Limited Liability Companies

Legal Status

The limited liability company (LLC) is a relatively new creation. It offers the pass-through earnings ofsole proprietorship and partnership while limiting member liability for the debts and liabilities of the company. Because of the limitation on liability, an LLC can only be formed by filing Articles of Organization and other required documents with the Arizona Corporation Commission. Arizona does not limit how many members an LLC has.  Nor does it limit who can become a member. Contact a business attorney to learn more about filing requirements.


A significant advantage of the LLC is its centralized management structure. The members themselves can manage the company or hire a manager to run it on their behalf. If a single member LLC, the company is run like a sole proprietorship with the single member having all management authority. Where there are multiple members, the business is operated like a partnership. This is a distinct advantage over the corporate form, which requires a board of directors to manage the company and officers to handle its day to day affairs. Running an LLC is also less cumbersome that a corporation as there are fewer formalities and no annual reports to file in Arizona. To learn more about managing an LLC, contact a business attorney.

Profit and Loss


An LLC, like a partnership, is a pass-through entity. All profits and losses pass through to the members. A single member LLC is much like a sole proprietorship where all profits and losses pass-through to the sole member who reaps the rewards for his/her labors. Unlike a sole proprietorship, however, the sole member is not personally liable for the debts and liabilities of the company. A multi-member LLC is similar to a partnership where the profits pass through to the members who share in the profits. Unlike a partnership, LLC members are not personally liable for the debts and liabilities of the company. Multi-member LLCs also give the members flexibility to determine how profits and losses are to be distributed. This is unlike a corporation, which distributes profits based on the number of shares held by each owner. As discussed in more detail here, LLCs can elect to have their profits taxed as S-Corporations. To learn more about how LLCs distribute profits and losses, contact a business attorney.

Termination of the Limited Liability Company

When creating an LLC, the members can elect to have the company terminate on a specific date or to give it a perpetual existence.  As with partnerships, the operating agreement can also provide for dissolution of the LLC and the winding down of its business affairs. Unlike the sole proprietorship, the LLC can survive its members, meaning your family members can continue to operate the business in the event of your death. To discuss your business goals with a business attorney, contact Blehm Law.