If you are thinking about creating a Limited Liability Company (LLC) in Arizona, it is paramount to pay attention to the various steps surrounding the process. Forming an LLC in Arizona allows for flexibility and limits personal liability for business debts and lawsuits.
For all those looking to create an LLC in Arizona, here is a detailed guide to follow.
|State||Arizona||New Mexico||Utah||California||US average|
|LLC Filing Fee||$50||$50||$70||$70||$130.38|
|LLC Annual/Biennial Fee||$0 (no fee and no information report)||$0 (no fee and no information report)||$20 (every year)||$800 (every year) + $20 (every 2 years)||$89.34 (every year)|
|Corporate Tax Rate||4.90%||4.8-5.9%||4.95%||8.84%||5.60%|
|Nominal GDP per capita||$56,511||$51,481||$66,011||$85,546||$64, 773.08|
|Overal Rating for Starting an LLC||4/5||4/5|
Before You Set Up an LLC in Arizona
When creating an LLC in Arizona, you need to follow a rather standard procedure. The entire application and approval procedure is done through the Arizona Corporation Commission.
The steps include filing for name reservation, selecting a Statutory Agent, filing Articles of Organization, and rounding it all up with a publication of LLC formation.
How Much Does It Cost to Start an LLC?
Starting an LLC in Arizona is affordable compared to other states. The cost mainly depends on the choice of the application process and how pressed you are on time. Regular mail application and approval processes are cheaper than expedited processing.
The answers to how much to start an LLC in Arizona are:
- The cost for reserving a name for your LLC is $10 if done regularly by mail, or $45 if performed online through an expedited procedure;
- Filing for Statutory Agent Acceptance is free of charge. If submitted separately from the appointment document, it may be expedited for an additional fee of $35. There is also a next-day service that costs $100, or same-day service with a $200 fee;
- The filing fee for the Articles of Organization is $50 for regular processing and an additional $35 for expedited processing;
- Publication requirements for newly formed LLCs in Arizona will cost you between $30 and $300, depending on the county;
- Registering a foreign LLC in Arizona will cost you $150;
- Filing a Trade name application to get a DBA will cost you $10;
- Acquiring a Transaction Privilege Tax License will cost the LLC $12 per business location.
The Arizona Corporation Commission has an exhaustive schedule of fees for regular processing and expedited processing fees. This schedule helps prepare your budget when forming an LLC in Arizona.
Steps to Start an LLC in Arizona
Pick a Name for Your LLC
Choosing the right LLC name includes finding one that isn’t already being used by another business entity. If you pick one that has already been taken, the system will inform you, so check the business name database of the Arizona Corporation Commission.
There are requirements you need to comply with when naming an LLC in Arizona:
- The legal business name has to include any of the following phrases and abbreviations at the end of the name: Limited Liability Company, Limited Company, LLC, L.L.C., LC, L.C.;
- The legal name cannot contain the following phrases: association, corporation, incorporated, bank, credit union, trust company, and/or deposit.
Many owners have already chosen a name for their business, but are not yet ready to file for LLC registration. Here, they can reserve the name for up to 120 days before filing the documentation. Just fill out an application to reserve a limited liability company name.
You should also check if a domain name is available. You may not be thinking about a website currently, but business owners often regret not having reserved the domain ahead of time.
You can reserve the name by filing the documentation regularly by mail or apply online for expedited processing. All name reservation applications obtained online are given priority and will be granted immediately.
Find a Statutory Agent in Arizona
A statutory agent is what other states call a registered agent. It is an individual or an entity that is authorized and has agreed to accept and deal with legal papers on behalf of the LLC. It may be an individual permanently residing in Arizona, a domestic LLC or corporation, or a foreign corporation or LLC authorized for business in Arizona.
The statutory agent must have a physical address in Arizona and be available during normal business hours to receive important legal documentation, summons, tax notices, subpoenas, etc. – all on the LLC’s behalf.
When choosing your statutory agent, the name and address of the agent are a matter of public record, so privacy-wise, choosing a professional statutory agent service is sometimes a wiser option.
