The Arizona Limited Liability Company Act provides the legal foundation for creating and operating limited liability companies within the state. Found in Title 29, Chapter 7 of the Arizona Revised Statutes, this legislation governs how LLCs are formed, managed, and dissolved. It replaced a previous version of the law, becoming fully effective for all Arizona LLCs on September 1, 2020.
Understanding the Arizona Limited Liability Company Act
The Arizona Limited Liability Company Act defines an LLC as a distinct legal entity separate from its owners, who are called members. This separation grants members limited liability protection, meaning their personal assets are not at risk for the company’s debts and legal liabilities.
The statute also provides flexibility in how the business can be managed and structured. Members can decide on a management arrangement that suits their needs and choose different methods of federal taxation.
Key Requirements for Establishing an Arizona LLC
The first step is selecting a compliant name for the LLC. The name must contain the words “Limited Liability Company” or an abbreviation like “L.L.C.,” “LLC,” “L.C.,” or “LC.”1Arizona State Legislature. 29-3112 – Permitted Names A name’s availability must be confirmed through the Arizona Corporation Commission (ACC) database to ensure it is distinguishable from other registered entities.
Another requirement is the appointment of a statutory agent.2Arizona State Legislature. 29-3115 – Statutory Agent This individual or entity accepts legal documents and official notices on behalf of the LLC. The agent must be an Arizona resident with a physical street address in the state, or it can be a company authorized to conduct business in Arizona.
The core formation document is the Articles of Organization. This document must include the LLC’s name, the statutory agent’s name and Arizona street address, and the LLC’s principal address.3Arizona State Legislature. 29-3201 – Formation of Limited Liability Company; Articles of Organization It also requires a statement indicating whether the LLC will be managed by its members or by designated managers. If manager-managed, the names and addresses of all managers must be included; if member-managed, the names and addresses of all members are required.
While not filed with the state, an Operating Agreement outlines the internal governance of the LLC. It details member contributions, the allocation of profits and losses, management duties, and procedures for admitting new members or handling a member’s departure. The Act allows members freedom to define these terms to prevent future disputes.
The Process of Forming Your Arizona LLC
File the completed Articles of Organization with the Arizona Corporation Commission. This can be accomplished through the ACC’s online eCorp portal, by mail, or by delivering it in person.
After the Articles of Organization are submitted, the ACC will review the document. Processing times can vary depending on the filing method and the commission’s workload. An approval means the LLC is officially formed and its legal existence has begun.
Upon receiving approval from the ACC, a common next step is to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). An EIN functions like a Social Security number for the business. It is necessary for opening a business bank account, hiring employees, and filing federal tax returns.
Essential Ongoing Obligations Under the Act
After formation, a publication requirement may apply. The LLC must publish a notice of its formation in a local newspaper for three consecutive issues within 60 days of ACC approval. This requirement is waived if the statutory agent is in Maricopa or Pima County, as the ACC publishes the notice on its website instead. The newspaper provides an Affidavit of Publication, which should be kept with the LLC’s records.
The LLC has a continuous duty to maintain a statutory agent and a known place of business in Arizona. If the agent or their address changes, a statement must be filed with the ACC to update the public record. Failure to maintain an agent can lead to administrative dissolution by the state.
The Act also mandates specific record-keeping. An LLC must maintain:
- Its Articles of Organization and any amendments
- Its Operating Agreement
- A list of all members’ names and addresses
- Financial records, including tax returns and statements for the past three years
If information in the Articles of Organization changes, an Articles of Amendment must be filed with the ACC.4Arizona State Legislature. 29-3202 – Amendment or Restatement of Articles of Organization
Dissolution and Winding Up Procedures
An event of dissolution begins the termination of an Arizona LLC. Common triggers include a provision in the operating agreement, the unanimous consent of all members, or a judicial decree. The ACC can also initiate an administrative dissolution if the LLC fails to meet its statutory duties.
To formally begin the process, the LLC must file Articles of Dissolution with the ACC. This filing serves as public notice that the company is ceasing operations. The filing moves the LLC into the “winding up” phase.5Arizona State Legislature. 29-3702 – Winding Up
During the winding up period, the company must conclude its business affairs. This involves stopping normal operations, selling off assets, and satisfying all known debts and liabilities. The law requires that all creditors be paid before any remaining assets are distributed to the members.6Arizona State Legislature. 29-3707 – Disposition of Assets in Winding Up The distribution of these final assets is governed by the terms of the operating agreement or by default rules in the statute.