Starting a business in Phoenix? The entity you choose on day one has compounding consequences for taxes, liability, and growth. Let's cut through the noise.
Sole Proprietorship: Simple but Risky
A sole proprietorship requires zero paperwork to form: you're automatically one if you operate under your own name. The downside: there is no legal separation between you and your business. A client lawsuit can reach your personal bank account, home, and savings.
LLC: The Sweet Spot for Most Small Businesses
An Arizona LLC (filed with the Arizona Corporation Commission) creates a legal wall between you and the business. Key benefits:
- Personal liability protection: your house stays yours if the business is sued
- Pass-through taxation: profits flow to your personal return; no double taxation
- Credibility: banks, vendors, and clients take LLCs more seriously
- Flexible management: run it yourself or bring in members
The Costs
Arizona LLC filing fee: $50 (online). Annual report: $0 (Arizona eliminated the annual report requirement). You'll also want an Operating Agreement, which is where we come in.
The Verdict
If you're generating any meaningful revenue, an LLC is almost always worth it. The liability protection alone justifies the one-time filing fee.
Get Your LLC Operating Agreement
Skip the $500 attorney fee. Our state-compliant LLC Operating Agreement is ready to customize today.