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Arizona LLC
Advantages and Disadvantages



Arizona LLC and Asset Protection



An Arizona LLC offers business entrepreneurs the form of corporate organization that provides perhaps the most flexibility to you. An LLC formation, like the alternative corporate forms of organization like a limited partnership or a Subchapter S Corporation, are generally prime candidates for a business juststarting. The state of Arizona gives public support to an Arizona LLC.

Should I form an Arizona LLC?

An Arizona LLC satisfies a necessary condition of your business planning developement in that it meets the requirement that you establish a legal form of organization in order to gain the statutory benefits and protection available in Arizona to your LLC. Your Arizona LLC establishes a legal presence within the state, which you can use either as a platform for in-state operations or by registering your Arizona LLC via your agent's physical address in order to meet the purely statutory requirement for tax and filing purposes absent an in state operation.

Arizona LLC Law Requires

  • Arizona requires a LLC (limited liability company) to publish notice of the Articles of Organization. The notice of articles of organization is to occur in the county where the LLC is located. Arizona is one of two states which requires publication of LLC Articles. The notice must appear in an approved legal publication such as a newspaper of general circulation.


  • You are also required to Submit an affidavit of publication to the Arizona Corporation Commission (ACC) to verify compliance.

Advantages and Disadvantages: Arizona LLC

Advantages of LLC

  • Limited Liability: Owners of a LLC have the limited liability protection of a corporation.


  • Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.


  • No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.


  • Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Usually, this will be a tax advantage, but circumstances can favor a corporate tax structure.


Disadvantages of LLC

  • Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.


  • Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.


  • Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.


Arizona’s 2009 Business Tax Climate Ranks 22nd

Arizona ranks 22nd in the Nation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. The ranks of neighboring states were as follows: California (48th), Nevada (3rd), Utah (11th), Colorado (13th) and New Mexico (26th).

Arizona Individual Income Tax System

Arizona's personal income tax system consists of five brackets and a top rate of 4.54% kicking in at an income level of $150,000. That top rate ranks 38th highest among states levying an individual income tax. In 2006, Arizona's individual income tax collections were $537 per person, which ranked 39th highest nationally.

Arizona’s Corporate Income Tax System

Arizona's corporate tax structure consists of a flat rate of 6.968% on all corporate income. That rate ranks 26th highest among states levying corporate income taxes. In 2007 state-level corporate tax collections (excluding local taxes) were $158 per capita, which ranked 25th highest nationally.

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