What is an Arizona Limited Liability Company (AZ LLC)?

An Arizona Limited Liability Company (AZ LLC) is a legal entity created by the state.  You can use a limited liability company to start and run a business. You can also use an AZ LLC to hold assets, like real estate and stock.

The people that make up the ownership structure of an Arizona Limited Liability Company are called “members.” Each of these members will have a designated ownership percentage based on the operating agreement for the business and/or assets.

Protect Your Personal Assets

There is always risk to operating a business.  A limited liability company can isolate that risk to the business assets and allow you to separate and protect your personal assets.  If the company is ever sued or forced to pay out on a judgement, your personal assets will be protected.

Simple Management & Accounting Requirements

Limited liability companies in Arizona are popular business structures for many reasons, but it is the ease of use that make them so favored.  That’s because reporting requirements are much lighter than corporations and there is no need to elect a board of directors, hold board meetings or keep records of all meetings.  The Arizona Corporate Commission states on their website that Limited Liability Companies do not need to file annual reports.

Pass Through Profits Without Double Taxation

All members of an AZ LLC can, and often do, use the company’s revenue to pay themselves a regular salary.  The business structure also provides the opportunity for business owners to pay themselves profit distributions as dividends of their ownership stake.  Profits can essentially be distributed however the owners see fit once they have agreed on a structure.  This should be clearly spelled out in an operating agreement among the LLC members so that future disputes can be avoided as often as possible.

How to File for an Arizona Limited Liability Company?

The first step in the process is choosing a name for your new company.  You can search on the Arizona Corporation Commission to find out if the business name is available and reserve it for up to 120 days.  Once you have a name, there are many online options to file your application for an AZ LLC.  The main problem with a cookie-cutter online form is that you won’t get any legal advice on the operating agreement among the members or if it is the ideal structure for your purposes.  While there might be some reasonable arguments to keeping costs low for a single member LLC, any multi-member limited liability company should be set up with the assistance of experienced legal representation.  Saving a few dollars in the short run to avoid paying to properly set up a complete and binding operating agreement among the members will almost certainly result in unforeseeable problems later down the road.

At MacQueen & Gottlieb, we have experience with setting up Arizona limited liability companies and drafting all the necessary documents to make sure all the members are on the same page about their respective responsibilities and ownership shares.  Contact us today to schedule an initial consultation or make an appointment online.