Christensen Law Firm

Who Are Limited Liability Companies Best For?


Limited Liability Companies are best for small to medium-sized companies. In Arizona, an LLC can be formed with a single member (owner), but the LLC is certainly not limited to circumstances where there is a single owner. LLC’s are most commonly used for small businesses with up to five or six owners. If there will be a larger number of owners, or if you intend to grow up to more than a hundred employees, an LLC may not be a good fit for you. For those larger businesses, the more formal corporate structure that comes along with forming a corporation may have certain advantages.

How Many People Are Needed To Form A Limited Liability Company?

You can form an LLC with a single member (owner). More commonly, it is set up with two or three people who are going into business together. If you want to start a business but do not have any partners, an LLC is certainly an option for you. If others will be starting the business with you, an LLC may also be the right entity for that business as well. For most of my clients, the LLC is a good fit because: (1) the business will be owned by 1-5 people; (2) the business likely will not grow large enough to require more than 100 employees; and (3) the business owners are looking to keep the ongoing hassle and expense of administering the business to a minimum.

How Is The LLC Formed?

In Arizona, a limited liability company is formed by filing a document called the Articles of Organization. This document is filed with the Arizona Corporation Commission—the public agency tasked with authorizing and regulating various business entities, including LLC’s and corporations. In the Articles of Organization, you simply have to provide information about who is involved with the company, who is going to own it, and where it is going to be located. You also have to give them information about who is authorized to accept delivery of legal documents. That person is called the Statutory Agent.

You can complete the process online, and depending on whether or not you have paid for expedited processing, the Corporation Commission will process your paperwork within a few days or a few weeks. Once you receive the paperwork from the Corporation Commission telling you that your Articles of Organization have been approved, the only step left for you to be an official limited liability company is to publish a notification in a newspaper of general circulation in the county in which the LLC is going to be located.

What Is A Corporation?

A corporation is a legal entity, separate from the people who own it (the shareholders) or the people who started it (the founders). Simply stated, a corporation is a business structure that allows the business owners to separate themselves from their business by having the separate entity that deals with their customers and affairs.

How Do I Form A Corporation?

A corporation is formed by filing a document called Articles of Incorporation with the Arizona Corporation Commission. The articles of incorporation will include information about the company’s name, where the corporation is located, who is forming it, the board of directors, and who the shareholders will be. It will also identify the person who will be authorized to accept delivery of legal documents. This person is called the Statutory Agent. Once this document is filed and approved, then a notice has to be published in a newspaper of general circulation in the county where the corporation is going to be located. The notice is simply intended to provide the public with the chance to see who is forming new businesses, what the business is about, and where it is located, so if any of that information raises a red flag for anyone, they can bring that to the attention of the corporation commission to be investigated.

For more information on Limited Liability Companies In Arizona, a consultation with a business attorney is your next best step. Get the information and legal answers you are seeking by calling (480) 378-0466 today.

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