How to Start a Limited Liability Partnership in Arizona | 2024 Guide

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Start a Limited Liability Partnership in Arizona

A Limited Liability Partnership (LLP) is a popular business structure offering the flexibility of a partnership while providing limited liability protection like starting an LLC in Arizona. LLP structure is ideal for attorneys, accountants, and consultants. If you’re considering starting a Limited Liability Partnership in Arizona, this comprehensive guide will walk you through the necessary steps, from researching and planning to ongoing compliance and reporting requirements.

Webinarcare Editorial Team will help you gain knowledge through thorough research and market study. Before starting your Arizona LLP, all the steps in this article must guide you.

Steps in Starting a Limited Liability Partnership in Arizona

What is a Limited Liability Partnership?

Forming an LLP is like starting an LLC as well. However, there are differences in terms of it. A Limited Liability Partnership (LLP) is a type of business structure that combines elements of partnerships and corporations. It allows multiple individuals, known as partners, to jointly own and manage the business while providing limited liability protection to each partner. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.

LLPs are popular among professional service providers, such as lawyers, accountants, and consultants, as they allow for flexible management structures and profit-sharing arrangements. The partners in an LLP can directly manage the business, unlike forming a Corporation in Arizona, where a board of directors typically handles the management.

Each partner’s liability is also limited to the extent of their investment, and they are not personally responsible for the negligence or misconduct of other partners. This is a key difference between an LLP and Arizona General Partnership, where partners have unlimited liability for the partnership’s actions and other partners.

It is suggested that you speak with a legal professional before you begin setting up your limited liability partnership. They’ll understand what’s best for you and your company. To safeguard your personal assets from business debts, you can always start an LLC rather than a limited liability partnership.

– WEBINARCARE EDITORIAL TEAM

Steps in Starting a Limited Liability Partnership in Arizona

To form a limited liability partnership in Arizona, you must consider following the below guidelines that include research and planning, choosing an LLP name, designating a Statutory Agent, filing for Articles of Organization, drafting a partnership agreement, get an EIN, obtaining necessary licenses and permits, the opening of business bank account and maintain ongoing compliance and reporting requirements. 

Step 1: Research and Planning

Before forming an LLP in Arizona, you must familiarize yourself with the state’s laws and regulations governing LLPs. Conduct thorough research to determine if an LLP is the right business structure for your needs, and create a detailed business plan outlining your goals, strategies, and financial projections.

Step 2: Choose an LLP Name

Selecting a unique and appropriate name for your LLP is crucial. First, check the availability of your desired LLP name with the Arizona business registry. Ensure that your chosen name follows Arizona naming guidelines and requirements, which typically include the use of “Limited Liability Partnership” or “LLP” in the name. You can register and reserve the name with Arizona Secretary of State if desired.

Here are some guidelines you must follow while naming your LLP in Arizona- 

  • Be distinguishable from other businesses registered in your state
  • Include the words “Limited Liability Partnership,” “LLP,” or a similar abbreviation.
  • Not include words that are restricted by your state
  • Ensure that your chosen name does not infringe on any existing trademarks or intellectual property rights.

However, to check the availability of your desired LLP name, you can also search the Arizona Secretary of State business name database and Arizona Business Name Search. If the name is available, you may choose to reserve it for a specific period of 120 days by filing a name reservation application and paying the online name reservation fee of $45 and mail name reservation fee of $45. If your LLP plans to operate under a name other than its legal name, you may also need to register a fictitious or “Doing Business As” (DBA) name. 

The DBA filing can be done by several methods. Check Arizona Trade Name Handbook for more details, which costs around $10 for filing and $3 for each duplicate copy.. In addition, the DBA’s validity in Arizona is five years, which you can file in the Arizona Secretary of State.

You can check out how to file a DBA in Arizona for clearer understanding.

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Step 3: Designate a Statutory Agent

In Arizona, you’ll need to designate a Statutory Agent for your LLP. The Statutory Agent is responsible for receiving the partnership’s important legal and tax documents. Choose a qualified individual or Arizona Statutory Agent Services to serve as your LLP’s Statutory Agent, ensuring that they meet Arizona requirements.

However, If you plan to become a Statutory Agent of your own LLP, follow the steps below. Also, this applies a guideline in hiring your registered agent.

  • Research the requirements in the state where you want to offer your service. Each state has specific criteria, such as having a physical address and being available during normal business hours.
  • Obtain a physical address in the state(s) if needed.
  • Be familiar with the rules, regulations, and compliance requirements for businesses in your state.
  • Create a business plan outlining your services, pricing, and marketing strategy.
  • Register your business entity, such as an LLP, if required.

