The Copper State, Arizona, has a long tradition of successful enterprises.
In the past, people came to profit from the state’s vast mineral resources. Now business owners come for a pleasant community vibe and affordable company incorporation costs.
The filing and LLC set up fees in Arizona are reasonable, and the maintenance requirements are minimal. Arizona Corporation Commission (ACC), Arizona Secretary of State, and local small business associations also provide plenty of guidance.
Follow the below steps and instructions to start an LLC in Arizona:
- Step 1: Choose a Business Name for Your LLC
- Step 2: Designate a Registered Agent
- Step 3: File the Arizona LLC Articles of Organization
- Step 4: Create an LLC Operating Agreement
- Step 5: Get an EIN (Employer Identification Number) from the IRS
- Last Steps
Step 1: Choose a Business Name for Your LLC
The first order of business is selecting your LLC’s name.
Ignite your imagination to come up with one that fits your marketing goals. But also mind the following Arizona business regulations:
- Include the word “limited liability company” or an abbreviation such as LLC, Ltd, etc.
- Avoid words like association, corporation, or incorporated
- Your name must be unique and distinguishable from registered entities
To check if your idea is available, use Arizona’s business name search tool. Avoid selecting a name that may cause confusion with any existing business.
A name reservation isn’t required. But it can secure your top contender, giving you time to handle other formation needs.
The standard cost to reserve an Arizona LLC name is $10, which you can do:
- Through the Arizona Corporation Commission (“ACC”) website
- By faxing or mailing a paper name reservation form
LLC name reservation lasts for 120 days. It allows you to handle other formalities without a rush.
Registering a Trade Name, also known as DBA (doing business as), is another optional filing.
Using a Trade Name allows you to operate under something other than the LLC’s legal name. This is especially helpful when managing several brands or services under one company.
Register a Trade Name with the Arizona Secretary of State (SOS). The cost is $3 per Trade Name and it may take weeks to process. You can get expedited service for an extra $25.
Step 2: Designate a Registered Agent
Now shift your attention to appointing a registered agent. This is a critical aspect of your LLC. It serves as the official point of contact for things like legal notices and tax documents.
Arizona calls this role a “statutory agent” and can be fulfilled by:
- An individual residing in the state of Arizona with a physical address (not a P.O. Box)
- LLC, foreign corporation, or foreign LLC that’s authorized to do business in AZ
You appoint the statutory agent during the LLC formation process. Then they must respond by filing the Statutory Agent Acceptance form.
You can be your own registered agent. But many experienced business owners choose to hire a registered agent service instead.
Serving as your own registered agent comes with many challenges, such as:
- Lacks privacy as the statutory agent’s address is in public records
- You’ll have to sort junk mail without missing any vital notices
- Taking time off is a challenge. Statutory agents must be available during business hours
- Your customers may witness you served with a lawsuit
To avoid these problems, hire a registered agent service in Arizona. A statutory agent service costs around $55-$299 per year, depending on the provider.
Step 3: File the Arizona LLC Articles of Organization
The articles of organization serve as the legal document to form an Arizona LLC. It can be an intimidating step. But the process is likely more straightforward than you imagine.
- Business entity type (LLC or Professional LLC)
- LLC’s name
- A description of services for Professional LLCs
- Statutory agent’s name and contact information
- Business’s principal address
- Member-managed or manager-managed
Use ACC’s eCorp system for online filings and fast processing. Or you can choose to submit a form by mail or fax.
The filing fee for Arizona articles of organization is $50.
The standard processing time is 30 business days. You can buy expedited processing for $35 to get a 5-day turnaround.
Step 4: Create an LLC Operating Agreement
An operating agreement is a private contract between the LLC members. It lays out the rights and obligations of the LLC members and managers.
Although Arizona law doesn’t force you to get one, don’t overlook an operating agreement. It is critical for a multi-member LLC.
If there’s no operating agreement in place, your LLC falls back to Arizona state law. This may result in unexpected outcomes that don’t align with your desires.
Instead, you can create an operating agreement that dictates how to:
- Add and remove members or managers
- Allocate profits and losses
- Resolve many different types of disputes
You can create an operating agreement using a free or low-cost template. Or seek help from a corporate attorney or LLC formation service to get one customized to your needs.
Step 5: Get an EIN (Employer Identification Number) from the IRS
The Internal Revenue Service (IRS) issues Employer Identification Numbers (EINs). It’s like a Social Security number for businesses. The IRS uses them to track your tax information.
LLCs with more than one member or any employees must get an EIN.
Getting an EIN is quick and free. You can apply and obtain one on the IRS website.
Some single-member LLCs can use the owner’s personal Social Security number. But the IRS requires one if other specific situations apply. These include certain tax withholding, business activities, and retirement plans.
The state fee for LLC formation in Arizona is $50. An extra $35 fee applies for expedited processing.
Most Arizona LLCs need to publish an LLC formation announcement in a local newspaper. This can cost anywhere from $60 to $300.
LLCs in Arizona don't file annual reports, so you won't need to pay an annual report fee.
For the majority of people forming an LLC in Arizona, total costs are anywhere between $110 to $385.
1. Publish a Notice of the Filing of the Articles of Organization
After the state approves your formation documents, the ACC will tell you if you need to publish notice. That’s typically the case for articles of organizations.
You’ll need to pay a newspaper for making three consecutive publications. The fee for this can range from about $60-$300. The ACC provides a list of approved newspapers for you to use.
Once completed, the newspaper will provide an Affidavit of Publication. Although not required, you can file it with the ACC to make it part of your LLC’s public record.
In any case, keep a copy of the Affidavit of Publication in your LLC's records as well.
2. Register with the Arizona Department of Revenue (ADOR)
Many businesses need to register with the Arizona Department of Revenue (ADOR). This authority issues various business licenses.
A Transaction Privilege Tax (TPT) is like a sales tax. If your LLC sells a product or service that is subject to the TPT, you need a Transaction Privilege Tax License.
If you hire employees, your LLC has certain withholding requirements. You need to complete the ADOR Withholding Tax Registration.
The registration process is quick and can be done online. Arizona’s Department of Revenue also provides some helpful guides with step-by-step instructions.
3. Licensing and permits
Certain businesses must get other licenses and permits. These can come from Arizona state regulatory agencies. But many local authorities have requirements too.
Many professional services need a state license, such as contractors and real estate agents.
Before conducting business, make sure your LLC gets what it needs to operate.
4. Open a business bank Account
Having a separate business bank account is a compliance need for LLCs.
Unlike a sole proprietorship, business entities can’t mix personal and business funds. If you do, the LLC’s ability to protect your personal assets from a lawsuit can disappear.
Having a business account also makes paying state fees much more convenient. Without one, you’d have to use a check with a pre-printed name and address to pay state fees.
Fees for local and federal banks range. There are many free options if you meet specific requirements. And if not, the fees are still quite minimal at about $15.
5. Other considerations
There are events put on by organizations like Arizona Entrepreneurs. These can expand your knowledge and grow your circle.
Keep up the momentum by moving forward with your Arizona LLC formation right away.
Start with details like your LLC’s name and statutory agent, making sure they meet Arizona law. Then keep working through this list and you’ll be able to get up and running in no time.
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