Forming an LLC in Arizona is similar to other states. The most important step in Arizona is to file the Articles of Organization with the Arizona Corporation Commission (ACC). You also have to appoint a qualified Arizona agent who will be the principal member of the LLC. The initial Articles of Organization should indicate your intent to run an LLC. It is also required to have a notice filed with the ACC that informs the public that the LLC has been duly registered and is Operating within the state. Your address, phone number, and email address should be mentioned on the notice.
After you filed the Articles of Organization, you have to choose one of the following options. Option One is to immediately incorporate the Arizona Limited Liability Company (LLC). This means that the new LLC will be considered as a separate entity from you and your business. In Arizona, all other LLCs are assumed to be state-created, so this option may affect your rights if the court ever concludes that your business is a partnership instead of a sole proprietorship or corporation.
Option Two is to choose another method for incorporating an Arizona Limited Liability Company. If you want to incorporate as a C-corporation, you will need to file an Articles of Organization with the Arizona Corporation Commission (ACC). Once filed, the ACC will provide you an approved Certificate of Incorporation. If you choose to incorporate as a C-corporation, it will not affect your rights to collect tax. However, if you want to incorporate as a sole proprietorship, you lose the right to collect taxes and capital gains taxes from your business.
How to Form an LLC in Arizona - Filing Articles of Organization
If you elect to form an LLC in Arizona, you may elect to be treated as a C-corporation for tax purposes. Although you lose the rights to corporation tax benefits, you may elect to be treated as a C corporation for the purpose of paying state taxes. You will have to report your Arizona LLC income on your personal income tax return. However, you may elect to treat your LLC as a C-corporation and report your income as your personal income. This would result in paying state taxes only once.
Option Three is to decide that you do not want to be treated as a C-corporation. You may decide that a limited liability company is the best choice for you. In Arizona, all other LLCs are assumed to be state-created, so How To Form An Llc In Arizona that is treated as a C-corporation has been boiled down to one simple option. If you elect to be treated as a C-corporation, you will not lose your limited liability status. However, you may elect to be treated as an LLC for tax purposes.
The last option, which we will discuss in a later article in this series, is to choose an all compliant entity. An all compliant entity is one in which the shareholders will own a substantial part of the company, or the members will own a majority of the company. This is also called a general partnership in many cases, and it will eliminate some of the problems that can arise when you are starting out. However, an all compliant entity is not for everyone.
If you choose option 1, you will be required to appoint a Corporation Commission counsel. The Corporation Commission will then issue you an Operating Agreement, Franchise Agreement, and by-laws. These documents will then be used by your LLC to make tax reports, manage its financial operations, and most importantly, to register and do business. Your LLC must maintain all of these documents for its future purposes.
Option 2 would be to file for an Arizona Limited Liability Company (LLC). With an LLC filing, you will be required to appoint one or more people as officers. One of the officers will be considered the "principal" and his or her spouse will be considered the "agent." You can also change your name as the business continues to expand.
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