What Is an Arizona LLC Operating Agreement?
An Arizona LLC operating agreement is a legal document that explains how your LLC will run. It outlines key details, including members’ ownership rights, management, and decision-making within the organization. Note that an Arizona LLC operating agreement form is for internal use only. You do not need to file this document with the state. It is also different from your articles of organization, which officially form your LLC.
LLC operating agreements in Arizona are recognized under Arizona Revised Statutes (ARS) § 29-3105, which allows LLCs to set their own operating rules. These rules may include:
- How profits are shared between members
- How decisions are made
- How members leave or join the company
While Arizona allows operating agreements to be written, oral, or implied, a written agreement is still the best way to protect your business and avoid misunderstandings.
Is an LLC Operating Agreement Required in Arizona?
An operating agreement for an LLC is not required in Arizona. However, having one is still strongly recommended. If you do not have an operating agreement, your Arizona LLC will be governed by the default state rules. These rules may not match your business goals or how you want your company to run.
An Arizona LLC operating agreement can also help:
- Protect your limited liability status by showing your business is separate from your personal affairs
- Prevent disputes between members by clearly outlining expectations and decision-making rules
- Open a business account by providing proof of your company’s structure and ownership
- Clarify member roles, responsibilities, and profit distribution so everyone understands their rights and obligations
If your business is a corporation, you will need Arizona corporate bylaws and articles of incorporation instead of an LLC operating agreement.
Arizona LLC Operating Agreement Legal Considerations
Here are some legal nuances you should consider when creating an operating agreement for your LLC in Arizona.
- Management Structure: Arizona LLCs are member-managed by default under ARS § 29-3407. If you want a manager-managed LLC, you must say so in your agreement.
- Member and Manager Duties: Arizona law sets out basic duties, such as loyalty and care, under ARS § 29-3409. Your agreement can adjust some of these duties, but it cannot remove them fully.
- Transfer of Membership Interest: Arizona separates economic rights from full membership rights under ARS § 29-3502. This means a member can transfer their financial interest, but the new owner does not automatically gain decision-making power unless the agreement allows it.
- Dissolution: Under AZ Rev Stat § 29-3105, allows you to set rules for how and when your LLC may dissolve. This may include events like member votes, business closure, or other conditions you have agreed upon (ARS § 29-3701). Setting clear rules can help prevent disputes during an LLC’s dissolution.
Sample Arizona LLC Operating Agreement
View a sample Arizona LLC operating agreement template below to see what details you can include and customize for your business. Once you’re ready, use our step-by-step questionnaire to complete it, then download your agreement as a PDF or Word document.
