An LLC, or limited liability company, 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
In most situations LLCs can provide limited liability protection from both the creditors of the LLC itself as well as the creditors of co-owners, depending upon the state in which the LLC was organized.
While states generally provide robust limited liability protection from the creditors of an LLC that has observed the formalities necessary for
In particular, those states that do not permit creditors of LLCs to seek and obtain any judicial remedy other than a charging order provide the greatest limited
2) Tax Flexibility
LLCs are hybrid entities that include many aspects of both corporations and partnerships. In fact, an LLC can elect either to be taxed under Subchapter C (like a C-Corporation) of the IRC or Subchapter K (like a partnership).
3) Reduced Requires Ongoing & Formational Actions
Unlike corporations in most states, which require the filing of annual report, LLCs do generally not require such filings.
As of August 2011, the Arizona Limited Liability Company Act (Act) requires the following actions to organize an LLC:
A. Except as provided in section 29-634, subsection D, a limited liability company is formed when the articles of organization are delivered to the commission for filing, even if the commission is unable to make the determination required for filing by section 29-634, subsection A at the time of delivery. If the articles of organization, as delivered to the commission, do not conform to the filing provisions of this chapter and are not brought into conformance within the time period prescribed by section 29-634, subsection C, paragraph 2, the existence of the limited liability company terminates at the end of the time period.
B. A copy of the articles of organization that is filed with the commission and that is stamped "filed" and marked with the filing date is conclusive evidence that all conditions precedent required to be performed by the organizers have been complied with and that the limited liability company has been legally organized and formed under this chapter. A limited liability company continues perpetually unless otherwise provided in its articles of organization or operating agreement or until the limited liability company is dissolved and terminated in accordance with this chapter.
C. Within sixty days after the commission approves the filing, there shall be published in a newspaper of general circulation in the county of the known place of business, for three consecutive publications, a notice of the filing of such articles of organization consisting of the information required in section 29-632, subsection A, paragraphs 1, 2, 3, 5 and 6. An affidavit evidencing publication may be filed with the commission.
ARS § 29-635.
The Act further specifies:
A. The articles of organization shall state:
1. The name of the limited liability company.
2. The name, street address in this state and signature of the agent for service of process required to be maintained by section 29-604.
3. The address of the company's known place of business in this state, if different from the street address of the company's statutory agent.
4. The latest date, if any, on which the limited liability company must dissolve.
5. Either of the following statements:
(a) Management of the limited liability company is vested in a manager or managers.
(b) Management of the limited liability company is reserved to the members.
6. The name and address of either of the following:
(a) If management of the limited liability company is vested in a manager or managers, each person who is a manager of the limited liability company and each member who owns a twenty per cent or greater interest in the capital or profits of the limited liability company.
(b) If management of the limited liability company is reserved to the members, each person who is a member of the limited liability company.
B. The articles of organization may include any other provision that is consistent with law, including any provisions under this chapter that are required or permitted to be set out in an operating agreement of the limited liability company.
C. It is not necessary to set out in the articles of organization any of the powers enumerated in this chapter.
ARS § 29-632.
This brief overview of some important considerations associated with limited liability companies (LLCs) is by no means comprehensive. Always seek the advice of a competent professional when making important financial and legal decisions.