If you’re looking for a reliable DIY guide for starting an LLC in Arizona, look no further.
Below you’ll find all the information you need to launch your business and handle any associated costs. Follow each step carefully and your LLC will be established and ready to hit the ground running.
That said, the process can be complex, with various filings and costs, so if at any point you need help, you can hire an LLC formation service.
Need Help Starting Your LLC?If you want to make sure your LLC is formed correctly, hire an LLC service. Below are the top two that will take care of all the legal paperwork:
ZenBusiness – $39: If getting the most value out of an LLC service is your priority, choose ZenBusiness. They charge one of the lowest rates online and include all the most important features when starting a business. IncFile – $0: If you're on a strict budget and prefer using the cheapest LLC service, choose IncFile. They will form an LLC for free (plus state filing fee) and give you great features along the way.
ZenBusiness – $39: If getting the most value out of an LLC service is your priority, choose ZenBusiness. They charge one of the lowest rates online and include all the most important features when starting a business.
IncFile – $0: If you're on a strict budget and prefer using the cheapest LLC service, choose IncFile. They will form an LLC for free (plus state filing fee) and give you great features along the way.
Step 1: Name Your LLC
What’s in a name? Quite a bit, actually. Your business name is your Arizona LLC’s identity, its personality, its reputation. Find a name that sticks in customers’ minds – while conveying your brand qualities – and you’ve struck gold. A unique, memorable name can draw in new customers and keep existing ones coming back.
Your LLC name is going to appear everywhere: business cards, marketing collateral, websites, legal contracts, bank accounts, invoices, directories, and much more. So be sure that it conveys your product, service, brand, and values.
While you can (and should) be creative with your business name, there are certain state requirements that it must follow.
Comply with these requirements by making sure any name you choose includes “limited liability company” or “limited company” or the abbreviations “L.L.C.”, “L.C.”, “LLC”, or “LC,” and avoids “association,” “corporation,” “incorporated,” or an abbreviation of those words. Other restricted words include “bank”, “deposit”, “credit union”, “trust” and “trust company.”
You can follow these rules carefully, but your name won’t be available if it’s already taken. It must be completely distinguishable from every other business name on record with the Arizona Corporation Commission.
If you discover that your name is unavailable, you can distinguish it by:
- Adding, removing, or changing a key word
- Rearranging key words
- Using unique spellings
- Communicating numbers differently (Arabic numerals vs. Roman numerals vs. spelled out)
- Using the singular, plural, or possessive form of a key word
- Adding, removing, or changing conjunctions or prepositions
- Using the abbreviated or unabbreviated form of a key word
- Using certain symbols instead of words, like $
- Adding or removing the word “Arizona”
- Using similar key words in different languages
Consider this: your friend Fanny wants to open a flower shop in Tempe, Arizona. The name she wants, Flowers by Fanny, LLC is already in use. So she comes up with a new one: Fanny’s Florals and Design, LLC. This name is similar to the original but includes new words, distinguishing it in the Arizona Corporation Commission’s records.
For additional details, see the Corporation and LLC Name Requirements page on the Arizona Corporation Commission website.
Determine if the Name is Available
Of course, you will only need to make distinguishable changes if your name is already taken. Don’t make the mistake of ordering business cards, creating advertisements, and using a name on documents like the Articles of Organization without first confirming it’s available. Use the Arizona Corporation Commission Business Search to see if there’s an existing business using your desired name.
Maybe you pegged a distinguishable name right away, or maybe it took some modifications, but either way, once you have a unique name, you can lock it down by filing a name reservation.
Optional: Name Reservation
You may have fallen in love with a particular name, but still have some preparation and paperwork to sort out before starting your LLC, and you’re worried that someone will swipe it in the meantime. To calm your nerves, you can reserve that name in Arizona for a total of 120 days.
Think about Fanny. After making her name distinguishable, she’s ready to make it official, but if she’s waiting on some paperwork to start her LLC, she can place a hold on the name either online or by mailing an Application to Reserve LLC Name to:
Arizona Corporation Commission
Corporate Filings Section
1300 W. Washington St.
Phoenix, AZ 85007
Mailed forms cost $10, while online submissions will automatically include the additional $35 expedited filing fee, as they are processed immediately.
Step 2: Choose a Statutory Agent
Fanny’s LLC is quickly taking shape, and if it’s going to operate in Arizona, she’ll need a go-between for state and legal communications. This is called the statutory agent.
A statutory agent is a key component of your budding LLC, handling all of its sensitive communication with the state so you don’t have to.
The Arizona Corporation Commission FAQ page explains that “a statutory agent is an individual or a business entity that the corporation or LLC appoints for the purpose of accepting service of process (lawsuit papers or legal documents) for the entity.”
