How to Start an LLC in Arizona
One million workers in Arizona are employed by small businesses, many of which are LLCs. The popular structure for businesses offers entrepreneurs personal asset protection without subjecting them to high corporate tax rates since all profits are reported on the owner’s personal tax return. In order to benefit from the LLC structure, a business owner needs to follow the correct steps in Arizona to formalize the business and maintain all requirements. The process to begin your LLC is simple – below you’ll find a step-by-step guide to help you get started and stay in good standing with the state.
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Before you start any business entity, it is important to make sure your business is established and meets all requirements that Arizona sets forth. Ensuring that all of these requirements are met up front helps to avoid repeat applications or any issues in the future, which lets you start your business sooner.
Name the LLC
You can file a name reservation in Arizona for 120 days.
One of the first things you need to know about your business is its formal name. Each state sets its own requirements for what a business can be called, including that business names cannot be duplicated or easily confused with one another.
Arizona provides a directory of business names so you can conduct a name search to see if it is taken. It’s a good idea to look through this directory as you start brainstorming names to research name availability.
Along with being unique, LLCs in Arizona must also:
- Include the words Limited Liability Company, LLC, or L.L.C.
- Not include any words that are used to name government agencies (Department, CIA, Treasury, State, etc.)
- Avoid certain restricted words (bank, lawyer, credit union) unless proper licensing is present
If the name is available in Arizona, you will be able to form an LLC under that name. However, it’s also helpful to do a wider search to see if the name has been used in other states. Consider what a customer might see if they were to search your name on Google and if this might confuse them.
You can check to see if a domain name is available so that you can have a good website URL, as well as looking at social media handles you might use. If these are taken, even if the name is available, you may consider something that is easier for customers to find and lets you create a stronger brand.
You can also reserve a name if you have chosen one and are not ready to register your LLC. Arizona allows you to pay a small fee and reserve a name for 120 days so that no one else can register the name in that time.
Have a name in mind? See if it’s already listed in the state’s business directory. If the name comes up in a search, it’s taken. If it doesn’t, it’s yours to claim.
Select a statutory agent
Each LLC registered in Arizona must name a statutory agent, which is often called a registered agent in other states. This person or entity is authorized to receive government paperwork and documents, like service of process and tax notices, on behalf of the LLC.
A statutory agent can be the owner of the LLC, any person associated or not associated with the LLC or a commercial registered agent who is contracted for the role.
To be a registered agent in Arizona, you must:
- Have a physical address in Arizona (not a P.O. box)
- Be on-site and available to receive documentation during regular business hours
- Accept the role in writing by filling out a Statutory Agent Acceptance Form
While it is possible to be our own agent, many people prefer to use a registered agent service to meet the requirement of full availability during business hours.
LLCs are required to list a statutory agent, but other business entities like sole proprietorships are not.
File Articles of Organization
The document that officially establishes an LLC in Arizona is known as the Articles of Organization. This is the same as what some states call a certificate of formation.
Arizona’s Corporation Commission handles these forms, not the secretary of state, which is usually the case. The four forms filed are:
- Form L010 – Articles of Organization
- Statutory Agent Acceptance
- Member or Manager Structure Attachment
- Cover Letter
Be prepared to include the following information when filing Articles of Organization on the state website:
- Whether the LLC is a regular LLC or a professional LLC
- The name the LLC will be doing business as
- Description of the the services if it is a professional LLC
- Name and address of statutory agent
- Business address
- Whether the LLC will be member managed or manager managed
- Signature of the LLC’s organizer(s)
Once complete, these forms can all be submitted online through the Arizona Corporation Commission. If you prefer, you can download the forms and send them in the mail.
You can fill out and submit your LLC formation documents here.
The fee for filing an Articles of Organization in Arizona is $50 for both online and mail applications. There is an additional $35 fee for expedited processing.
Arizona processing time
Processing for Articles of Organization can take up to 30 business days in Arizona. An additional fee can be paid to expedite the processing. This can range from $35 for 3-5 day processing to $400 for 2-hour processing. Next day and same day are also available. Each week, a processing time calendar is updated.
Complete Arizona LLC publication requirement
Arizona has a requirement that all newly formed LLCs publish a formal Notice of LLC Formation. This must be published for three consecutive weeks in an approved newspaper in the county of the LLC’s stated business address. The publication must take place within 60 days of formation. The only exception to this rule is when a startup has a principal address in either Maricope or Pima counties.
The Notice of LLC Formation must include:
- The LLC name
- Name and street address of the statutory agent
- The LLC’s principal address
- Whether the LLC is member or manager managed
- The name(s) and address(es) of either the LLC’s manager or each member of the LLC
The cost for this can range from $30 to $300 depending on the county.
Create an LLC operating agreement
Arizona does not require new businesses to write or register an operating agreement, but it is best practice for most businesses to have one in place before beginning operations. An operating agreement is a legal document that outlines the ownership and operating procedures for an LLC, which can be referenced if there are any disputes or conflicts in the future.
An operating agreement should include:
- Basic company information: Things like the name and address of the company, registered agent information, and anything else filed with the state.
- Business purpose: A line or two about the industry and primary product or service of the business.
- Statement of intent: A statement that the LLC will conform to the laws of the state and operate in compliance.
- Duration: A statement that specifies that the LLC will continue in perpetuity.
- Income tax classification: Any specific elections the LLC will make in terms of taxation, like S-corp or C-corp status.
- Member and manager information: Name, address, title, job responsibilities, and LLC owners’ percentages, as well as the management structure.
- Member contributions: What each owner contributed to the business and how funds will be raised in the future.
- Voting and approval process: Any information on how votes will be cast and who can approve manager actions.
- New member and exit rights: What will happen if a new member joins or an existing member leaves the LLC.
