A limited liability company (LLC) is an ideal business structure for small business owners who want flexibility in running their business.
It’s easier to set up and costs less to maintain than a corporation. But, unlike a sole proprietorship, you’re required to file legal documents to the state and pay filing fees.
So as a new business owner, it’s important to understand the costs associated with forming an LLC in Arizona. Below is a detailed breakdown.
Table of contents
- Arizona LLC formation cost: $50 + publication fees
- Extra Arizona LLC costs to account for
- Does Arizona have an annual LLC fee?
- What taxes do LLCs pay in Arizona?
- Conclusion: How much does an LLC cost in Arizona?
Arizona LLC formation cost: $50 + publication fees
To officially form your LLC in the State of Arizona, you must file the Articles of Organization with the Arizona Corporation Commission (ACC).
The Articles of Organization document includes core information about your business, such as your business name, principal address, statutory agent details (known as registered agent in other states), and whether your LLC is manager or member-managed.
Once the Arizona Corporation Commission (ACC) processes and approves your LLC formation documents, you can do business in the state.
You can file your articles of organization online or by fax and pay $50 with a debit or credit card. The request will be processed within 15 days.
If you choose to fax your LLC formation documents, you must also include a cover sheet.
Need your documents sooner? Pay an extra $35 state fee for expedited service. Your filings will be approved in 5-7 days.
You can also print and mail your Articles of Organization form to the ACC at:
Arizona Corporation Commission – Examination Section
1300 W. Washington St.
Phoenix, Arizona 85007
Unlike other states, Arizona also requires new LLCs to publish a Notice of LLC Formation in county newspapers. Publication fees range between $30 and $300, depending on the county. We’ll share details on the publication requirements for Arizona LLCs later in this post.
Foreign LLC cost: $150
If your LLC is incorporated in another state and you wish to do business in Arizona, you’ll need to register as a foreign LLC.
Like domestic LLCs, you can file online, by mail, or fax and opt for expedited processing. You must complete Form L025 and pay the foreign LLC filing fee of $150 plus another $35 for expedited service.
For both domestic and foreign LLC formations, the Arizona Corporation Commission (ACC) recommends filing your formation documents online for fastest (and sometimes instantaneous) processing.
Extra Arizona LLC costs to account for
Aside from filing your Articles of Organization with the ACC, there are other costs you may need to budget for as you form your new Arizona LLC.
Newspaper publication fee
Only a handful of states require new business owners to publish notice of their LLC formation. Arizona is one of them. The Notice of LLC Formation must be published for three consecutive weeks in a local newspaper in the same county where the company’s principal business office is located.
Once your LLC is approved in Arizona, the state will send you the Notice of LLC Formation form to complete for the newspaper. You must do this within 60 days of your LLC’s formation date.
After your publication notice has run for three consecutive weeks in the local newspaper, the newspaper will send you an Affidavit of Publication confirming that your publication has run for the required notice period.
Arizona doesn’t charge state publication fees, but you must pay the local newspapers for advertising your notice. Publication fees vary but average between $30 and $300, depending on the county.
For your convenience, Arizona has compiled a list of newspapers by the county that meet the state’s LLC publication requirements.
Failure to comply with the Arizona publication requirements can result in the dissolution of your LLC.
A registered agent, called a statutory agent in Arizona, is an individual or a legal entity that your LLC appoints to accept legal documents. If a lawsuit is filed against your LLC, the statutory agent is the one who gets the court papers to forward to you. The statutory agent also receives official notices from the state regarding your LLC.
Arizona law requires that LLCs maintain a statutory agent with a physical street address on file with the Arizona Corporation Commission in case of service of process.
The LLC cannot serve as its own statutory agent. But you can appoint:
- An individual LLC member
- Employee or private person
- Professional service provider
Arizona doesn’t charge a separate fee for appointing a statutory agent, but there’s a $5 fee to change your agent’s contact information and an extra $35 for expedited service.
You can outsource this task to a registered agent service provider to keep your company in compliance with state laws and avoid late fees and fines. Hiring a professional registered agent usually costs less than $100 per year. They’ll be available in case of service of process and save you the stress of having to do this on your own as a new business owner.
Failure to keep your statutory agent information current with the Arizona state corporations division can result in the administrative dissolution of your LLC.
Arizona LLC name reservation
If you have a business name that you want to use while setting up your business entity, you can reserve the name with the Arizona Corporation Commission.
While a name reservation isn’t required, it’s good to have it if you don’t want someone else to claim the name you intend to use for your LLC.
Before you file, check the State of Arizona business entity search portal to make sure the name is available to use.
When you file the name reservation request online and pay the $10 filing fee, a $35 expedited fee is automatically added because the online filings are processed immediately.
The name reservation grants your LLC exclusive access to that name. If you don’t want to pay the extra $35 fee, you can file by mail for $10. But then your request won’t be processed immediately as online filings have priority over mailed name reservation requests.
