Arizona LLC

An Arizona LLC is a flexible and accepted manner of structuring and operating businesses because of: 1) limited liability, 2) tax flexibility, and 3) minimal formalities.

1) Limited Liability

Often, the single biggest advantage of using an LLC to structure a business is the limited liability that it can provide.

Unlike partnerships and sole proprietorships, an LLC can effectively limit its owners' liability to creditors, provided the owners, called members, have not personally guaranteed the debts of the LLC.

2) Tax Flexibility

In years past, the most common corporate form was a "C" corporation. The distributions made by a "C" corporation to its shareholders are taxed twice, once at the corporate level and once at the shareholder level. This system of two-level taxation is often referred to as corporate taxation. In contrast, however, there is another corporate form, called the "S" corporation, that is only taxed at one level for distributions made to shareholders. This single-level taxation is often called pass-through taxation.

An LLC provides flexibility in that it allows the LLC's owners to choose either corporate taxation or pass-through taxation.

3) Minimal Formalities

In order to form and operate a corporation, a substantial number of formalities are required. However, there are fewer formalities required to form an LLC in Arizona and much fewer formalities required to operate an LLC. This lack of formalities allows people to effectively silo their liabilitiy through easily forming and easily operating multiple LLCs.

Why Use a Lawyer?

If an LLC can be formed very easily, why use a lawyer? In short, the default provisions provided for Arizona LLCs by law are a bare minimum. Because the circumstances and operations of most businesses are unique, a one-size-fits all policy is often insufficient to allow businesses to run effectively and efficiently while providing protection to the businesses' owners. Customized and well-drafted LLC operating agreements can account for each business' unique circumstances and provide effective protections to business owners.

This brief overview of some important considerations associated with Arizona LLCs is by no means comprehensive. Always seek the advice of a competent professional when making important legal decisions.

Douglas K Cook is an Arizona llc lawyer with over 40 years of experience as a practicing attorney. Although Douglas K Cook's office is located in Mesa, Arizona, he represents clients throughout the Phoenix, Arizona Metropolitan area including the following east valley cities: Scottsdale, Paradise Valley, Tempe, Chandler, & Gilbert.

Last Updated on March 26, 2012

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Click on the infographic below to learn more about the various types of business entities, e.g. LLC &S-Corporation, in the United States.

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