A combination of features has made the Arizona LLC entity an attractive choice for doing business in Arizona. The LLC is becoming the entrepreneurs' entity of choice due to its attractive characteristics.

Key Features of an Arizona LLC

Informal operation requirements. While several beneficial characteristics of an LLC contribute to its rapid growth as an Arizona business entity, the main reason for choosing an LLC over a corporation is also the most understated - the reduced formality of operating the business and maintaining the limited liability attributes of the company.

With a limited liability company, corporate resolutions, minutes of meetings of shareholders, filing of annual reports and other administrative tasks inherent to a corporation are significantly reduced. This in itself can render a LLC more effective than a corporation in protecting business owners' personal assets. MORE

Protection of personal assets. An Arizona LLC is a separate legal entity which provides limited liability characteristics previously available only to shareholders of corporations. Owners (members) of the LLC are, like the shareholders of a corporation, not personally liable for the debts of the company.

Other advantages.

LLC Formation

One or more persons may form the LLC by filing articles of organization with Arizona's Corporation Commission. Articles of organization are merely a simple notice that contains basic information about the company for public inspection. In Arizona the articles must include, among other items:

The articles of organization may include any other legal provisions, and must be published in a legal newspaper which has been approved by the Arizona corporation commission.

LLC Management and Control

Flexible capitalization. Members of LLCs enjoy a great degree of freedom in setting their rights and obligations as to most management and capital contribution matters. Members of an Arizona LLC have broad discretion to decide how property, cash or services will be contributed. An operating agreement will typically govern the manner and time frame contributions are made. Contributions may be required to be made at the time of LLC formation or at any time thereafter.

Distribution of Profits & Losses. Profits and losses can be shared by LLC members in any manner they agree. If the sharing of profits and losses is not specified in an operating agreement, Arizona law states distributions will be shared by LLC members in proportion to their contributions. After all contributions have been returned, distributions will be shared equally by the members.

Arizona Operating Agreements

A written operating agreement is not a requisite under Arizona law for LLC formation. However, an operating agreement is ordinarily entered by the members of the company before contributions are made. Without an operating agreement, state law governs each members' right and obligations.

Generally, the Arizona Limited Liability Company Act states members have equal rights to management and profit sharing, and each member has an equal obligation to contribute start-up and operating funds. If the owner's agree to an arrangement other than equal contribution and profit sharing, then an LLC operating agreement is necessary.

The operating agreement provided to our customers is directly patterned after Arizona law, and also includes provisions covering issues not specifically addressed under the LLC Act (such as a non-compete clause).  By reviewing the first draft, the client can review what the law provides with respect to operating an LLC in Arizona and then make informed modifications to meet their specific needs.

Company Record Keeping Requirements

Arizona limited liability companys are required to maintain a list of the names and addresses of its members, a copy of the articles of organization, and a copy of the operating agreement, if one has been entered. An LLC must also keep financial records, which may be inspected by any member.  An LLC is not required to file annual reports in Arizona.

Conclusion

Primary reasons to form Arizona LLC entities include protection of members form personal liability for business obligations. LLC's insulate members just as a corporation protects its shareholders, but with far less formality to maintain legal integrity of the company.

Key benefits of include the avoidance of double taxation; the flexibility of business owners to delegate management rights and decide the manner and time of capital contributions.

With its minimal filing costs and maintenance fees, Arizona is LLC friendly. Form a company now by starting here.