The Arizona limited liability company (LLC) operating agreement is a legal document that provides details on each member's contribution, rights, and responsibilities within the LLC.
The LLC operating agreement, or business operating agreement, is a document that enables parties to regulate their relationship in more detail and prevent potential misunderstandings and disputes.
This is mainly caused by the fact that the federal and state laws regulating the operation of LLCs provide a minimal legal framework in that regard.
Is an Operating Agreement Required in Arizona?
No, the operating agreement is not required in Arizona. Nevertheless, many parties choose to draft the operating agreement when forming an LLC due to the fact that the document provides details on how the company will be operated on a day-to-day basis.
4 Main Types of Operating Agreements
This section presents the four most commonly used operating agreement types in Arizona:
Types of Operating Agreements
Single-member LLC operating agreement: This type of operating agreement is designed for LLCs with a single member. It provides details on how the company will operate, but it doesn’t include provisions about the relationship between the members of the LLC.
Multi-member LLC operating agreement: Here, the document mainly focuses on regulating the relationship between the multiple members of the LLC by outlining their rights and duties within the business organization.
Member-managed LLC operating agreement: With this type of operating agreement, members define their roles within the business entity and decision-making process. This is mostly used in smaller business structures or in companies where members want to have a direct influence on decision-making.
Manager-managed LLC operating agreement: The members that want to have a more passive role in managing the company create the manager-managed LLC operating agreement, where they delegate managing rights to one or more professional managers.
Laws and Legal Requirements for LLC Operating Agreements in Arizona
Title 29, Chapter 7 of the Arizona Revised Statutes regulates the status of limited liability companies.
Here, you can see the sections regulating the operating agreement in Arizona:
Laws and Legal Requirements
§ 29-3105: Regulates scope, function, and limitations of the operating agreement.
§ 29-3106: Regulates effect on limited liability companies and persons becoming members and preformation agreement.
§ 29-3107: Regulates amendments, effects on third parties, and relationship to records effective on behalf of a limited liability company.
How to Form a Limited Liability Company (LLC) in Arizona
How to Form a LLC in Arizona
#1. Reserve a Name For Your LLC
Although not required, you can start your LLC formation process by reserving your company name before submitting the articles of organization. In this way, you will prevent other companies from using the company name you have reserved for 120 days.
You should go to the ACC Entity Name Search website and check if the name you are planning to use is not already used by another company.
#2. Choose the Type of LLC
Here, you have two options:
Domestic LLC: For companies formed in the State of Arizona.
Foreign LLC: For companies formed outside of the State of Arizona.
#3. Nominate an Agent
You should also choose a statutory agent who will receive important documents on behalf of the LLC. It can be an individual with a registered address in Arizona or a company that can conduct business in Arizona.
#4. Pay the Required Fee
Upon completing the registration documents, you should also pay the filing fee of $50 for the domestic LLC or $150 for the foreign LLC.
#5. File the Articles of Organization
#6. Create your LLC Operating Agreement
Despite the fact that state law does not mandate the creation of this document, it is always a good idea to do so because it contains crucial company information.
#7. Apply For an Employer Identification Number (EIN)
After forming the LLC, you should apply for the Employer Identification Number in order to conduct business transactions and open a bank account. The application for EIN can be completed online or by submitting Form SS-4 to the IRS.