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.
Table of contents
- 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: Publish a notice of the filing of the Articles of Organization
- Step 5: Obtain an EIN (Employer Identification Number) from the IRS
- Step 6: Register with the Arizona Department of Revenue (ADOR)
- Step 7: Prepare an LLC operating agreement
- Step 8: Open a business bank account
Step 1: Choose a business name for your LLC
Your business entity needs an operational name.
Use your creativity to come up with a brandable option. But also mind the following Arizona business regulations around LLC naming:
- Include the word “limited liability company” or an abbreviation such as LLC, Ltd, etc.
- Don’t use words like association, corporation, or incorporated or an abbreviation
- Your name must be sufficiently distinguishable from other registered entities
To check if your business name is available, use Arizona’s business name search tool. It lets you verify if the name is not in use and is different from others.
While a name reservation isn’t required, you may want to claim your top contender while preparing other company formation documents.
The standard cost to reserve a business name in Arizona is $10.
You can reserve an LLC name:
LLC name reservation lasts for 120 days. It gives you time to deal with other formalities without a rush.
Trade name registration, also known as DBA (doing business as), is another optional filing.
When managing several brands or sub-services under one company, some business entities want to register a trade name on top of a legal company name.
Trade names are registered with the Arizona Secretary of State (SOS) instead of the ACC. The cost is $3 per trade name.
Step 2: Designate a registered agent
A registered agent, known as a “statutory agent” in Arizona, is required by local corporate laws.
This role can be fulfilled by:
- An individual residing in the state of Arizona with a valid street address (not a P.O.box)
- LLC, foreign corporation, or foreign LLC that’s authorized to do business in AZ
You can be your own registered agent if you meet one of these requirements.
In this case, you’ll be personally responsible for receiving the service of process of legal documents and other business correspondence during business hours. You must also list your address with the ACC when filing the Statutory Agent Acceptance form.
If you don’t want to handle these chores, then you can hire a registered agent service. A statutory agent service costs around $49-$299 annually, depending on the provider.
Step 3: File the Arizona LLC articles of organization
A company’s articles of organization serve as a legal document certifying its formation to the state.
You’ll need to provide the following information on the application for articles of organization form:
- Business entity/business structure type (either an LLC or a professional LLC)
- Your LLC’s business name
- For professional LLCs (PLLCs), a description of services the LLC will provide
- Statutory agent’s name, physical street address, and mailing address
- The principal address of doing business
- Whether the LLC is member-managed or manager-managed
Use ACC’s online system, eCorp, for the online filings and fast processing.
If you choose to submit a form by mail or fax, be sure to include:
- A cover sheet for faxed documents
- A check addressed to ACC for mail filings
The filing fee for Arizona articles of organization is $50.
The standard processing time is 30 business days for standard filings and 5 days for expedited processing. The expedited processing fee is $35.
Step 4: Publish a notice of the filing of the Articles of Organization
After the state approves your company formation documents, the ACC will reach out and tell you if a notice needs to be published in a local newspaper. Typically, that’s the case for articles of organizations.
The state collects no affidavit of publication fee.
However, you’ll need to pay a newspaper for making three consecutive publications. The fee for this can range from about $40-$70. The ACC provides a list of approved newspapers as a reference guide.
Keep in mind that you should keep a copy of the Affidavit of Publication in your LLC’s records as well.
Step 5: Obtain an EIN (Employer Identification Number) from the IRS
An Employer Identification Number (EIN) is issued by the Internal Revenue Service (IRS) for federal tax purposes.
It’s required if your LLC:
- Has employees
- Withholds taxes (other than income) from a non-resident alien
- Pays taxes for certain products (alcohol, tobacco, firearms, or excise)
- Has a Keogh plan
- Or is involved with certain organizations (listed on the IRS website)
If neither is your case, you can use your social security number to report federal income taxes and register with state tax authorities.