Taxes, lawsuits, maintenance requirements, and more – the statutory agent takes care of it all. If you had to do this yourself, it would pile additional tasks onto your already-full plate. Plus, your agent makes your business available to receive documents even when you’re out of town or away from the office. This is especially important if your physical office is outside Arizona.
But maintaining an agent isn’t just a convenience, it’s required. According to the Arizona State Legislature Section 29-3115, “each limited liability company and each registered foreign limited liability company shall designate and maintain a statutory agent in this state.”
You can appoint either an individual or a business entity as the LLC’s statutory agent, as long as the agent accepts the assignment by submitting a Statutory Agent Acceptance form.
Individual as Statutory Agent
You may think that an individual statutory agent would need specialized training or experience, but this isn’t the case. As long as a person has a physical Arizona address and is over 18 years old, they are a valid option.
Third parties like attorneys or business partners are often good options because they understand the particulars of maintaining an LLC, but family members or friends are also viable choices.
If you meet these requirements and don’t mind taking on added responsibilities, you can even appoint yourself. An LLC, however, cannot serve as its own agent.
Statutory Agent Service
It can be a lot easier, though, to use an LLC formation service like ZenBusiness (or even IncFile and Northwest Registered Agent), so we highly recommend it. Not only will they take care of business formation requirements, but they’ll also include a free registered agent service. Or, if you’d rather start your LLC on your own, you can use a national registered agent service to cover your agent duties.
During the life of your LLC, you may, at some point, need to change your statutory agent. Perhaps you want to switch from an individual to a professional service, or maybe your existing statutory agent resigns. Either way, you’ll want to make the change as soon as possible because operating without an agent on file can lead to administrative dissolution.
Step 3: File the Formation Documents with the State
This is where the LLC formation process kicks into high gear. Let’s check back in with Fanny.
She’s reserved her unique business name, designated a statutory agent, and she’s ready to get her LLC off the ground. It’s time for Fanny to take on the most important LLC document: the Articles of Organization. This filing creates a record for Fanny’s Florals and Design, LLC with the Arizona Corporation Commission, giving it the authorization to commence business in the state.
You can file the Articles of Organization either online, by mail, or in person. The standard filing fee is $50, but if you’d like expedited processing, it’s $85. Online submissions are processed immediately and automatically incur the $85 expedited fee.
The first step in filing online is creating an eCorp account. After registering, you can select the appropriate filing and complete the process there.
Download the paper application here. You will also need to complete and submit a cover sheet, which you can download from the eCorp site. Also, make sure to include a check or money order (payable to “Arizona Corporation Commission”) and send your materials to:
Arizona Corporation Commission
Corporate Filings Section
1300 W. Washington St.
Phoenix, AZ 85007
Live in Phoenix? You can hand-deliver it instead, if you’d like, to the same address. When dropping off a form in person, you can also pay with cash or credit card.
Both standard and expedited processing times vary depending on the number of submissions in the A.C.C.’s queue, but they are updated weekly on the eCorp homepage.
Step 4: Create an Operating Agreement
The operating agreement is the framework that holds up an LLC, the vital underpinning that establishes processes for its procedures, activities, and conduct. Essentially, it serves as your company’s bylaws.
Your LLC is not required to adopt an operating agreement before doing business in Arizona. But we strongly recommend that you create one anyway because it’s one of the most important business documents to your company’s success. Not only does this agreement entrench your customized procedures, but it also protects your legal assets and gives your LLC legitimacy in front of courts, banks, and more. It’s the backbone of your business structure and stability.
Let’s say our friend Fanny sells a percentage of her company to two other owners. Her operating agreement could stipulate how the LLC’s assets would be distributed among them in the case of dissolution. But if she decides to maintain sole ownership, the agreement could be used in court as evidence that the LLC’s assets are separate from her personal ones. These are just two examples, but the operating agreement governs everything from member duties to the tax structure.
If you’ve decided to draft an agreement, there are two ways to go about it:
- Write it yourself. Don’t be intimidated by this option. There are plenty of free online templates that serve as helpful guides. You can create an effective document from most of the templates out there, but we recommend getting one through ZenBusiness, which includes a free LLC operating agreement with every package. This will save you a lot of time and money.
- Hire an attorney. If you want to be absolutely sure that you don’t miss any important details, an attorney can write or review the agreement for you, ensuring that it complies with state law, includes all necessary information, and avoids the state’s default laws.
What are default laws?
Each state has its own set of generic, baseline laws for how LLCs should operate. These laws, however, only govern matters not included in your operating agreement. Take dissolution, for example. If your LLC ever dissolves, your operating agreement would determine what happens to its remaining assets and debts. But if you fail to include it in the agreement, the state will make that decision for you.
