Business Entity Formation in Arizona
Choosing which type of legal entity to form is one of the
most important decisions to make when starting a business.
Arizona law provides for a variety of business entity options, and each works
differently to protect certain assets and determine tax, debt, and legal
Among the types of business entities
available in Arizona are:
limited liability companies (LLCs)
limited liability partnerships (LLPs)
limited liability limited
professional limited liability companies (PLLCs)
professional limited companies (PLCs)
In Arizona, the Secretary of State provides the registration of
LLCs, limited partnerships, foreign limited partnerships, limited liability
partnerships and other non-incorporated entities. The Arizona Corporation
Commission (ACC) regulates the incorporation of businesses, adopts rules, and
makes decisions in contested matters.
From what we see in our practice,
the most popular choice is currently the limited liability company. However,
corporations and limited partnerships are also common choices. There are
benefits and disadvantages of each type of entity that should be reviewed with
an experienced business attorney.
Limited Liability Companies
Note: While the information contained in this
article is accurate as of its publication date, 2018 passage of the Arizona
Limited Liability Company Act will impose major changes for LLCs formed on or
after September 1, 2019, and for all Arizona LLCs, regardless of their formation
date, beginning September 1, 2020. See David Fitzgibbons'
article for more information.
The rules and regulations regarding
the formation and maintenance of an Arizona LLC are set forth in Title 29 of the
Arizona Revised Statutes. In order to form an Arizona LLC or PLLC, Articles of
Organization must be approved by the ACC, followed by publication in an approved
newspaper. The Articles provide basic information including a name for the LLC,
a statement of its purpose, location of a registered office, information
regarding a statutory agent, a date of dissolution, a statement indicating
whether it will be member-managed or manager–managed, and addresses of certain
managers or members.
Maintaining an LLC in Arizona is
relatively easy, but formalities include filing Articles of Amendment when
necessary and securing necessary licenses from federal, state and local
jurisdictions. Members may also consider entering into an Operating Agreement
regarding the operation and management of the business. An Arizona LLC will
continue to exist until voluntarily dissolved by its members or involuntarily
dissolved by the ACC or an Arizona court.
The rules and regulations regarding
the formation and maintenance of an Arizona corporation are set forth in Title
10 of the Arizona Revised Statutes. In order to form an Arizona corporation or
non-profit corporation, Articles of Incorporation and a disclosure statement
must be approved by the ACC, followed by publication in an approved newspaper.
The Articles provide basic information, including a unique name for the
corporation, a statement of the corporations purpose, its place of business,
information regarding shares, board members, incorporators and a statutory
In general, after formation, directors and officers are appointed, bylaws
are entered into, stock may be issued, annual and special meetings are held, and
annual reports must be filed. A corporation will continue to exist until it is
voluntarily dissolved by the shareholders or board of directors, or
involuntarily dissolved by the ACC or an Arizona court.
Whether you intend to form a
partnership or file documents to that effect, a general partnership is formed
whenever two or more people associate to run a for-profit business.
General partnerships are not
commonly used, because each partner may be held liable for the acts of any other
partner. To reduce the liability of the partners, a limited liability
partnership (LLP) may be formed, combining some of the liability protections of
a corporation or LLC with the ease of a partnership.
To form a limited liability
partnership, you must file a statement of qualification with the Secretary of
State setting forth a unique name for the partnership, the address of the
business office, and information for the agent for service of process.
Forming a Corporation | Forming a Partnership | Forming a Limited Liability Company
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