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Step 4: File a Certificate of Limited Liability Partnership

To officially form your LLP, you must file a Certificate of Limited Liability Partnership with the Arizona Secretary of State. Obtain the necessary forms and provide the required information, such as the LLP name, principal office address, registered agent’s name and address, names and addresses of partners, and management structure. Pay the required filing fee and submit the completed forms to the Arizona Secretary of State’s office.

Step 5: Draft a Partnership Agreement

A well-crafted partnership agreement is essential for governing your LLP and protecting the interests of its partners. This document should cover crucial provisions such as roles and responsibilities of partners, profit and loss sharing, decision-making processes, partner admission and withdrawal, and dispute resolution. Consider having the partnership agreement reviewed by an attorney to ensure its completeness and compliance with Arizona laws.

A partnership agreement should include the following:

  • Business name
  • Description of the business
  • Contact information of the business and its owners

Ownership of all business partners, decision-making, capital contribution, profits and distribution, death and disability, and withdrawal and addition of partners is one of the key factors to consider when forming or creating a partnership agreement. In this way, all business partners will understand what this is all about and how to proceed if the mentioned scenarios happen. 

Without a partnership agreement, your company will often be subject to the general partnership default laws of Arizona. The default laws in Arizona might not be appropriate for your requirements.

Step 6: Get an EIN

Your LLP must obtain Arizona Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The application of an EIN can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN, you can benefit in several ways. It will give your LLP the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 7: Obtain the Necessary Licenses and Permits

Depending on your specific industry, you may need to obtain Arizona Business Licenses and permits to operate your LLP. Research your business’s licensing and permit requirements and apply for them accordingly.

You can check out the United States Business License & Licensing Fee Resources for more information about the costs in Arizona.

Step 8: Open a Business Bank Account and Obtain Insurance

Maintaining clear financial records is crucial for any business, so open a separate bank account for your Arizona LLP. Additionally, obtain the necessary Arizona Business Insurance, such as general liability insurance, professional liability insurance (if applicable), and workers’ compensation insurance (if you have employees). 

Check the Best Bank for Small Businesses in Arizona to open a bank account.

Step 9: Maintain Compliance and Reporting Requirements

Stay informed about and comply with relevant laws and regulations to keep your LLP in good standing. File Annual Reports with the Arizona Secretary of State (if required), maintain accurate financial and operational records, and file and pay required taxes at the federal, Arizona, and local levels.

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Advantages of Forming a Limited Liability Partnership in Arizona

While the specific advantages of forming an LLP in Arizona can vary depending on the state’s unique laws and regulations, several public benefits associated with LLPs often apply across jurisdictions. Here are some advantages to consider when forming an LLP in Arizona:

  • Limited Liability Protection: One of the main benefits of an LLP is its limited liability protection to its partners. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.
  • Pass-through Taxation: An LLP typically enjoys pass-through taxation, which means that the profits and losses of the business are passed through to the partners, who report them on their personal income tax returns. This avoids the double taxation often associated with corporations.
  • Flexible Management Structure: Unlike corporations requiring a board of directors, LLPs allow for a more flexible management structure. Partners in an LLP can directly manage the business and make decisions without needing a formal board.
  • Profit-sharing Flexibility: The partnership agreement can outline the distribution of profits and losses among partners, allowing for a customized profit-sharing arrangement based on the partners’ preferences and contributions.
  • Easier Formation and Compliance: Forming an LLP is generally less complicated and expensive than forming a corporation. Ongoing compliance requirements may also be less burdensome than other business entities, depending on the specific laws and regulations in Arizona.
  • Professional Credibility: Forming an LLP can enhance your business’s professional credibility, as it demonstrates a commitment to a formal business structure and can offer reassurance to clients, customers, and potential investors.

Bear in mind that the advantages of forming an LLP in Arizona may vary based on the specific laws and regulations governing LLPs. Researching the applicable laws and consulting with legal or financial advisors is essential to fully understand the benefits and requirements of forming an LLP in Arizona.

Cost of Forming an LLP in Arizona

The cost of forming an LLP in Arizona may vary depending on the required filing fees and any additional services you may need. The filing fee for a Certificate of Limited Liability Partnership typically ranges from $50 to $200, depending on the state.

Can I Form an LLP in Other States?

You can form an LLP (Limited Liability Partnership) in other states. To form an LLP in a different state, you must follow that state’s specific registration requirements and filing procedures. This usually involves filing an application or certificate of registration, paying a registration fee, and obtaining any necessary permits or licenses.

