Review of Arizona LLC Facts

The Arizona LLC is a popular business and investment holding vehicle which extends limited liability to its owners. To form an LLC in Arizona, Articles of Organization are filed with the Arizona Corporation Commission. Adoption of an Operating Agreement is optional under Arizona law.

In review, the members of an LLC are not personally liable for its debts. The limited liability characteristics of an Arizona LLC apply to the personal assets of the members, but not to their investment in the company.  The member of a limited liability company risks their investment in the LLC, but their other personal assets are not at risk.  Exceptions to these facts exist, such as when a member has personally guaranteed a debt. 

LLC Ownership Management and Structure

The LLC is owned by the members, who are allowed in Arizona to manage the company, unless the limited liability company has adopted an operating agreement or articles of organization that provide that management of the Arizona LLC is vested in a manager.  A manager of the LLC is not required to be a member, nor are members or managers of the limited liability company required to be residents of Arizona.

Similar to corporations, in Arizona a LLC may have perpetual duration.  Its existence can continue regardless of the status of its owners. As with shares of a corporation, ownership of a limited liability company is transferable. An Arizona limited liability company business form is less complicated than a corporation.  However, when compared to the bylaws of an Arizona corporation, an operating agreement for an LLC may be more complicated. As with a partnership agreement, an LLCs operating agreement sets forth the conduct of the business, and should outline the powers and obligations of the managers and members of the LLC.

Even though the structure of an Arizona LLC is less complicated than a corporation, there are some expenses with operating the LLC form of business. An Arizona LLC is required to publish its articles of organization after the form is filed with the state. Publication occurs in the county of the LLCs place of business for three consecutive publications.

Arizona Annual Filing Requirements and LLC Taxation

Arizona does not require an LLC to file an annual report. However, notification of address changes, statutory agent changes and changes in members of the limited liability company must be filed with the Arizona Corporation Commission.  Articles of Amendment to Articles of Organization for an LLC will need to be filed in certain instances, such as when the name of the limited liability company changes, or when the number of members or managers changes.

For taxation purposes, an LLC is classified as a partnership by default.  However, an LLC can choose to be taxed as a corporation for federal tax purposes. An Arizona single member LLC or multiple member LLC is by default taxed as a partnership or sole proprietorship.

Arizona imposes a fee of $50.00 to file Articles of Organization for a domestic Arizona LLC.  It is recommended that the additional cost of $35.00 be paid to expedite the approval process.  These fees apply to all Arizona limited liability company filings, whether the entity is a professional llc, a business llc, a real estate llc or an investment holding llc.

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