The process of engaging a statutory agent encompasses the potential agent accepting the appointment in writing. The Arizona Corporate Commission provides a Statutory Agent Acceptance Form that needs to be submitted along with the appointment correspondence, within 7 days of the receipt. The LLC filing process may be delayed if there is no confirmation.
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Articles of Organization
The Articles of Organization refer to the paperwork that is needed to form an LLC. Filling out and filing the Arizona LLC Articles of Organization is a simple process and can be done by mail or online.
The Arizona Corporate Commission will require the following information regarding the LLC:
- The effective date of the LLC is usually the date of submission, but if you wish to have the LLC start later, you need to specify this. This delay may not be longer than 90 days.
- The duration may seem odd when establishing a business, but some owners wish to open investment-related LLCs, and these end once the project is complete. If there is a specific end date you have in mind, make sure to specify it in the form;
- Business character is what the business will be dealing with. If the list doesn’t contain any activity relevant to your business, simply choose any legal purpose option.
- Member structure contains information on whether you’ll have a member-managed LLC or a manager-managed LLC.
It takes around 3 weeks for the LLC to be approved by the Arizona Corporation Commission.
Other Required Documents
When researching how to start an LLC in Arizona, business owners also come across other documents that need to be submitted with the main documentation. They may not be compulsory for all types of LLCs, but some of these documents are listed below.
The North American Industry Classification System (NAICS) is used by the Federal statistical agencies to classify businesses to collect and analyze statistical data, which are then published to offer information on the U.S. business economy. It is a six-digit code that characterizes the business activity of your LLC. The main purpose of this number is to be used in reports and forms related to the LLC.
Business Licenses and Permits
Every state has its own rules when it comes to business permits and licenses. Depending on the business nature you may be asked to acquire the following before starting:
- Business license – may be required before starting;
- Professional license – required for accountants, barbershops, and similar business branches;
- Transaction privilege tax license (TPT) – the transaction privilege tax or mainly known as sales tax, is charged by the Arizona Department of Revenue for having the privilege to do business in Arizona.
The Arizona Corporation Commission does not require LLCs to file annual reports. However, it is recommended that the Commission is informed of any changes in updated ownership information and other relevant details.
Arizona LLC Publication Requirement
All newly formed LLCs have to publish a Notice of LLC Formation in a newspaper in their county.
The only exception is LLC formed in Maricopa County and Pima Country.
The Notice of LLC Formation has to be published three times. It has to be published within 60 days of receiving notice from the Arizona Corporations Commission, and it has to be published in a newspaper approved by the same commission.
The Notice of LLC Formation must include the following information:
- LLC name
- Name and address of the Statutory Agent
- Address of the LLC
- How the LLC is managed
- Names and addresses of LLC managers or members
An Operating Agreement is not a requirement in most states, including Arizona, however, it is highly advisable to have one. It is a useful and important document that defines how the business will be run.
An Operating Agreement usually consists of several parts which include organization, management and voting, capital contribution, distributions, membership changes, and dissolution.
It should outline essential information like:
- The LLC name and address
- The LLC duration period
- Name and address of the statutory agent
- Information relevant to Articles of Organization
- Purpose of the business
- Members and their contribution
- Management of finances, including division of profits and losses
- Procedures for admitting new and outgoing members
- LLC management
- Liability and indemnification clauses
The operating agreement is an internal document but it still needs to be updated regularly.
The document protects the LLC from being governed by the LLC laws of the state of Arizona.
Get An EIN
The Employer Identification Number (or EIN) is a unique 9-digit number that is assigned to each business by the Internal Revenue Office (IRS). It’s the same as the social security number issued for individuals. To register for an EIN, you need to visit the IRS website and fill out an EIN application form.
Once the application is submitted through the IRS website, the EIN will be available immediately and free of charge. You may also register by phone, fax, or mail.
The EIN has many uses including opening a bank account, hiring employees, registering for licenses and permits, and more. All that has to be done on behalf of the LLC will require an EIN.