Additionally, you may need to register your LLP as Arizona Foreign LLC if you plan to conduct business in multiple states. It is advisable to consult with an attorney or a business consultant familiar with the laws and regulations of the state where you plan to form your LLP.

Can an LLP Need to Have One Owner?

An LLP (Limited Liability Partnership) cannot have just one owner. By definition, an LLP is a partnership, which means it requires at least two partners to be formed. If you want a business structure with limited liability protection and only one owner, you may consider forming a Single-Member LLC in Arizona instead. An LLC can have one or more owners, known as members, and offers limited liability protection and pass-through taxation. The requirements for forming an LLC will vary by state, so consult your state’s laws and regulations.

FAQs

What is a limited liability partnership in Arizona?
A limited liability partnership (LLP) in Arizona is a business entity that allows partners to limit their personal liability for the company’s debts and other obligations.
How do I form an LLP in Arizona?
To form an LLP in Arizona, you must file a certificate of registration with the Arizona Corporation Commission and meet other state requirements.
What are the benefits of forming an LLP in Arizona?
The benefits of forming an LLP in Arizona include protection of personal assets, pass-through taxation, flexibility in management, and easy formation.
Do I need to register my LLP in Arizona?
yes, you must file a certificate of registration with the Arizona Corporation Commission.
What documents are required to register an LLP in Arizona?
To register an LLP in Arizona, you must file a certificate of registration that lists the name of the partnership and the names and addresses of its partners.
How much does it cost to register an LLP in Arizona?
The fee for registering an LLP in Arizona is currently $50.
Can I form an LLP in Arizona with just one partner?
No, Arizona requires a minimum of two partners to form an LLP.
What is the process of registering an LLP in Arizona?
To register an LLP in Arizona, you must complete a certificate of registration form, pay the required fee, and file the paperwork with the Arizona Corporation Commission.
Can I register my LLP online in Arizona?
You can file your certificate of registration online if you choose.
How long does it take to form an LLP in Arizona?
In Arizona, it usually takes 5-10 business days to process a certificate of registration for an LLP.
Can anyone be a partner in an LLP in Arizona?
Yes, as long as they meet the requirements of the Arizona Corporation Commission.
Do I need to have a registered agent in Arizona to form an LLP?
Yes, if you are forming and maintaining an LLP in Arizona, you must have a registered agent located within the state.
What are the annual requirements for an LLP in Arizona?
Each year an LLP must file an annual report and pay a fee to the Arizona Corporation Commission.
Do I need to file taxes for my LLP in Arizona?
Yes, an LLP is required to file a tax return with the state of Arizona.
What kind of tax classification does an LLP in Arizona have?
An LLP in Arizona is treated as a pass-through entity and the partners report their share of profits on their individual tax returns.
What are some of the liability protections of an LLP in Arizona?
An LLP in Arizona limits the personal liability of each partner for the debts and obligations of the partnership.
Can an LLP in Arizona be sued?
Yes, an LLP in Arizona can be sued for its own actions or the actions of individual partners.
Can an LLP in Arizona own property?
Yes, an LLP in Arizona can own property in its own name.
Can a non-Arizona resident form an LLP in Arizona?
Yes, a non-resident can form an LLP in Arizona as long as they meet the requirements of the Arizona Corporation Commission.
Do I need to have a physical office in Arizona to form an LLP there?
No, you do not need to have a physical office in Arizona, but you must have a registered agent located within the state.
What are the penalties for failing to file an LLP annual report in Arizona?
If you fail to file an annual report for your LLP in Arizona, the state may dissolve the partnership.
How can I change the name of my LLP in Arizona?
To change the name of your LLP in Arizona, you must file a certificate of amendment with the Arizona Corporation Commission.
Can I dissolve an LLP in Arizona?
Yes, you can dissolve an LLP in Arizona by filing paperwork with the Arizona Corporation Commission.
How do I obtain an EIN for my Arizona LLP?
You can obtain an EIN for your Arizona LLP from the IRS website.
What happens to an LLP in Arizona if a partner dies?
The remaining partners can continue to operate the business, but the partnership agreement may specify what happens if a partner dies.
Are there any restrictions on naming my LLP in Arizona?
Arizona prohibits words in the name such as “associates” where the partnership mix not comprise only of attorneys or Certified Public Accountants(CPAs)
Can I convert my LLP to a different business entity type?
Yes, with appropriate filings and permissions, you can change the business entity type of your LLP in Arizona.
Can I transfer ownership of my LLP in Arizona?
Yes, but the specific conditions should be described in the partnership agreement and required formalities under the laws of Arizona needs to be followed.
Is an LLC or LLP better for starting a small business in Arizona?
