Arizona Entity Comparison Table

Characteristic	SP	GP	LP	C Corp	S Corp	LLC	LT
Ease of formation	easy	easy	complex	complex	complex	semi-complex	complex
Formation document	-	GPA	LPA	AOI	AOI	AOO	TA
Owners identified in formation docs	-	-	yes	yes(1)	yes(1)	yes(1)	-
Managers, officers & directors identified in formation docs	-	-	yes	yes	yes	yes	-
File formation docs with	-	-	ASS	ACC	ACC	ACC	-
Filing fee - normal	-	-	$10 + $3/page	$60	$60	$50	-
Filing fee - expedited	-	-	$10 + $3/page	$95	$95	$85	-
Publish formation docs in paper	no	no	no	yes	yes	yes	no
Publication cost(2)	-	-	-	$150+	$150+	$45+	-
Statutory agent	no	no	yes	yes	yes	yes	no
Number of owners	1	2+	2+	1+	1-75	1+	1+
Ownership restricted	no	no	no	no	yes	no	no
ACC annual report	no	no	no	yes	yes	no	no
Owners, officers, directors & managers disclosed in annual report	no	no	no	yes	yes	no	no
Entity existence terminates if annual report not filed	no	no	no	yes	yes	no	no
Annual ACC fee	-	-	-	$45	$45	-	-
Annual minutes	no	no	no	yes	yes	no	no
Controlled by	-	GPS	GPS	SHDR	SHDR	M	TA
Managed by	-	GPS	GPS	D&O(3)	D&O(3)	M/M	TEE
Owners generally have limited liability	no	no	yes	yes	yes	yes	-
Management by owners loses limited liability	n/a	n/a	yes	no	no	no	-
Entity a federal tax paying entity	n/a	no	no	yes	no	no(5)	-
Report profits & losses on owners' federal tax return	yes	yes	yes	no	yes	maybe(6)	maybe(7)
Profits & losses may be specially allocated to owners	n/a	yes	yes	no	no	yes	n/a

Abbreviations

ACC = Arizona Corporation Commission

AOI = articles of incorporation

AOO = articles of organization

ASS = Arizona Secretary of State

C corp = C corporation

D&O = directors & officers

GP = general partnership

GPA = general partnership agreement

GPS = general partners

LP = limited partnership

LLC = limited liability company

LPA = limited partnership agreement

LT = land trust

M = members

M/M = members or managers

S corp = S corporation

SHDR = shareholders

SP = sole proprietorship

TEE = trustee

TA = trust agreement

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

• Types of Entities for New Arizona Companies

• The “Best” Entity

• Arizona Sole Proprietorships

• Arizona General Partnerships

• Arizona Limited Partnerships

• C Corporations

• S Corporations

• How to Incorporate in Arizona (for profit corporations)

• How to Form an Arizona Nonprofit Corporation

• Trusts

• Arizona Limited Liability Companies

• Arizona Limited Liability Company Operating Agreement FAQ or Why Most Multi-Member Arizona Limited Liability Companies Need a Comprehensive Operating Agreement

• Prepare an Operating Agreement Now for Your AZ LLC

This article was first published on February 9, 2003.