How to Form an Arizona Professional Limited Liability Company

Choosing the right form of business for your company is not always easy. You have to do everything as required for your new venture to start on the right foot. In this guide, we’ll show you what you need to know about how to form an Arizona professional limited liability company.

Which professions can form a PLLC in Arizona?

A professional limited liability company (PLLC) is suitable for licensed professionals in Arizona, such as doctors, lawyers, architects, accountants, and engineers. To form a PLLC in Arizona, you need to outline the professional services you’ll provide in the Articles of Organization.

Your Arizona PLLC is formed under Chapter 4 of Title 29 of the Arizona Revised Statutes for the purpose of providing one or more categories of service that may be lawfully rendered only by a person licensed, or otherwise authorized by a licensing authority in Arizona to render that service.

The law specifies that, in those cases where an Arizona licensed or authorized professional wants to offer their services under an LLC structure, they may do so only as a PLLC. 

Should I form a professional corporation or a PLLC?

Professional corporations are suitable for those situations where more people are financially involved in the business. They have shareholders rather than members, and they come with a higher burden of paperwork and administration.

On the other hand, PLLCs are much easier to form, are simpler business entities for tax purposes, and provide the liability protection of corporations. On the downside, this makes transferring ownership interest much more difficult down the road. To read more on this topic, see our PC vs PLLC page. If deciding between an LLC or PLLC, check out our comparisons page.

How to form an Arizona PLLC

Step 1: Choose a name for your Arizona PLLC

Choosing a name for your business is probably one of the most important decisions you’ll make. You should decide on a business name that’s distinctive while also telling people what services you’re offering straight away.

To choose a PLLC name, think about what service(s) you’re going to offer, then come up with a list of potential names. Once you have a list of names you like, it’s time to make sure it’s compliant with Arizona regulations and any applicable professional licensing board’s standards.

According to the Arizona Limited Liability Company Act, you can’t include the words “association,” “corporation,” or “incorporated” into the name of your PLLC. It must also include “professional limited liability company” or an acceptable abbreviation (PLLC, PLC).

Your business name needs to be distinct. Check whether your preferred name is available using the Arizona state site. If you’ve found the perfect name but aren’t ready to form your PLLC yet, you can reserve it. That way, no one else can use it until you’re ready to get started. We offer a name reservation service, so you get peace of mind while working on setting up your business. If you want an online process, you may also want to grab a domain name. In that case, you can use our domain registration service and make things easy.

Step 2: Select an Arizona statutory agent

Arizona requires new PLLCs to designate an Arizona statutory agent (registered agent) when forming a new business. Choosing our registered agent service can make running your PLLC easier. Your registered agent will have a physical location in Arizona and be available during standard business hours Monday through Friday. Their job is to accept legal notices and state compliance documents on your behalf.

This gives you more freedom to move around. Not to mention, when you work with a registered agent service, you can be assured any legal notices, such as subpoenas, won’t be delivered to your place of business and cause a potentially awkward situation.

Step 3: Complete and file Arizona Articles of Organization

To form an Arizona professional limited liability company, you have to complete and file your Articles of Organization. This document officially establishes your business in the state. You can file your Articles online, in person, or by mail. The latter two methods are slower in processing time than filing online, so keep that in mind.

This is the time when you must decide whether your PLLC will be member-managed or manager-managed. A member-managed setup is when the owners/members of the PLLC are in control of the day-to-day operations. A manager-managed setup is when designated members or outside individuals control the day-to-day operations.

Step 4: Create an Arizona operating agreement for your PLLC

Operating agreements are essential to avoid being subject to the state’s default rules, which may not be entirely suitable for your business. Their main purpose is to define the terms of ownership and management. Arizona does not require an LLC or PLLC to file one with the state, but having one can make running your business a whole lot easier.

Well-drafted operating agreements are key for preventing and resolving conflicts between members, so it’s a good idea to have a professional create them or use a template. If you don’t know where to start, we offer an operating agreement template for your Arizona business so that you can tailor this important document to meet your business’s needs.

Step 5: Handle tax obligations

Taking care of tax obligations is the next step after officially forming your PLLC. There are federal requirements, state requirements, and local requirements to consider. We can help you apply for an EIN, which is required for paying taxes, applying for a business bank account, and hiring employees.

Step 6: Obtain business licenses and permits

It is the responsibility of a new PLLC owner to obtain all licenses and permits the business is required to have. Unfortunately, there’s no central place to check all the requirements because some licensing is industry-specific and licensing can happen on the federal, state, and local levels.

Businesses in Arizona must pay state sales tax if they sell goods as well as state employer taxes and state unemployment tax if they have employees. You also have to pay the transaction privilege tax. It’s important to check tax obligations for your particular industry, as they may vary.

Step7: Acquire insurance for your Arizona PLLC

The next step in forming your Arizona PLLC is to acquire business insurance. A PLLC typically needs multiple policies to protect against losses. You’ll typically need general business insurance, professional malpractice insurance, and workers’ compensation insurance if applicable.

Step 8: Open a business bank account for your Arizona professional limited liability company

Opening a business bank account for your PLLC helps you maintain personal liability protection. It also makes your life easier because you won’t mix your personal expenses with those of the business.

Most banks offer business bank accounts that are suitable for PLLCs. While they are not as easy to set up as personal business accounts, you only need a couple of documents to open one. You’ll typically need a copy of your Articles of Organization and your EIN. You may also need the operating agreement to show that you’re authorized to open an account on behalf of the PLLC.

Ready to Kick Start Your Arizona Business?

We are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service, want to reserve a business name, or looking to register a domain, our goal is to help you stay on the road to success. Check out our services, and contact us today to see how we can help you grow your company.