Free BOI/CTA filing for all clients. Receive your LLC, EIN, and bank account SAME-DAY. Learn more.

By The Wyoming LLC Attorney Team

May 04, 2023
Home
  1. Arizona LLC Requirements

Arizona LLC Requirements

How to Start an LLC

Summary

This article discusses limited liability companies (LLCs) as a business structure for entrepreneurs. LLCs provide owners with protection from personal liability for any legal or financial issues, making them popular among new entrepreneurs. The article explains the requirements for forming an LLC in Arizona, including business name, registered agent, operating agreement, articles of organization, business licenses, permits, and tax forms. LLCs are also compared to corporations, with LLCs being more flexible and better suited for small businesses, and corporations being better for larger scale businesses.

When starting a new business, it’s important to understand the different business structures available to ensure you select the right one. These all vary in terms of their tax, income, and liability implications. A very common business structure that’s favored by new entrepreneurs forming their first company is an LLC, which stands for limited liability company. Limited liability companies are a very popular business structure and offer lots of benefits. They also come with different requirements depending on the state they are formed in.

What is an LLC?

An LLC is a business structure in the US that protects the owners of a company from personal responsibility for any liabilities. This includes financial problems such as debts or bankruptcy as well as any legal issues such as lawsuits. Essentially, the owner's personal finances can’t be used to resolve any of these issues. This is one of the many reasons a limited liability company is particularly favored by new entrepreneurs starting their businesses. This added sense of legal and financial protection offers reassurance and allows them to focus on building their companies.

Start an LLC in Arizona

What is required of an LLC in Arizona?

While most states have their requirements when it comes to forming an LLC, some rules generally apply to all of them. These are:

  • Business name – the LLC must have an approved name that has been declared on all official documentation and filed to the state.
  • Registered agent – this is the member of the LLC who will handle, receive and send all legal matters regarding the LLC, including legal documents.
  • Operating agreement – this is a legal document that outlines the LLC’s financial and functional decisions. This includes rules, regulations and provisions.
  • Articles of organization – this is the document that outlines the initial statements required to form an LLC and includes all necessary information regarding it. This can also be referred to as a certificate of organization or a certificate of formation and proves the LLC has been legally formed.
  • Business licenses and permits – the ones your LLC will need depend on the premise of your company. For example, if your company plans on selling alcohol, you will need a liquor license.
  • Tax forms – the specific corporation taxes in Arizona you pay will depend on your company’s particular structure.

When it comes to forming an LLC in Arizona, all of the above apply, but there are a few additional publication requirements too. These requirements tend to be outlined on the notice of formation and include:

  • The statutory agents' names and addresses
  • The LLC’s principal address
  • Whether the LLC is manager-managed or member-managed
  • The names and addresses of all managers and members of the LLC

How is an LLC more flexible than a corporation?

Although all business structures have their benefits, there is a common argument that limited liability companies offer more flexibility than corporations. Several factors support this. Some of these are:

  • It can come in different forms – What we mean by this is that an LLC can be structured as a single-owner business, a partnership, or a multi-member structure. This means that with an LLC, you are granted the flexibility to decide how you wish to structure, manage and form your company, giving the owner much more freedom in comparison to a corporation.
  • There’s no limit on how many members you can have as part of an LLC – Owners of LLCs are called ‘members’, and each one will have made a capital contribution to the business, whether that’s through start-up funds or physical assets. There aren’t any limits on the number of members an LLC can have.
  • There is some flexibility in terms of how the LLC is taxed – If your Arizona LLC is a single member, it’s taxed as a disregarded entity, meaning you will submit Arizona LLC taxes the same way a sole proprietorship does. However, if your business is multi-member, you will be taxed the same way as a general partnership.

Who should create an LLC?

Limited liability companies work for any type of business and would have benefits for all of them. However, arguably an LLC is better suited to some business owners than others and would operate more smoothly and advantageously with certain types of businesses and circumstances. Some of the scenarios and people who should seriously consider starting an LLC are highlighted below:

  • You operate as a sole proprietorship – this will allow you to operate as a small business and keep your assets protected.
  • You operate as a partnership – this will also help you to operate as a small business.
  • You own/want to own a small business – gives you the limited liability protection of a corporation without the added complexities and costs that a corporation brings.
  • You do not have much experience in business – an LLC will protect you from any legal liability. A lack of experience makes this more likely to be needed and beneficial.
  • This is your first company – LLCs in Arizona will protect the owners' assets which as a new starter in business is very important. Issues are more likely to occur as a new entrepreneur and not protecting your assets and finances as a new owner could be fatal for any potential businesses you may wish to form.