Alternatively, apply for an EIN on the IRS website for free to get your digits.
Step 6: Register with the Arizona Department of Revenue (ADOR)
Some businesses will need to register with ADOR for a Transaction Privilege Tax License. It’s similar to what many would recognize as a sales tax license.
It’s required for all businesses that sell products or services that fall under the Transaction Privilege Tax requirements.
The Arizona Department of Revenue explains further the types of businesses required to apply for a Transaction Privilege Tax license. Namely:
- Retailers (physical and online)
- Restaurants, food delivery companies
- Hotels and lodgings
- Personal property rentals
- Publishing companies
The registration process is quick and can be quickly done online. Arizona’s Department of Revenue also provides some helpful guides with step-by-step instructions.
Note: If you have full-time employees, your LLC will have to register with ADOR for withholding employer taxes.
Step 7: Prepare an LLC operating agreement
Arizona doesn’t require LLCs to prepare or file an operating agreement with the state.
Still, don’t skim on this step if you incorporate a multi-member LLC.
This document becomes important if any disputes arise among members. Also, it lays out the rights and obligations of the LLC members and other interested parties (e.g., non-member LLC managers).
If there’s no operating agreement in place, then disputes will be resolved under Arizona state law.
You can create your own operating agreement using a template or seek help from a professional service provider — a corporate attorney or LLC formation service.
Step 8: Open an business bank account
Having a separate business bank account is a compliance requirement for LLCs.
Unlike a sole proprietorship, business entities can’t mix personal and business funds.
Moreover, since you’d have to use a check with a pre-printed name and address for paying state fees (not a debit/credit card), it’s plain convenient to have a business account.
Fees for local and federal banks range, but you can expect a monthly cost of about $15 unless you meet specific deposit requirements. Then the services are free.
Arizona LLC taxes, costs, and fees
Arizona LLCs don’t have to file an annual report, so there are no required maintenance fees, unlike most other states.
Similarly, most LLCs will be exempt from paying Arizona corporate income tax (6.968%) if they stay within the default tax classification — sole proprietorship for single-member LLCs and partnership for multi-member LLCs.
In that case, LLCs are treated as a pass-through tax entity, and all profits are reported on members’ individual personal income tax returns.
However, other LLC taxes may apply. For example, the Transaction Privilege Tax discussed above or state employment taxes.
Overall, Arizona has favorable business taxation and low maintenance costs for LLCs.
Business permits and licenses in Arizona
Arizona has precise business license registration requirements.
There’s no general business license for doing business in this state. But you may need to register for:
- A sales tax license (Transaction Privilege Tax license)
- A professional or occupational license specific to your profession
- Other local permits or licenses, issued by counties/cities
You can use a checklist from the Arizona Commerce Authority to figure out if you need a business license or permit.
Professional licenses and permits
You’ll need a valid professional license if you provide specialized services (e.g., accounting, medical, or legal).
It can be either issued in Arizona or by another state. Arizona recently adopted a universal licensing recognition law, making it easier for people to transfer their license registration from another state.
State regulatory agencies and city councils are in charge of issuing licenses and permits. Costs vary depending on the type of business your LLC is conducting and its location.
For example, an Arizona CPA will have to pay $100 for an examination to the Arizona State Board of Accountancy. Then another $300 for the initial registration.
Pros and cons of operating an LLC in Arizona
This state’s low cost of living and thriving workforce make Arizona attractive for new businesses and startups.
Foreign LLCs are also attracted by low business registration costs and growing populations and tourists in Phoenix, Maricopa, and Pima. Yet, there are several cons too.
- No annual report filings or fees
- Attractive business climate
- Friendly regulations for emerging business niches
- No minimal annual franchise taxes
- Mandatory document publication requirement
- On the lower end of tax attractiveness rankings
- Constrained access to highly specialized skills
Frequently Asked Questions:
Here are the most frequently asked questions regarding LLC formation in Arizona.