Because default laws are broad and not tailored to your specific business, they often aren’t in your LLC’s best interest, so it’s best to avoid them by being as comprehensive as possible in your agreement.
Step 5: Get an EIN
There’s simply no way to avoid taxes. In fact, it’s illegal to try, so don’t do it.
Federally, LLCs are classified as “pass-through” entities, businesses that don’t file corporate tax returns, but whose owners include income and losses on their individual returns. Still, there are certain circumstances that require LLCs to pay federal taxes, like classifying as a corporation or partnership, hiring employees, or selling merchandise. So, in Fanny’s case, if she plans on hiring additional florists and selling bouquets, she will need to apply for an EIN.
The Employer Identification Number (EIN) is a nine-digit number that the IRS will use to identify your company’s tax accounts, so if you pay any business taxes, it’s extremely important to have one. Click the “Do I need an EIN?” link on this page to see if you fall into this category. If so, apply for an EIN one of three ways:
Need to get this done quick? File online – it’s by far the most efficient method. You can only complete the process between 7 a.m. and 10 p.m. EST, Monday through Friday, but you’ll receive your number immediately upon finishing the digital form. Keep in mind that you will need to provide a valid individual taxpayer number (like a Social Security Number) as part of the process.
You might prefer the feel and security of a paper form. In this case, download Form SS-4, complete it, and fax it to (855) 641-6935. You will receive your EIN within four business days.
Or, there’s always trusty postal mail. However, this is the slowest option, as processing typically takes around four weeks. If that doesn’t deter you, fill out Form SS-4 and send it to:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Okay, so you’ve filed the Articles of Organization, designated a statutory agent, adopted an operating agreement, and filed for an EIN. Time to start doing business, right? Sorry, there are a couple of additional steps you may need to take first. But don’t worry, you’re almost there!
Step 6: Taxes, Licensing & Income Reporting
For all intents and purposes, most LLCs will be official after completing all the prior steps. Still, it’s important for business owners like Fanny to keep looking ahead, as there are certain maintenance requirements to keep an Arizona LLC running smoothly and in good standing with the state.
Before you start doing business, create a plan for the following potential LLC requirements:
As mentioned earlier, LLCs are almost always classified as “pass-through” entities, which means that they don’t pay income taxes directly to the federal government. That responsibility falls instead on the owners, who must include business income and losses on their personal 1040 tax returns and/or Schedule C. LLCs are flexible with tax structure, so you can choose to have yours taxed like a corporation instead. In this case, it would need to file a separate corporate tax return.
Like the federal income taxes, Arizona income “passes through” to the owners’ personal returns, so you won’t need to file a separate corporate one. And there’s more good news: Arizona doesn’t impose any other tax on LLCs for the privilege of doing business in the state.
But don’t celebrate too early, because state taxes don’t end there. If your LLC sells merchandise, it will owe a Sales Tax (also known as a Transaction Privilege Tax) and a Use Tax. And if your business is an employer, it will be responsible for withholding employee taxes and paying an Unemployment Insurance Tax.
The Articles of Organization may have already made your business legitimate, but your LLC might still need to obtain a license before doing business. Arizona doesn’t have a general business license, but depending on the type of business you run and your LLC’s other circumstances, you may need to apply for other types of licensure.
If your LLC sells merchandise and pays the Transaction Privilege Tax, it will need a Transaction Privilege Tax license. To determine whether your LLC is subject to the tax and the license, contact the Arizona Department of Revenue.
Other than that, you may need specific professional or occupational licensure. Fanny, for example, may need a certification or license from the Department of Agriculture before selling nursery stock in her flower shop. Arizona doesn’t provide a comprehensive list of licenses, so your best bet is using Google or another search engine to see if your LLC requires any licenses.
Many states use annual or biennial reports to keep their business records up to date. Arizona, however, keeps it simple and doesn’t require LLCs to file Annual Reports.
And we’ve come to the end. It’s a long process, and not always easy, but the reward is well worth it. If you’ve made it this far, congratulations! Your Arizona LLC is ready for takeoff. So go ahead and start with that big sale, promotional campaign, or business deal. Maybe you’ll see Fanny out there in the business world, selling her beautiful floral creations.
Need Help Creating Your LLC?
If you even skimmed this guide to look over the steps, you likely got a sense of how many moving parts there are when starting an LLC. Can you do it all yourself? Absolutely. We have complete confidence in you.
But if you’d rather hand it off to someone else and not have to worry about it again, we recommend using an LLC service. This way, you can go about your other business responsibilities with the confidence that everything will be submitted correctly and punctually.
Plus, an LLC formation service can handle maintenance items like Annual Reports, so you can take them off your to-do list. And on top of that, many services also provide a statutory agent.