Form and Sustain an Arizona Llc - continued
Pages (2): 1 [2]

Sustaining LLC Good Standing

Certain conditions exist for maintaining an LLC after forming the company. Arizona is a relatively easy state to sustain good standing and retain limited liability protection. No annual filings or fees apply, but certain formalities exist to remain compliant with the ACC. Formalities include publication, adopting an operating agreement, and possibly securing appropriate licenses.

Publication of Articles of Organization

Arizona requires an LLC to publish notice of its Articles of Organization. Notice is to occur in the county where the company is located. The notice must appear in an approved legal publication. An Affidavit of Publication is filed with the ACC to verify compliance.

Arizona Operating Agreement Guidelines

Legal existence of an LLC is invoked by filing Articles of Organization. But an operating agreement is advisable, and in some instances may be necessary. The operating agreement must be signed by each member to be effective. If no operating agreement is entered, operation and management of the company will be governed by Arizona LLC laws.

If departures from the law are desired, then an operating agreement is necessary.

State law does not contain provisions for such things as place of banking, periodical meetings and many other matters regarding operation of the LLC.

The agreement should cover the following matters:

Contributions and start-up capital, Additional contributions to the LLC;
The rights and duties of members and managers;
Records and reports to be kept and inspection rights;
Accounting records and maintenance;
Profits and Losses Distributions to company members;
Salaries, Permissibility and frequency of Draws against income by members;
Salaries to Managers or Officers of the company;
When and how to call meetings between members and managers;
Expense accounts and draws;
Expulsion of members and limits on remedies of expelled member;
Dispute Arbitration and Litigation Expenses;
Non-competition agreement.

Licensing and Permits for LLCs

Although LLCs are not taxed at the entity level, a Federal Tax Identification Number for the company may be needed for banking purposes. A multiple-member company will also need the federal number. This tax identification number can be quickly obtained from the IRS by filing IRS form SS-4. You can fill out the form online and apply by going to the interactive version. A single-member LLC without employees generally should not obtain the number. For more on this, please see the IRS' Frequently Asked Questions Page, Section 12-1 re: Notice 99-6, 1999-1 CB 321.

All companies with employees will need a withholding and unemployment insurance number from the State Department of Revenue. A privilege or sales tax license may also be needed. Withholding number, unemployment number and transaction privilege tax license applications are at the State Department of Revenue website.

Other licensure provisions may exist for your for LLC, depending on the nature of its functions. Consult the directory of state regulatory licensing agencies for a good place to start checking regulation of different professions.

At the local level, county and city sales tax and business licenses may be needed, depending on the business activity and location of the company.

Also at the local level, trade name, fictitious name and "dba" registration can be filed. Registration of a trade name is not mandated in Arizona for an LLC. The practice is optional, and when done, the application is filed with the Secretary of State.

For more information about filing trade names, or to start checking local licensing and permits for your LLC please refer to our local business licensing page.

Summary

This has included considerations to be made prior to forming an Arizona LLC. It is intended to show the differences between filing a form and organizing a limited liability company in Arizona. The LLC form of business organization will provide limited-liability protection to members. To sustain this insulation from liability, certain criteria must be met. Maintaining limited-liability protection can be relatively easy, if the company is formed correctly.

For more information on keeping an Arizona LLC compliant, you should visit the resource page. Sustaining Limited Liability Company Protection supplements Form an Arizona LLC. For information beyond limited-liability maintenance and operating agreement criteria, you can locate pertinent information there.

Printable Version