Trade name registration
Unlike a name reservation, a trade name registration doesn’t grant you exclusive rights to use a business name.
A trade name is a “doing business as” (DBA name), which allows your business to operate under a name other than the LLC’s legal name. For example, if your LLC’s legal name is Florence’s Nursery, Inc., but you open a local flower shop and want to operate as Florence’s Flowers, you’d register a trade name for Florence’s Flowers by completing the Trade Name Application. The cost is $10 per name.
You can check to see if your trade name is available on the Arizona Secretary of State’s website before filing your paperwork. Trade name registrations are processed within 3 weeks and are valid for 5 years. If your filing is not renewed on time, your trade name or trademark can be registered by someone else.
Certified document copies
As a new business owner, you may need to provide your LLC’s legal documents to bankers, investors, or vendors for tax purposes. Your Articles of Organization or a certificate of good standing certifies to a bank that your LLC is a compliant business entity in Arizona. Getting copies of these documents is not free.
Archived or unofficial copies of the above documents are $5 plus $0.50 per page when ordered from the Arizona Corporation Commission. Certified document copies for LLCs are $15 plus $0.50 per page.
Business permits and licenses
Before your LLC can do business in Arizona, you’ll need to obtain the proper licenses and permits. Those you’ll need depend on the industry you operate in and the city or county where you’re located.
Arizona has three types of business licenses:
- Transaction Privilege Tax: also referred to as a sales tax license.
- Business licenses: issued by the county or city where your business is located.
- Regulatory licenses: required for business entities in specialized industries like plumbing, legal, or construction.
Transaction Privilege Tax
LLCs that sell merchandise or physical products must pay a Transaction Privilege Tax. The Arizona Transaction Privilege Tax or “TPT” is assessed to vendors for the privilege of doing business in the state. TPT applies to business entities engaged in retail sales or other activities like utilities, restaurants, amusement parks, and hotels.
Some counties don’t charge fees for TPT licenses, while others can be as high as $50. The Arizona Department of Revenue (ADOR) collects the sales tax on behalf of most counties and most cities, while some cities choose to manage their own TPT and sales tax collections.
Tax rates vary depending on the nature of your LLC’s business, the city, and the county. You’ll need a license for each retail location that you operate. It takes about 3-5 business days to receive the TPT license for your Arizona LLC.
Business and regulatory licenses
Some industries require service providers to hold valid occupational licenses and permits to operate.
These professional licenses are issued by respective regulatory bodies such as Barbers Board or Psychologist Examiners Board. You can learn more about licensing requirements and costs from the Arizona e-licensing portal.
What taxes do LLCs pay in Arizona?
Depending on the type of business you operate, you may have to pay the following types of local taxes.
State employment taxes in Arizona
LLCs with employees must pay state employment taxes. As an employer in Arizona, you’ll need to withhold payroll taxes from your employees’ paychecks. This includes state unemployment taxes (SUTA), plus local and county taxes that you must submit to your LLC’s state tax agencies.
In addition to registering your LLC for Transaction Privilege Tax, Form JT-1 will also register your LLC for employer withholding and unemployment insurance with the Arizona Department of Revenue.
State income taxes
Arizona doesn’t impose a state-level income tax if your LLC is taxed on its default classification status with the IRS:
- A single-member LLC taxed as sole proprietorship
- A multi-member LLC taxed as a partnership.
LLC members are responsible for paying state income taxes at their individual income tax rates.
Does Arizona have an annual LLC fee?
Luckily, no! You don’t have to file annual reports or pay renewal fees for your Arizona LLC. You must, however, keep your LLC in good standing by maintaining current statutory agent information, paying applicable taxes, and obtaining the appropriate business licenses.
Conclusion: How much does an LLC cost in Arizona?
Forming your LLC in Arizona can cost you as little as $50 or more than $500. You can start an LLC for $50 if you file the documents yourself and don’t need a DBA or name reservation. The $50 covers state fees for filing your Articles of Organization with the Arizona Corporations Commission (ACC) which officially creates your LLC.
Your appointed statutory agent may add to your LLC fees if you use a professional service provider.
Expect to pay up to $300 to meet LLC publication requirements depending on the county where your principal business office is located.
Other fees for licenses vary but budget a few extra hundred dollars for county and local licensing requirements, especially if your LLC operates in a regulated industry.
Suppose you don’t have the time for LLC incorporation. In that case, you can look for professional service providers who can serve as your statutory agent and do other things like LLC formation, create your LLC operating agreement, and get your Employer Identification Number (EIN) for you. The costs will be slightly higher as you still must pay state fees in addition to the fees charged by the third-party service provider.
Consult with a CPA on forming your limited liability company and understanding the state and federal tax implications of choosing an LLC as the business structure for your new venture in Arizona.