in Arizona
A corporation enjoys advantages that unincorporated companies do not. Primarily, it cannot be held accountable for an amount of debt greater than the value of the assets that the owners have invested in it. If the business had remained a personal asset of the owners, they could run the risk of losing their personal property to pay for the company's financial liabilities in case of default. Furthermore, banks in the Bullhead City area prefer to evaluate the credit worthiness of a business as a whole rather than that of individual owners. This makes the process of getting corporate loans simpler. Finally, a corporation's ownership stake is divided into equal slices or "shares" of stock, which make investments in the business much easier to transfer.
Costs of Incorporation
Along with a possible fee to apply for incorporation in Arizona, there are other costs that corporations incur. The most important is that a corporation is taxed as its own entity. Disbursements to the owners of the corporation are also taxed as individual income, so this means earnings might be taxed twice. But this double taxation can be avoided with proper planning and help from a local Bullhead City lawyer.