Free Guide to Start an LLC in Arizona
Starting a business in Arizona can be an exciting time. Before selling your product or service though, the nuts and bolts of licenses, registrations, and taxes must be completed.
The guide below will show you the DIY process of forming an LLC in Arizona. However, you can also use an online LLC service that will handle the paperwork for you. We reviewed and ranked the 7 best available.
The Top 2 Worth Considering:
- Northwest Registered Agent is a great option if you are looking for premium customer support.
- IncFile is ideal if you are looking for the best pricing with excellent features.
Step 1: Name Your LLC
Selecting a name for your Arizona LLC is a first step, yet a very important one. A name that is unique and easy to remember is helpful in finding potential clients or retaining customers.
The name should indicate the product or service. It should also follow guidelines set forth by the state of Arizona.
The name of an LLC will likely appear on business cards and stationary, marketing materials, a website, legal contracts, business bank accounts, invoices and/or a building directory.
Arizona law requires that the business name includes the words “Limited Liability Company,” “Limited Company,” or the abbreviations LLC, L.L.C, LC or L.C. It is restricted from using the words “association,” “corporation,” “incorporated,” or associated abbreviations.
The name must be limited to 60 characters.
It must be also different than other names already registered. Distinguishing features include the following:
- A key word is different.
- The same keywords are used but not in the same order or with a unique spelling.
- If the key words are numbers, they are communicated differently: as numerals, Roman numerals, or written words.
- Key words are differentiated by singular, plural, or possessive.
- The addition or subtraction of prepositions and conjunctions is a distinguishing feature.
- Key words are distinguished by abbreviated or unabbreviated versions of the same word(s).
- Certain symbols are used instead of words, such as $.
- Addition or subtraction of the word “Arizona” is a distinguishing feature.
- Similar key words that are written in different languages can be used.
Let’s imagine that someone is considering opening a flower shop in Tempe, Arizona. The name she is considering, Flowers by Fanny, is already in use. Instead, she decides to legally name her business Fanny’s Florals, LLC.
For other guidelines regarding distinguishable names in Arizona, see the Corporation and LLC Name Requirements page on the ACC website.
Determine if the Name is Available
Following the selection of a name but before filing the Articles of Organization, check to ensure that your name is unique on the ACC website. Searching in other places, such as online, is also a good idea.
After you have determined that your chosen name is “distinguishable,” the name can be registered, but it is not required.
Optional: Name Reservation
Sometimes a situation may arise where an individual wants a particular name but needs time to organize his/her company before filing paperwork for an LLC. In this case, a name can be reserved for 120 days in the state of Arizona.
An Application to Reserve LLC Name can be filed online for $45, which will process immediately and be given priority over hard copy filings. (If two applications are made for the same name at the same time, the online application is considered first.) If mailing, delivering in person, or faxing, the cost is $10 for standard processing or $45 for expedited processing. Fees are non-refundable. Applications can be sent to the following address:
Arizona Corporation Commission
Corporate Filings Section
1300 W. Washington St.
Phoenix, AZ 85007
Applications can be faxed to 602-542-4100.
Step 2: Choose a Statutory Agent
Every LLC in Arizona is required to have a statutory agent (also known as a registered agent in most states). This agent can be an individual or a company.
The role of the statutory agent is that of a contact person between the LLC and the state. As stated on the Arizona Corporation Commission website, “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.”
Simply put, the process agent receives communications or documents from the state involving such things as taxes or lawsuits and communicates them to the LLC.
Some may wonder why a statutory agent is necessary. The importance of the agent is to ensure that someone is always available to receive important documents even if the business owner leaves the office, goes on vacation, or is otherwise away. Also, having a statutory agent is especially important if a physical office does not exist in Arizona.
The chosen statutory agent can accept his/her assignment by submitting a Statutory Agent Acceptance form.
Individual as Registered Agent
The individual must be 18 years old and a permanent, full-time resident of the state of Arizona. An LLC in Arizona cannot act as its own registered agent. Using a third party ensures that nothing falls through the cracks. The third party can be an accountant, an attorney, or even a friend. The agent must have a physical and mailing address in Arizona.
Registered Agent Service
If using a service, we recommend either using an LLC formation service (like Incfile or Northwest Registered Agent) which gives you a free registered agent or ordering a registered agent service by yourself if you choose to DIY your LLC formation.
Step 3: File the Formation Documents with State
Let’s assume that fictional Fanny has selected both the name for her LLC and the registered agent. She is ready to complete the paperwork (called the Articles of Organization) that actually creates Fanny’s Florals, LLC in Arizona.
