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Arizona Entity Comparison Table

by Richard Keyt, Arizona LLC, corporate and business lawyer

This article is part of a series of nine related articles about the seven types of entities most commonly used in Arizona to operate a business and to hold assets.  The articles are:  sole proprietorships, general partnerships, limited partnerships, C corporations, S corporations, trusts, limited liability companies, the "best" entity and the entity comparison table.  The type of entity can have significant income tax and asset protection consequences.  The articles discuss the entities in terms of ease and cost of formation, number of owners & restrictions on ownership, privacy, control and management, owners protection from liabilities of the entity, and federal income taxation issues.

Arizona Entity Comparison Table

The information in the table below applies only to entities formed under Arizona law.  The abbreviations are defined below the table.

Footnotes

1. The formation document must disclose the name and address of all owners of twenty percent or more of the ownership interests in the entity.

2. Estimated cost based on KEYTLaw standard document.  Actual cost depends on length of document and publishing newspaper.  Note:  The Yuma Daily Sun newspaper is the only paper in Yuma County approved by the ACC for publication.  It recently charged me $186 to publish substantially the same articles of organization for an LLC that would have cost approximately $60 if I had published the same articles in the Mesa Tribune.

3. The members of the board of directors are responsible for managing an Arizona corporation.  The shareholders elect the directors.  The officers report to the directors and carry out the day to day business of the corporation in accordance with the policies and instructions set by the directors.  The directors elect the officers.

4. The limited partners, as a general rule, are not liable for the debts of the limited partnership, but all general partners of an Arizona limited partnership have unlimited liability for the obligations of the limited partnership.  Limited partners who become involved in management may become liable as general partners.

5. An LLC may or may not be a federal income tax paying entity depending on how it elects to be taxed.  Sole member LLCs may be taxed for federal income tax purposes as a sole proprietorship, partnership or corporation.  Multiple member LLCs may elect to be taxed for federal income tax purposes as a partnership or a corporation.  LLCs that are taxed as a partnership are not federal income tax paying entities.  LLCs that are taxed as corporations are federal income taxpaying entities.

6. If the LLC is taxed as a partnership, the profits and losses pass through to the members prorata based on their percentage ownership or as otherwise provided in a special allocation of profits and losses.  If the LLC is taxed as a C corporation, the LLC reports profits and losses rather than the members.

7. Federal income taxation of trusts is a complex subject and is beyond the scope of this article.  The profits and losses of a trust are sometimes reported by the trust and sometimes reported by the beneficiaries depending on the sources of the profits and losses and whether and to what extend income is distributed to the beneficiaries.

Related Articles

This article was first published on February 9, 2003.

About the Author

Richard Keyt, J.D., LL.M. (income taxation New York University Law School) is a business, real estate, transactions, contracts and estate planning attorney licensed to practice law in Arizona.  He has formed over 1,550+ Arizona limited liability companies in the last few years because his low cost high quality LLC package is second to none and it only costs $599 for everything.  Rick has practiced law in Arizona since 1980.  Rick can be reached by telephone at 602-906-4953, ext. 101.  Email at  rickkeyt@keytlaw.com and fax at 602-297-6890.  Rick's web site located at www.keytlaw.com had over 1,000,000 visitors in 2006 and 2007.  Rick does not accept matters involving landlord / tenant disputes or litigation of any kind (other than tax lien foreclosures).  Communicating with Richard Keyt via email or otherwise does not cause you to become a client or cause your communications to be confidential or subject to the attorney client privilege.

This page was last modified on October 18, 2007.

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