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Several decisions are needed to start closely held businesses

On behalf of Kadish & Associates Law Group posted in Closely Held Businesses on Thursday, August 20, 2015.

Deciding to start a company in Arizona is only one of many decisions that will need to be made before the business opens. Closely held businesses may not end up on NASDAQ, but they must still comply with numerous federal and state laws. Any errors during the formation process or in the years ahead could jeopardize a company’s standing, which could affect its ability to legally conduct business.

The type of entity the company becomes has several legal and business implications. The benefits and risks associated with each option should be researched in order to find the best fit for the business. Issues such as taxes, reporting requirements and the amount of personal protection the entity will provide to its owners and/or shareholders will need to be considered.

Once these issues are decided, all of the appropriate licensing requirements for the particular type of business will need to be obtained. For example, a restaurant that desires to serve alcohol will need a liquor license, which can be a complicated process. In addition, insurance requirements can vary as well. Something that is seemingly as simple as obtaining a federal tax identification number could cause problems in the future if a question is not properly answered.

Enlisting the assistance of an attorney could help make the decisions and subsequent paperwork easier. Many closely held businesses in Arizona never truly have a chance to succeed because they are not set up appropriately at the outset. All of the efforts put into creating, financing and running the business could be sabotaged by one misstep during the formation process.

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