This step can be completed either online or by mailing a hard copy through USPS. The filing cost is $50 for standard processing and $85 for expedited processing. The fee is non-refundable. When you are ready, it is important to note a few details about each method to ensure that your application is fully completed in the time frame in which you need it.
In order to file online, you must first set up an eCorp account. The online filing cost is $85. Payment is required at the time of filing and is non-refundable.
Hard Copy Filing
An application needs to be accompanied by a cover page and payment. Payment can be made by check or money order, payable to Arizona Corporation Commission. Temporary checks or checks drawn on non-U.S. banks will not be accepted. Payment can also be made through money-on-deposit (MOD) accounts. For those filing in person, payment can be made by cash or credit, in addition to check money order or MOD.
The Articles of Organization application can be sent to the following address:
Arizona Corporation Commission
Corporate Filings Section
1300 W. Washington St.
Phoenix, AZ 85007
You can expect standard processing time of 30 days or less and expedited processing time of 5 days or less. Processing times are updated weekly, and the updates can be accessed here.
Step 4: Create an Operating Agreement
An operating agreement in the state of Arizona is recommended though not required. The agreement is a contract that defines the operations of the LLC, includes terms and conditions, states the responsibilities of its members, and ensures legal protections of its members.
All owners of the LLC must be in agreement of the terms in the agreement and sign before a notary public.
The operating agreement is useful for both multi-member and single-owner LLCs. In both cases, the agreement provides protections.
For example, in the case of the multi-owner LLC, the terms can stipulate what should happen if a death or divorce occurs among one of its members. In the case of the single-owner LLC, the agreement could be used in court as evidence that the LLC is separate from the individual owner.
The operating agreement can be created in two ways. Some individuals may choose to write the agreement on their own, using an online template. In this case, forms are available that are specific to state. Be sure to use the correct multi-member or single-member form.
The alternative is hiring an attorney to create the document. The benefits of using an attorney are ensuring the document doesn’t exclude any important information, adheres to state law, and invalidates default provisions that may not be what you wish.
Step 5: Get an EIN
An EIN is an Employer Identification Number. Anyone who runs their business as a corporation or partnership must file for this 9-digit number in order to identify the tax accounts of a business. The number can be applied for in one of the following three ways:
Applying online is the quickest method. The process can be completed between 7 a.m. and 10 p.m. EST, Monday through Friday. When the form is completed, the information will be immediately validated and a number issued while you are still online. In order to apply online, a valid individual taxpayer number, such as a Social Security number, is required.
Form SS-4 can be downloaded, completed and faxed to 855-641-6935, twenty-four hours, seven days per week. The EIN will be provided within four business days.
If either of the above methods are unavailable, Form SS-4 can be mailed, though processing will take approximately four weeks. The form can be mailed to the following address:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Think you’re ready to open up shop now? Guess again!
Step 6: Taxes, Licensing & Income Reporting
Businesses like Fanny’s Florals, LLC may be official after completing the above steps, but it is important not to overlook a few critical details.
On the federal level, most LLCs do not pay taxes directly to the government. Instead, they report income and losses on the owner’s personal 1040 tax returns. Schedule C is often used for reporting. Unless the LLC chooses to be taxed as a corporation, a single-member LLC is taxed as a Sole Proprietorship and a multi-member LLC is taxed as a Partnership.
The state of Arizona does not place a tax or fee on LLCs for the privilege of doing business in the state. If the LLC sells merchandise, it will need to pay a sales tax, otherwise known as a Transaction Privilege Tax.
A business license is not required by the state of Arizona. However, most cities or municipalities will require a business license. In addition, several other types of licenses or permits may be required depending on the type of business.
If your LLC does sell merchandise and is required to pay the Transaction Privilege Tax, a Transaction Privilege Tax license will be needed. To determine whether your LLC is subject to the tax and the license, contact the Arizona Department of Revenue.
In some cases, a professional or occupational license may be needed before a business can begin operations. Unlike some states, the state government website does not have a list of licensed professions and occupations that are required to obtain a license. An internet search is probably the best way to determine if this license is necessary.
Arizona keeps it simple. LLCs are not required to file an annual report.
When all of the mechanics of setting up an LLC in Arizona have been completed, someone like Fanny can get down to the business of setting up a website, creating a logo… or purchasing flowers!
Need Help Creating Your LLC?
We recommend LLC formation services because it allows you to knock off an important thing off your checklist so you can focus all your energy on actually starting a business.
Can you do it yourself? Absolutely.
However, a service that forms an LLC for you will help with ongoing maintenance and keep you notified of any requirements you should adhere to.
As we mentioned earlier, IncFile and Northwest Registered Agent are the top LLC services available. If you’re not familiar with them, as a point-of-reference many of our readers like to compare them to the most well known LLC service, LegalZoom.