Forming an LLC in Arizona

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Whether you’re an up-and-coming entrepreneur or an established business, operating as an LLC is a smart business decision.

Why?

It’s simple, flexible, and offers a lot of benefits such as providing credibility, tax savings, and protecting your personal assets

What is the purpose of forming an LLC? What paperwork do you need to properly form an LLC in Arizona? And can you file on your own or do you need a business attorney?

Keep reading because we cover all the bases on forming an LLC in Arizona!

What is an LLC?

LLC is an abbreviation for limited liability company. LLCs are simple, hybrid business structures that offer more benefits and flexibility than any other entity.

Business owners often form an LLC to ensure they are not personally liable for their companies’ liabilities or debts. LLCs are a great option for startups and small businesses. If you are thinking of starting a business in Arizona, you should strongly consider forming an LLC.

Reasons to form an LLC

An LLC business structure is the most popular among business owners due to its flexibility. As an LLC, owners have the choice to operate as a single-owner business, a partnership, or a multi-member structure.

Forming an LLC also helps owners obtain personal liability protection. Meaning they are not liable for any company debts that occur. Other advantages include:

Flexible Tax Management – When mentioning flexibility as a benefit, that means the freedom to customize LLC dwellings and management structure. An LLC can choose tax flexibility because the LLC itself doesn’t pay federal income taxes.

Perpetual Existence – LLCs can survive, and often thrive, even in the event of major life changes such as death or change of hands. Other business entities, such as a sole proprietorship, cannot do this.

How to form an LLC

If you want to create an LLC in Arizona, follow these six steps.

1. Choose a location

When you choose to form an LLC, you can form one in any state. However, the most-effective option is the state in which you plan to live and operate. Regardless of which state you choose to file in, you must file paperwork in your home state.

2. Choose a name

Choosing a name for your LLC in Arizona is one of the most important steps. While you want your business name to be unique and distinguishable to your industry, there are specific guidelines you must adhere to. For example, the name must include the phrase “limited liability company,” or “LLC.”

You also must refrain from using any words associated with a government agency, like FBI, and other restricted words like “attorney” or “bank.” However, there are exceptions for using some of these words that may require additional paperwork. Requirements for choosing a name for your LLC vary from state to state.

3. Choose a registered agent

A registered agent, also called a statutory agent, is required in the state of Arizona when forming an LLC. This is a person or business entity that is responsible for receiving important paperwork, such as notice of lawsuits, legal documents, and tax forms related to your business. In short, a registered agent is the person or entity that is the point of contact for the state.

A registered agent can be an individual within the company – including yourself – an attorney, or authorized business. The restriction to all of these options is that the registered agent must be a resident of Arizona.

4. Operating Agreement

While operating agreements are not a state requirement for an Arizona LLC, it’s best to have one in place.

An operating agreement outlines how you want your business to operate, ownership rights, and more. It’s a legally binding document that ensures everyone is on the same page, so that future conflicts are resolved quickly.

5. Articles of Organization

Articles of organization are the birth certificate of your business, and it’s required by the state to have one before forming an LLC.

These legal documents vary from state to state, but typically include documents like, a registered agent acceptance, member/management structure agreement, articles or organization, and a cover sheet.

6. Submit Application

After ensuring you have all documentation properly filled out, filed, and approved, you can submit your application by mail or online.

Who Should Start an LLC?

LLCs are best for business owners who want to have an unlimited number of owners and want a more flexible legal environment.

Small businesses, self-employed individuals, and entrepreneurs often find that an LLC business structure works best for them. Any business with employees or co-owners benefits from operating as an LLC because of personal protection. Businesses with high financial risks also find favor in an LLC business structure.

Most businesses are allowed to form a Limited Liability Company, with the only exception being non-profit organizations. Professions such as doctors and lawyers, are also often restricted from forming LLCs due to high-risk situations.

Work With a Business Attorney

When forming an LLC in Arizona, a business attorney is not a requirement. However, it’s often best for business owners to seek an experienced attorney to ensure proper documentation.

Business owners form LLCs to ensure they are not personally liable for their companies’ liabilities or debts. This can only take effect if the LLC is properly formed with the right documentation and operated accurately.

Business attorneys can guide owners on what to include in the paperwork to ensure full liability coverage. They can also save you a lot of time and money by acting as your registered agent, keeping detailed records, and completing all the paperwork.

Forming an LLC in Arizona for your business is a step in the right direction. It’s also a decision that should not be taken lightly. Knowing how to properly form an LLC, the required documents, and more can help guide you to making the right business decision based on your unique situation.



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