- Dissolution: How it will be agreed to dissolve the business and what will happen to assets.
Your operating agreement does not need to be filed with Arizona but should be kept on record for your own purposes.
Now that you have formally registered your LLC, you are free to begin business operations. However, there are still steps you should take to ensure you remain in compliance with Arizona and federal laws.
Get your EIN
All types of businesses can be issued a free Employer Identification Number by the Internal Revenue Service, IRS, which serves as an LLC tax identification for the business when it comes to federal taxes. An EIN is essentially a Social Security Number, but for businesses instead of individuals.
Not all businesses need an EIN. However, you do need an EIN, if your business:
- Has any employees
- Files excise taxes
- Is involved in certain industries, like real estate mortgages or estate planning
Even if your business does not need an EIN for tax purposes, it is helpful to file for one. Having an EIN will make it easier to do things like gain access to business bank accounts and other funding, as well as protect your personal information.
You can get your EIN by visiting the IRS website.
Get Arizona business licenses
Arizona does not have a state-level general business license, but almost every business in the state will need a transaction privilege tax (TPT) license. This is similar to a seller’s permit and allows the business to collect and remit sales tax. There is a $12 fee for each location of a business that needs a TPT – it must be renewed annually, but there is no fee to do so.
Along with the TPT, most counties will require an LLC to obtain business licenses. You can contact county or city offices in Arizona to find local licensing laws.
Open business bank accounts
In an LLC, the business is considered a separate legal entity from the owners, which is why personal assets can be protected. To maintain that divide and protect your personal assets further, it is important to keep all finances separate. The best way to do this is to open bank accounts specific to your business.
A business checking account is the first step most LLCs take, as it immediately separates assets and makes accounting simpler. You can also choose to open a business savings account and credit cards in the name of the business.
Review LLC tax rules in Arizona
Along with sales taxes paid through a TPT license, LLCs in Arizona must comply with all tax laws. Most LLCs will be treated as a pass-through entity and not need to pay corporate taxes, instead having profits and losses treated as personal income for the owner or owners. If a member’s individual income is above $75,000, the state of Arizona requires you to pay at least 90% of your taxes due for the current year and 100% for the previous year through estimated tax payments.
Any LLC with employees must also register for Unemployment Tax and Employee Withholding Tax through the Department of Revenue. This is handled through Arizona’s Department of Economic Security.
Get insurance for your LLC
Most LLCs will need liability insurance that protects the business from lawsuits and ensures the protection of assets. You may choose to purchase additional insurance, like professional liability insurance for certain professional service providers.
Along with business insurance, any business in Arizona with one or more employees are required to have workers’ compensation insurance to cover employees with job-related illness, injury, or death.
Additional resources to help you set up a business in Arizona
The Arizona Corporations Commission is responsible for all business registration and offers many resources for entrepreneurs.
Do I have to file an Annual Report in Arizona?
No, unlike most other states, Arizona does not require LLCs to file an annual report. There is no Statement of Information to file either. However, you must maintain all other tax requirements to remain in good standing with the state, including all tax filings and license renewals.
Is there a state EIN for Arizona?
The IRS issues EINs, which are used for federal tax identification purposes. Arizona’s Department of Revenue also issues a TIN, or Taxpayer Identification Number, which is used for state tax identification. This may be the same 9-digit number as your federal EIN.
What is an Arizona Notice of Publication?
A Notice of Publication is the information state law requires to be published upon the formation of a new LLC. Aside from Maricopa or Pima County, all LLCs must publish this notice in an approved newspaper for three consecutive weeks, within 60 days of forming the LLC. There are templates available for the necessary information to publish.
Do I need a business license for an LLC in Arizona?
There is no state-level general business license in Arizona. However, most businesses will need to obtain a Transaction Privilege Tax license, which allows the business to collect sales tax on taxable goods and services. Many counties, cities, and localities will also require licenses for businesses in the area. Some industries will also need professional licensing through the state.
Should I file my operating agreement in Arizona?
Arizona does not require LLCs to submit their operating agreements or have them on record with the state. It is still best practice to have an operating agreement. Rather than submitting it to the state, this document will remain on file for your business to reference or amend as needed.
What is a PLLC vs LLC in Arizona?
Arizona has a distinction between an LLC and a professional LLC, with the latter accounting for 3% of LLCs. A PLLC is necessary for certain categories of professional services, like medical doctors, certified public accountants, attorneys, and real estate agents. These businesses have additional regulations they must follow to maintain licensure in their given industry.
How long does it take to form an LLC in Arizona?
The processing time for Articles of Organization in Arizona can be up to 30 business days. Additional fees can be paid for expedited processing, with options as fast as 2 hours from filing. The state also publishes a schedule that helps show expected processing times. This is in addition to any other administrative steps you need to complete to start your business.
Can I form an LLC in Arizona without a lawyer?
Arizona provides many resources that allow you to form an LLC without the help of a lawyer. Most entrepreneurs opt for an LLC for personal liability protection, which is valid even if an Arizona lawyer isn’t involved in forming an LLC.
Many business owners will choose to hire a lawyer to help with the application, operating agreement, and other decisions, especially for more complicated business structures.
Can I be my own statutory agent in Arizona?
Arizona allows business owners to serve as their own statutory agent, as long as they have a physical mailing address in the state and the proper availability. However, remember that your Notice of Publication must include the agent’s personal information, so many people choose to use a commercial statutory agent service rather than share their address in the newspaper.
How do I dissolve an LLC in Arizona?
An LLC is considered a permanent entity and will exist whether or not it is actively operating a business unless it is formally dissolved. To do so, you will file dissolution papers with the Arizona Corporation Commission, called the Form LL: 0020 Articles of Termination.
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