An Arizona LLC is a particular kind of corporate structure. Being an LLC has a lot of benefits for businesses. Making a business an LLC protects the owners’ personal assets from being at risk in the event of litigation. You must register as an LLC with the Arizona Corporation Commission to do so (ACC).
The corporation’s obligations and any monetary judgments rendered against the company in court are not personally responsible to the company’s owners. One of its drawbacks is the so-called “double taxation” that comes with corporations.
In other words, once business profits are earned, they are first taxed to the corporation. When shareholders get dividends, these profits are taxable as capital gains income. The benefits of a limited liability company are similar to those of a corporation in that the owners’ assets are protected against creditors and lawsuits brought against the LLC.
Additionally, LLCs are not subject to “entity level” taxation unlike partnerships. This indicates that they do not pay taxes as an LLC, unlike corporations. Members who have made a profit are the only ones who pay taxes. The decision to form an LLC is not without drawbacks. Due to the liability of LLC arrangements, owners may be held liable for their own negligence.
What Conditions Must an LLC Meet?
Checking to discover whether there are any other firms with your name registered in Arizona should be your first step before filing for an LLC. If your company’s name is not already taken, you can reserve it until you register as an LLC. A foreign corporation must submit a name registration, which costs $10 for standard service or $35 for expedited service.
Choosing a statutory agent, who must be a person, an Arizona company or LLC, or a foreign corporation or LLC that has a license to conduct business in Arizona, is another crucial stage in forming an LLC. Your proposed LLC is not permitted to act as its own statutory agent. Finally, whether members or managers will control the LLC must be decided.
What Documents Do I Need to Create an LLC?
Registering as an LLC can do it in person, online, or by mail. The articles of organization, statutory agent acceptance, and manager or member structure attachment are the paperwork you need to complete.
The Articles of Organization must specify whether the LLC is professional or nonprofessional, its exact name, the name and address of the statutory agent, the company’s known place of business, the duration of the LLC’s existence, whether the LLC will be managed by a manager or run by its members, and the signature of the document’s creator.
Foreign LLCs must complete an additional step by applying for registration. The applicant must specify on the application whether the LLC is a professional or nonprofessional one, the foreign name of the company, the name it intends to use in Arizona, the location and date of the LLC’s formation, the main purpose of the business, the statutory agent’s address in Arizona, and the LLC’s formation status.
What Advantages Does an LLC Receive in Arizona?
Compared to other states, Arizona has a lot fewer criteria for LLCs. For instance, you are not required to draft an operating agreement or submit yearly reports. You have a lot of freedom in deciding how you wish to organize your taxes.
What Drawbacks Does an LLC Face in Arizona?
Arizona does not allow nonprofit organizations to register as nonprofit LLCs, in contrast to some other states. Only a standard LLC may be created, and the IRS must be contacted to request tax-exempt status. Additionally, since the ACC does not require an operating agreement, any operating agreements you provide with your application won’t be returned to you.
What Distinguishes a Limited Liability Company from Other Business Structures?
The structure of LLCs differs from those of other popular corporate structures. Revenue from LLCs is only taxed once, unlike income from corporations. In other words, the LLC is not taxed on the income; rather, only the individual members are. This tax structure also applies to limited partnerships and sole proprietorships. The ownership structure of limited liability businesses is different from that of corporations. Corporations are owned by shareholders, whereas individual owners own LLCs.
Regarding liability, LLCs are distinct from both partnerships and sole proprietorships. A partnership’s partners are personally responsible for any debts the partnership accrues. These debts consist of obligations made by the other partner. In other words, if a partnership owes a creditor money, the creditor has the right to “come after” the partners’ personal and real property to collect on the debt.
In most cases, LLC owners are not held personally responsible for the obligations or debts incurred by the LLC. Because of this reality, LLC owners can operate the company without worrying about losing their individual assets.
Who Ought to Establish a Limited Liability Company in Arizona?
People who want to run a small business should think about creating an LLC. Creating an LLC limits liability to the assets owned by the LLC, protecting individual assets. A small business owner can avoid using their personal assets to cover legal costs by creating an LLC.
People who want to start a business with the least amount of paperwork and expense should also think about incorporating an LLC. The state must be notified of the creation of an LLC by filing “articles of organization” and a fee.
Usually, this charge is lower than the one needed to incorporate a corporation. When compared to corporation creation, LLC formation often involves less documentation to be filed with the state. Additionally, keeping track of LLC earnings and outlays is not difficult. Separate tax returns need not be filed under an LLC. Members and management instead record their earnings and outlays on personal tax returns.
Additionally, managing an LLC can be fairly easy. An LLC with at least two members may create an operating agreement. The members specify in this agreement how the LLC will be run, how earnings will be distributed, and which members’ votes will be required for which decisions. The operating agreement may also specify the procedure for dissolving or terminating the LLC.
The operating agreement may also specify procedures for resolving disputes amongst LLC members. What happens if an LLC member passes away or becomes incapable of working may be covered by the operating agreement.
What Is Protected by the LLC? What Does It Not Guard Against?
Even while the LLC form shields members’ private property from a lawsuit, things change if the case alleges a member of the LLC was negligent. A member of an LLC may be held personally accountable for negligence if a court finds the member to have acted recklessly. Additionally, an LLC member is personally responsible for deliberate torts.
For instance, an LLC member is personally responsible for any battery committed during negotiations with another corporate company.
Where Do I Find the Best Lawyers?
You should get the legal counsel of a business attorney when forming an LLC to ensure that your company benefits to the fullest extent possible. You can get support from an Arizona corporate attorney for the duration of the application.