It depends on various factors, such as the nature of your business, tax implications, and personal preferences. Consult a lawyer or a tax advisor to determine which one would be more suitable for you.
How can I form an LLP in Arizona?
To form an LLP in Arizona, you must file a registration statement with the Arizona Corporation Commission, pay the filing fee, and comply with any other state-specific requirements.
Are there any ongoing requirements for maintaining an LLP in Arizona?
Yes, an LLP in Arizona must file an annual report with the Corporation Commission and maintain compliance with all state laws on an ongoing basis.
What are the filing fees for forming an LLP in Arizona?
The filing fee for forming an LLP in Arizona is $85 for standard processing and $95 for expedited processing.
Do I need to have a registered agent to form an LLP in Arizona?
Yes, all LLPs in Arizona must have a designated registered agent who can receive legal correspondence on behalf of the partnership.
Can out-of-state residents form an LLP in Arizona?
Yes, non-residents can form an LLP in Arizona as long as they designate a registered agent with a physical address in the state.
How many partners can an LLP have in Arizona?
There is no minimum or maximum limit on the number of partners that an LLP can have in Arizona.
Are all partners in an LLP liable for the actions of individual partners in Arizona?
No, all partners in an LLP in Arizona are only liable up to their investments in the partnership and are not personally responsible for the actions of other partners.
Can an LLP revert to a general partnership in Arizona?
Yes, an LLP can convert back to a general partnership in Arizona by complying with the state-specific requirements for doing so.
What is the minimum age for forming an LLP in Arizona?
There is no minimum age for forming an LLP in Arizona, but all partners must be of legal age to sign a legally binding contract.
Can an LLP do business in other states in addition to Arizona?
Yes, an LLP can do business in other states as well, but it must register as a foreign entity in those states.
Does Arizona allow foreign LLPs to register and do business in the state?
Yes, Arizona allows foreign LLPs to register and do business in the state as long as they comply with all relevant regulations and requirements.
Can an LLP be taxed as a corporation in Arizona?
No, an LLP cannot be taxed as a corporation in Arizona as it is treated as a partnership for tax purposes.
Can I dissolve an LLP in Arizona before the end of its designated time period?
Yes, an LLP can be dissolved before the end of its designated time period by complying with the state-specific requirements for doing so.
What happens to the assets of an LLP when it is dissolved in Arizona?
When an LLP is dissolved in Arizona, the assets are distributed among the partners according to their respective contributions to the partnership.
Can an LLP be converted into an LLC in Arizona?
Yes, an LLP can be converted into an LLC in Arizona by complying with the state-specific requirements for doing so.
Are there any exemptions for filing an annual report for an LLP in Arizona?
No, all LLPs in Arizona must file an annual report irrespective of their income and status.
Can I change my registered agent after forming an LLP in Arizona?
Yes, you can change the registered agent for an LLP in Arizona by filing a statement of change of agent with the Corporation Commission.
Is there a requirement for a specific type of name for an LLP in Arizona?
Yes, an LLP name in Arizona must end with “Limited Liability Partnership” or “LLP.” It must also be distinguishable from other business names registered with the Corporation Commission.
Can an LLP partner contribute non-monetary assets in Arizona?
Yes, an LLP partner can contribute non-monetary assets such as property or equipment in Arizona as long as it is accounted for fairly with respect to the other partners.
What is the dissolution process for an LLP in Arizona?
To dissolve an LLP in Arizona, all partners must agree to the dissolution, and a certificate of dissolution must be filed with the Corporation Commission.
Is liability protection guaranteed for an LLP in Arizona?
No, liability protection is not guaranteed for an LLP in Arizona, especially if the partners engage in unlawful or fraudulent activities.
Can an LLP have officers separate from the partners in Arizona?
Yes, an LLP in Arizona can have officers hired and appointed separately from the partners to carry out specific functions required by the partnership.
Can an LLP partner be held personally liable for malpractice in Arizona?
Yes, an LLP partner can be held personally liable for malpractice in Arizona if they are personally responsible for performing or supervising the service that gave rise to the malpractice claim.
What is the disadvantage of registering as an LLP in Arizona?
The main disadvantage of registering as an LLP in Arizona is that partners may face difficulty raising capital as LLPs cannot sell stocks like corporations can.

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Conclusion

Starting an LLP in Arizona may seem daunting, but you can successfully establish and run your business with thorough research, planning, and compliance with legal requirements. Feel free to seek professional assistance from legal or financial advisors when needed to ensure your Limited Liability Partnership’s smooth operation and growth in Arizona.

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