Do you own a new business in Arizona, or are you planning on starting one? If so, you’ll likely need to review different corporate structures to determine which is ideal for your business.
An LLC is one option to consider. This brief guide will cover some of the benefits this structure offers to Arizona business owners.
Just be aware this is a general overview. You should conduct additional research to more confidently determine whether an LLC is the right structure for you.
You also need to be aware of the steps involved in establishing an LLC should you choose to do so. For example, you need to draft a formal LLC operating agreement early on to establish internal rules and processes.
That said, reasons to establish an LLC in Arizona include:
LLC is short for limited liability company. Its name highlights one of the key benefits this corporate structure offers.
When your business is an LLC, if it incurs debts or suffers a loss, you’re typically not liable. In other words, assets like your home can’t be seized to cover business losses.
With some corporate structures, profits are essentially taxed twice: once before being distributed to owners, and again when owners report the income on their tax returns. With an LLC, profits are only taxed when owners file their returns.
Additionally, when you start an LLC in Arizona, you can choose from various options when deciding how to pay business tax. This degree of flexibility is attractive to many business owners who prioritize tax efficiency.
Arizona LLCs also allow business owners to choose from multiple ownership and management structures. For example, your LLC can be owned by a single individual or multiple members, it can be managed by one individual selected by the team or managed by the team as a whole, and more. This is another way in which LLCs offer flexibility.
Again, while it’s important that you thoroughly understand the steps involved in forming an LLC, it’s worth noting that establishing one tends to be much easier than establishing another type of business.
Running an LLC can also be an easier process. For example, while some corporate structures require businesses to draft bylaws and hold annual meetings, that’s not the case for Arizona LLCs.
When you form an LLC, you officially establish your business’ name. This must be different from the name of any existing Arizona business or government entity.
On the one hand, that does mean you’ll have to conduct a name search and choose one that’s not already claimed. However, it also means that when you form your LLC, no other Arizona business owner can start a business with the same name. As your business grows, you may find this allows you to protect your brand by ensuring your business isn’t confused with other businesses of the same name.
Again, none of this is to suggest that an LLC is the right corporate structure for all Arizona business owners. You should still review your options. That said, as these points indicate, there are many reasons an LLC may be the best choice for your business.