Key Considerations When Starting an LLC in Arizona

Arizona’s lack of annual reporting requirements and affordable filing fees can make it an attractive state for LLC formation.

This Best Financial guide explains the essential steps and key compliance requirements of establishing an LLC in the Grand Canyon State.

Short on time? Here are the key takeaways

• Arizona LLCs benefit from no annual reporting requirements and low start-up costs.
• When starting an LLC in Arizona, you must follow specific naming laws, apply for a transaction privilege tax license, and publish a notice of formation.
• Consulting with a lawyer or financial advisor is essential to understand the legal requirements fully.

Setting up a limited liability company (LLC): The basic steps

Business owners often choose an LLC business structure because they offer limited liability—safeguarding personal assets in cases of debt or bankruptcy.

The basic process for forming an LLC in Arizona includes these steps:

1. Select a unique business name. Search the Arizona Corporation Commission’s (ACC) and the Secretary of State’s websites to confirm the name isn’t in use.
2. Select a statutory agent (called a registered agent in other states like Florida) to accept service of financial and legal documents.
3. File articles of organization with the ACC online, via mail, or fax.
4. Apply for a federal employer identification number (EIN).
5. File a federal beneficial ownership information (BOI) report within 90 days.
6. Create an operating agreement to outline your LLC's ownership and management structure. While not a legal requirement, operating agreements are good business practice.
7. Open a business bank account and obtain required licenses, such as a transaction privilege tax license.

Specific laws and regulations you must consider when starting an LLC in Arizona

Here are some of the primary considerations when forming an LLC in Arizona.

Business name

LLC names must be unique and distinguishable from other businesses in Arizona. They must include:

• “limited liability company”
• “limited company”
• “L.L.C.”
• “L.C.”
• “LLC”
• “LC”

They can’t use terms like “association,” “corporation,” or “incorporated,” including abbreviations.

Professional LLCs

If your business is in a licensed profession, like medicine, you generally need to form a professional LLC. These entities must comply with similar naming requirements.

Transaction privilege tax (TPT)

Certain Arizona businesses must pay TPT. Rates vary depending on the business type. To comply, apply for a TPT license through the Department of Revenue.

Articles of organization

Filing articles of organization costs $50 for regular processing and $85 for expedited processing. For faster processing, additional costs are as follows:

• Next day: $100
• Same day: $200
• Two hours: $400

Foreign LLCs can register to do business in Arizona for $150, or $185 for expedited processing.

Statutory agents

Your LLC must have a statutory agent with a physical address in Arizona. This person must sign a statutory agent acceptance form, which is then filed with the articles of organization.

Publication requirement

New LLCs must publish a notice of LLC formation in a newspaper within 60 days of their formation, except those based in Maricopa or Pima County. The notice must appear in three consecutive issues. Publication fees typically range from $60 to $120.

Conclusion

Forming an LLC in Arizona involves adherence to specific requirements, such as applying for a TPT license and publishing a formation notice in a local newspaper. By diligently navigating these processes, businesses can ensure compliance and operational readiness in the state’s favorable business environment.

To find out how to form your LLC in other states, like Alabama, visit Best Financial.

FAQs

How much taxes does an LLC pay in Arizona?

In Arizona, LLCs typically pay taxes based on their income, at varying rates depending on how they’re taxed. For example, single-member LLCs are taxed as sole proprietorships.

How long does it take to set up an LLC in Arizona?

The processing time for articles of organization filed with the ACC is usually 14 to 16 business days for regular filings and three to five days for expedited filings. You can also pay extra for next day, same day, and two-hour processing.

What are the requirements for an LLC in Arizona?

To form an LLC in Arizona, you must file articles of organization, appoint a statutory agent, create an operating agreement, and publish a notice of formation.

How much does it cost to start an LLC in Arizona?

Arizona's filing fees for articles of organization are $50 for standard filings and $85 for expedited filings.

Disclaimer

This article is an informational overview and is not intended as legal or financial advice. Forming an LLC creates legal obligations and involves strict rules that regularly change. While we aim to provide current and reliable information, we cannot guarantee the completeness or accuracy of this information. We strongly recommend consulting with a qualified attorney or financial advisor to address your specific needs and ensure compliance with all relevant laws.