How Many Members Are Needed to Form an LLC in Arizona?

Is there a minimum number of members required to form an Arizona LLC (limited liability company)?  As a Phoenix startup and small business attorney, this is a question I am sometimes asked by entrepreneurs and expectant business owners who are new to the State and looking to form their Arizona LLC.

Although most states used to require a minimum of two members to form an LLC, now all of them and the District of Columbia allow “single member” LLCs to be created.

Arizona allows formation of single-member LLCs

Arizona LLCs are governed by the Arizona Limited Liability Company Act (Arizona Revised Statutes, Title 29, Chapter 4).  Under A.R.S. §29-601(15), a “Member” is defined as “a person who is admitted as a member in a limited liability company pursuant to this chapter until an event of withdrawal occurs with respect to the person and, if reference is made to members, that reference means a member in the case of a limited liability company that has a single member.”

So not only does the Act make specific reference to a “case of a limited liability company that has a single member” but if you look further along in §29-601’s definitions, you will see that, for purposes of creating and operating an Arizona LLC, our legislature defined the word “person” to mean “any individual, general partnership, limited partnership, domestic or foreign limited liability company, corporation, trust, business trust, real estate investment trust, estate and other association.”

Conclusion: It’s OK to be Single

From the personal asset protection standpoint, a multiple member LLC is usually preferred from the limited liability standpoint, however the law on this continues to evolve and Arizona’s highest courts have not specifically ruled that a single-member LLC receives less protection or should be carved out from the limitations on member liability for the debts and liabilities of the company contained under A.R.S. §29-651.

For many new entrepreneurs and small business owners, though, having one or more partners in their Arizona LLC is either impossible or would cause more headaches than it would solve.  For those of you in that situation, don’t fret; the Arizona legislature says it’s OK to be a single member.

If you are a sole-proprietor in the process of moving or relocating your operations to Arizona, our Phoenix business law firm can help you form your domestic LLC or for-profit corporation, or simply register your “foreign” entity to properly conduct business and maintain legal formalities here in the Grand Canyon State.  Our basic corporate legal services are usually handled for a fixed or flat fee, which helps give our clients some degree of certainty and budget their legal costs appropriately.

Ben Bhandhusavee is the Managing Attorney for BhandLaw, PLLC a Phoenix business and technology law firm working with start-up companies, creative intellectual property matters, and complex corporate M&A and technology transactions. Ben can be reached at (602) 678-2970 or by e-mail at bbhand@bhandlaw.com