Think about your LLC a year from now: raking in profits and taking Arizona by storm. You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees – before you sell a single product, there are startup costs associated with launching an LLC in Arizona.
While you’re making plans and dreaming big, make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Arizona startup fees here.
Quick Note: If you’d like to keep your costs of starting an LLC as simple and low as possible, consider hiring ZenBusiness – a reliable business formation service. To get a better idea of the value they offer and how it works, we compared them to the two most well known services:
Bare Minimum Cost to Start an LLC in Arizona
- Optional: LLC Name Reservation Fee
- $10 for paper forms or $45 for online and expedited forms
- Required: Articles of Organization Fee
- $50 paper forms or $85 for online and expedited forms
Overall Arizona LLC Formation Costs
LLC Name Reservation Fee
Reserving a business name isn’t mandatory in Arizona, but it’s a nice option to have. If you have a name that’s perfect for your LLC, but you’re worried that someone else will take it before you have a chance, reserve it with the Arizona Corporation Commission. When you do, the A.C.C. will place a 120-day hold on your name, giving you the exclusive rights to use it during that time. The fee to reserve an LLC name is $10, but if you need it done quickly you can pay another $35 to expedite the process or file online for a total of $45.
Articles of Organization Fee
This is the big one, the most important (and most expensive) form that you’ll file to start your Arizona LLC. Once accepted, your Articles of Organization registers your business with the state and grants you authorization to begin doing business. Standard paper filings cost $50 with an expedited option for another $35. File online and your form will be processed as quickly as (or quicker than) an expedited form, so that fee is $85. Filing your Articles of Organization might make a dent in your bank account initially, but it’s a one-time fee, so as long as the Arizona Corporation Commission accepts it, you won’t have to worry about it again.
LLC Formation Service
Starting an LLC can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC formation service. These services take care of the registration process for you, so you don’t have to spend the time on research, paperwork, and filings.
Most of these services (like ZenBusiness and Northwest) offer basic LLC formation service like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, Operating Agreements, and expedited filing.
Statutory Agent Service
Appointing a statutory agent is an important part of your LLC formation process. Your statutory agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with Arizona business law. In short, you need an agent you can trust.
While you can be the statutory agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A statutory agent service ensures that your forms are filed efficiently and on-time, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
Not all statutory agent services are equal, so you’ll need to be careful in choosing one. Fortunately, we’ve done some research for you, and we recommend Northwest Registered Agent. In addition to statutory agent services, Northwest also handles LLC formation — and they’ll include a statutory agent free for one year when you form your business with them. We think they’re the most reliable choice, but if you’d like to evaluate all your options, check out our Best Registered Agent Services guide.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2000.
Cost variations depend on the experience and location of the lawyer. Because of the investment involved, it’s important to find the right fit for you, which means doing some research. The good news is that legal service databases like Avvo have done some of the work for you, compiling and organization information on business attorneys in Arizona.
Foreign Qualification Fee
This only applies if your LLC was formed in another state and is now expanding into Arizona. If this describes your business, you’ll need to submit an “Application for Registration” before doing business in the state, which will take the place of your Articles of Organization.
All foreign business entities are required to foreign qualify in Arizona, or they could incur some pretty severe penalties. Avoid them by filing online on the A.C.C. eCorp page or downloading a paper application. Foreign qualifying in Arizona is a little more pricey than filing the Articles of Organization – $150 for paper applications and $185 for online and expedited ones – but it’s also a one-time fee, provided your application is accepted.
LLC Annual Fees
When it comes to Annual Reports, Arizona keeps it simple. LLCs aren’t required to file them. Just be sure to keep your statutory agent and principal office address up to date by filing a “Statement of Change” for $5 whenever you have an update.
The Arizona LLC tax situation is almost as easy as the annual report one. By default, LLCs are pass-through entities, so the members file income taxes, but the business itself doesn’t have to. However, if you’ve set your LLC up to be taxed as a corporation, it will need to pay the Arizona corporate income tax of 4.9%.
There are certain circumstances under which your LLC would have to pay a specific business-related tax, though. For example, LLCs with employees must pay a state employer tax and LLCs that sell merchandise are required to pay a Transaction Privilege Tax, although the amounts of these payments depend on your company’s size and taxable income.
What If I Don’t Pay?
Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
You don’t need to worry about annual reports or fees, but there are other ways you can fall out of good standing with the Arizona Corporation Commission. Your LLC can be labeled “noncompliant” or potentially dissolved if you fail to successfully file your Articles of Organization, maintain a valid principal office address, or pay any relevant taxes.
As a dissolved entity, you can no longer legally do business in the state, and as a “noncompliant” one you can’t obtain a Certificate of Good Standing, which is necessary for foreign qualification in other states and opening or maintaining financial accounts.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Arizona.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with business updates – like statutory agent information – so your business doesn’t fall out of good standing.