How do I set up an LLC or a sole proprietorship?

Question

Accepted Answer

Sole proprietorship

Arizona requires no formation filing to operate as a sole proprietorship — the business exists automatically when a person does business under their own name. A filing is only required if you operate under a fictitious or trade name rather than your own legal name: in that case, any person other than a partnership transacting business in Arizona under a fictitious name (or a designation not showing the owner's name) must record a certificate with the county recorder of the county where the business is located, stating the owner's name and residence, signed and acknowledged by the owner . A new certificate must be recorded upon any change in ownership of the business using the fictitious name . If you do business under a fictitious name without recording the required certificate, you cannot maintain a court action on a contract or transaction made under that name until the certificate is recorded . The recording requirement does not apply if you have filed a trade name certificate with the secretary of state or obtained authorization from the corporation commission as a foreign corporation .

Limited liability company (LLC)

1. Choose one or more organizers and deliver articles of organization to the Arizona Corporation Commission for filing. One or more persons may act as organizers to form an LLC by delivering articles of organization to the commission .

2. Include the required contents in the articles. The articles must state: the LLC's name (complying with A.R.S. § 29-3112); the principal address; the name and street and mailing addresses in Arizona of the statutory agent; and whether the company is manager-managed or member-managed . If manager-managed, list the name and address of each manager and of each member owning a twenty percent or greater interest in the capital or profits; if member-managed, list the name and address of each member .

3. Ensure at least one member at formation. An LLC must have at least one member at formation; a single member becomes a member by agreeing to be a member and being identified in the articles of organization, and the member and organizer need not be the same person .

4. Effective date. The LLC is formed when the articles of organization become effective, and the commission's filing is conclusive proof that the company has been legally organized .

5. Publication or database notice after filing. Within sixty days after the commission files the articles, either a notice must be published in a newspaper of general circulation in the county of the statutory agent's street address for three consecutive publications (an affidavit of publication may be filed with the commission), or, if the statutory agent's address is in a county with more than 800,000 persons, the commission inputs the approval information into its database .

6. Know the LLC's basic characteristics. An LLC is an entity distinct from its members, may have any lawful purpose (but may not engage in banking and may not be an insurer except in limited authorized cases), and has perpetual duration .

7. Professional services. If you are organizing to provide professional services, you may form a professional limited liability company by filing articles that, in addition to the standard required information, specify that the company is a professional LLC and identify the professional services it will provide; its name must contain "professional limited liability company" or the abbreviation "P.L.L.C.," "P.L.C.," "PLLC," or "PLC" .

The sources provided do not address filing fees, how to obtain an EIN, business licensing, or tax registration, so I cannot describe those steps. For advice on which structure best fits your situation and on any federal tax or filing obligations, consult a licensed attorney.