The Forms You Need To Register An LLC In Arizona
The forms that you will need to complete to register an LLC include:
- Application to reserve limited liability company name
- Statutory Agent Acceptance Form
- LLC Articles of Organization
- Trade name application form
- Transaction Privilege Tax license
|Did You Know? |
The LLCs were first enacted by Arizona in 1992 and have been developed by combining partnership attributes. The 2018 Arizona LLC Act requires that a member of a member-managed LLC owes the company and its members a duty of loyalty and should act consistently with the obligation of good faith and fair dealing. In the second case, it demands the manager of a manager-managed LLC owes the company and its members a duty of loyalty. As such, it must discharge the obligations and duties with the obligation of good faith and fair dealing.
LLC Taxes In Arizona
How Much Do LLCs Have To Pay In Taxes In Arizona?
Single-member LLCs are subjected to paying federal income tax and self-employment tax, and both are leveraged as pass-through taxation. If the LLC decides to be taxed as a corporation, it will pay taxes on the gross income and income tax on dividends.
The LLC’s tax returns include a corporate tax rate of 6.968% of the net income. If the LLC chooses to be taxed as a corporation, the minimum tax will be $50.
How Much State Taxes Do LLCs In Arizona Have To Pay?
The Arizona Income Tax rates run between 2.59% to 4.50%, depending on the income.
The Self-employment tax rate that LLCs need to pay amounts to 15.3%.
The IRC allows LLCs to choose the S-corporation taxation which allows LLCs to reduce the self-employment tax and declare certain income as salary and other income as withdrawals and distributions.
How Much Federal Taxes Do LLCs In Arizona Have To Pay?
The amount of federal income tax paid by LLCs depends on the earnings, deductions, current income tax bracket, and filing status.
Is Arizona A Good Place To Start An LLC?
Arizona is ranked as a state with a strong business environment and low business costs, so establishing an LLC is a clear-cut process.
How Long To Form An LLC In Arizona?
Depending on the documentation filing method, the forming of an LLC in Arizona can last from
1 to 3 weeks.
How Much Does It Cost To Run An LLC In Arizona?
Establishing an LLC in Arizona and filing the Articles of Organization costs $50 for regular filing and an additional $35 is charged for expedited filing. There are no annual fees for running an Arizona LLC, except in the case of any special licenses and permits. The cost for establishing an LLC in Alaska is $250 – the fee needed to file the Articles of Organization. The yearly cost for running one is $50, after which reapplication is required.
What To Do After Formation?
Once the LLC is formed, an LLC needs to open a business bank account and abide by the Arizona publication requirements. This requires that newly formed LLCs publish a Notice of LLC Formation in a county-approved newspaper for three consecutive weeks. The publication must be completed within 60 days of formation.
A Notice of LLC Formation should include the following:
- LLC name
- Statutory Agent name and address
- If the address differs from that of the Statutory Agent, include the LLC principal address
- The LLC structure – member-managed or manager-managed
- Names and addresses of the LLC manager or each member, depending on the structure
An exception to these requirements is the LLC businesses from Maricopa or Pima counties who are not required to publish a Notice of LLC Formation.
Resources To Make A Successful LLC In Arizona?
The following links can be useful when establishing an LLC in Arizona:
Start Marketing Your LLC In Arizona
The first form of marketing is achieved by the Arizona publication requirement by posting a Notice of LLC Formation in a county-approved newspaper for 3 consecutive weeks. In the meantime, you may use other marketing sources, platforms, and strategies, depending on the industry.
How To Dissolve An LLC In Arizona
LLCs usually don’t have an expiration date. However, some investment-related LLCs need to be dissolved once the investment has ended. Consult the articles of the Operating Agreement referring to dissolution. If you don’t have an operating agreement or it doesn’t specify the dissolution process, you may turn to the Arizona LLC Act for voluntary LLC dissolution.
Turn to Articles of Termination to learn more about dissolving an LLC in Arizona.
We have covered all aspects of how to start an LLC in Arizona for free, by doing it yourself, or with an additional cost by hiring a professional agency to do the work for you.
Starting an LLC in Arizona offers many benefits but be sure to cover all steps to creating one – selecting a name, appointing a statutory agent, and preparing the Articles of Organization and other documents.