Who is better off with a corporation?

Although limited liability companies offer many benefits and are a very useful business structure for some, corporations do offer certain things that a limited liability company cannot. In some scenarios, a corporation would be better for a business owner. In particular when an owner wants their business to go on a much larger scale. Small businesses are great and for many entrepreneurs, they are desired. In that scenario, an LLC is most applicable.

However, not everyone wants to run a small business. Some business-savvy minds want to take their business to a much larger scale perhaps nationally, internationally, or even globally. In this scenario, a corporation would be better suited. This is also likely to be the case if the business owner has a history of building big, successful businesses. This would make it likelier for their new business to grow and succeed as they have done it before and have a solid understanding of the industry. They have the connections and networking skills necessary to develop their company as well as the funds and success to gain investors or take it larger on their own. It would also be beneficial to use a corporate structure if the owner wants to seek outside investment as this will also grow their company and take more funding.

These bigger companies that will have a board of directors should use a corporate structure as this is what's necessary for a corporation in Arizona. If this hierarchical structure is what your company would better suit, a corporation may be the better choice.

Why would someone want to create an LLC?

Many benefits come with owning a limited liability company that acts as a reason to form one. Below we have explored some of these:

  • - Separate legal identity – it is separate and apart from its owners including its rights, responsibilities and liabilities. This means any legal issues such as lawsuits, will be in the LLC’s rights and not related to the owner.
  • - Limited liability – because it is a separate entity, the owners and members of the LLC will face limited liability against any financial, legal, or business issues the LLC may face. This keeps them protected so not only can it operate as an individual, it can be prosecuted as an individual without harming the owner's assets.
  • - Perpetual existence – the owners can change without risking the dissolution of the company unless specified that it can. This means that the company doesn’t have to be ceased due to unforeseen changes.
  • - Flexible management structure – there are many options for how the members of the LLC wish to structure the management.
  • - Free transferability of financial interests – the profits of the LLC can be transferred to the rights of the manager without restriction.

Work with a lawyer to create your LLC

We highly recommend working with a lawyer to form your LLC. They can offer you solid, expert advice that could prevent any legal and financial troubles your LLC may face. There are many benefits to working with an attorney when creating your limited liability company and some of these are:

  • They can determine whether an LLC is the right legal entity for you – the first step to forming an LLC is deciding whether that would be the best business structure for you. A lawyer would have a wider range of knowledge and could help you make the right decision.
  • State offices cannot provide you with legal advice should you need it – if you need legal advice or have any issues the state offices will not be able to help so you should contact your attorney.
  • To create an effective LLC there are numerous legal requirements – a lawyer could ensure these are all met appropriately to avoid any issues.
  • Your operating agreement dictates all of your legal rights in your LLC – you may wish for a lawyer to make these clear to you and to ensure that they are correct.

Frequently Asked Questions

An operating agreement is a legal document that outlines how an LLC will conduct its business. This includes outlining the management structure, powers and duties of managers, buyout rules, how to amend the operating agreement, what to do in unforeseen circumstances and how to resolve disagreements between members. It’s not a requirement in Arizona, but it can be beneficial.

This is a unique nine-digit number assigned by the IRS, Internal Revenue System. They are used for IRS federal tax purposes. This is needed for an LLC if your employees or yourself wish to open a business bank account.

You may need to apply for additional licenses or permits depending on what type of business your LLC is conducting. You can find this out by visiting the State of Arizona Department of Revenue website.

There are 3 basic types of licensing in Arizona:

  • Local business/Occupational license/permits
  • Regulatory licensing/permits
  • State-wide transaction privilege tax license

Speaking to a team of professionals may be beneficial in ensuring that all of the legal elements of the formation of your LLC in Arizona are up to standard and have been completed and filed appropriately. This should help for a more seamless formation and operation of your LLC.