A Step-by-Step Guide to Arizona LLC Formation
One of the most crucial steps in starting your company is determining the best business structure as an owner. With so many options, each with its advantages and disadvantages, it can be tricky to decide on the best fit.
Small business owners have the option of setting up a Limited Liability Company (LLC), which is an excellent option known for being a safe yet flexible business structure.
Whether you are interested in setting up your business as a new LLC in Arizona or are just looking to find out more information, you’ve come to the right place.
This article will discuss the details of what an LLC is, the advantages, and how to start an LLC in Arizona for your business.
Benefits of Forming an LLC in Arizona
When you file your company as an LLC in Arizona, it helps solidify your standing in the business world. This motion shows other businesses and potential customers that you are willing to do what it takes to be a legally operating business.
Choosing to form your business as an LLC in Arizona allows you to take advantage of the benefits of both a corporation and a partnership structure. Some of these benefits include:
Protection of Personal Assets
The LLC will have its liability that does not automatically extend to the owners, unlike a sole proprietor, where you are legally responsible for everything. That means the Arizona LLC protects the liabilities and debts incurred from the business. In most situations, your assets, such as your car, home, or savings, will never be at risk if your Arizona LLC is faced with lawsuits or bankruptcy.
Business Profit Taxation
In an LLC in Arizona, your profits and losses can pass through to your income without having to have corporate taxation.
Simple to Create and Maintain
The formation of an Arizona LLC requires minimal paperwork and requirements. They are known for being easy to start and simple to maintain.
Your business matters can be managed by more than one owner or member while still being one main business to the public. This means all decisions and transactions behind the scenes can be equitably distributed while presenting one entity as you move forward.
As you move forward, your Arizona LLC will continuously be recognized as an entity. People and other businesses prefer doing business with a legitimate entity because it shows your level of professionalism.
Access to Business Loans
When you form your Arizona LLC, you will obtain a DUNS number and build your business credit, helping you to further build upon your business.
Flexible Profit Distribution
In an LLC, you are not required to spread the distribution of profits equally across the owners. You have full control over profit distribution in your Arizona LLC.
An LLC business structure in Arizona is an excellent choice for both medium and higher-risk level businesses. You might always want to consider opting to go with an LLC if you have a significant amount of personal assets to protect from your company. And lastly, LLCs are great for owners who are interested in paying lower tax rates than corporations.
How to Start an LLC in Arizona
Suppose you have decided to move forward with forming an Arizona LLC for your business. In that case, you will need to follow these steps as detailed by the Arizona Corporation Commission (ACC) to be successful in abiding by Arizona LLC law. For the sake of efficiency, some of the steps have been reordered.
1. Name LLC
Every state has different rules regarding business names that you will want to find out more information on once you have selected the state of your business address.
Check Name Availability
In choosing a name for your business in Arizona, you will need to search it on the internet to see if it is already in use. Keep in mind there are potential legal consequences for using a similar name to an already existing business in Arizona.
After you have done a general search online, you can check your business’s potential name through the ACC website to conduct a proper search.
Once you have confirmed the name is available through the ACC website, you can move forward with three options to secure it for your business.
Your first option is to place a name reservation through the ACC website. This reservation is good for 120 days, holding your business name until you can complete and submit the paperwork.
Trade Name Registration
You can also submit a trade name registration application at this time through the Arizona Secretary of State’s website. Your trade name will be effective for five years. Only the Arizona Secretary of State can register trade names, not the ACC.
Keep in mind that you do not need to submit a name reservation through the ACC if you have a trade name. The trade name will essentially hold the name for you, and you can form your business this way.
2. Choose an Arizona Statutory Agent Service
A person, or separate business, that receives and sends legal documents on behalf of your company is known as a registered agent. The ACC requires all LLCs to appoint an Arizona registered agent. To accept the appointment as this position, they must sign a statement of acceptance which becomes the statutory agent acceptance form.
To complete the process of choosing a registered agent service for your LLC, you can look online. Resident agent statutes are available online on the Arizona Legislature’s website, under Arizona Revised Statutes.
3. File Arizona LLC Articles of Organization
You will need to submit all of your formation documentation to the ACC. To form an Arizona LLC, you will need to complete the Articles of Organization paperwork. You can submit this via their online services, fax, or mail.
Your paperwork will have to be examined and approved by a member of the ACC staff and will be approved or rejected at this point. You can now request expedited filing for same-day approval with an additional $35 expedited processing fee.
Once the ACC has approved your paperwork, you will receive a letter stating so, along with further instructions for your LLC formation. Congratulations, you can now move forward with the process of properly setting up your LLC in Arizona.
If the ACC has rejected your paperwork, you will receive a notice as well as additional information on how to resubmit your paperwork. You will not be able to continue the following steps until you have received proper approval.
4. Create an LLC Operating Agreement
If your LLC has two or more members, it should have an operating agreement. Although it’s not required to get an LLC, this outlines how the business is structured and will operate among the members.
Some of the sections you will typically find covered in an operating agreement include:
- Capital distributions
5. Create an EIN
The Employer Identification Number (EIN), also known as your Tax ID Number, comes from the Internal Revenue Service (IRS) and is an identifier for your business. It consists of a unique nine-digit number and is imperative for a business. The EIN legally allows you to:
- Open a bank account
- Apply for a business licenses
- File your tax returns
6. LLC Publication Requirements
According to Arizona LLC law, you must complete specific publication requirements to complete the process of setting up your LLC.
Notice of Publication
The ACC will send you a Notice of Publication to complete and send to the newspaper to run your ad. The average cost of running a newspaper ad will be anywhere from $60 to $120.
Unless the address of your Arizona Statutory Agent is located in Maricopa County or Pima County, you are required to notify the public of your LLC formation by running an ad in one newspaper through three consecutive publications.
The newspaper in which you publish your ad must be the same county as your statutory agent, and you must post the advertisement within 60 days of receiving your approval.
You can find a list of approved newspapers through the ACCs website.
Affidavit of Publication
Once your ads have run through three consecutive publications, the newspaper will then return an Affidavit of Publication. If the newspaper does not automatically send you one, you might need to call to request one. Make sure to make a copy of this to keep in your records.
While you used to be legally required to record your Affidavit of Publication to the ACC, the only requirement now is for you to have a copy of it on file with your business records. You can always submit the document via email or mail to the ACC for backup.
7. Tax Application and Business License
You may need to complete a transaction tax application through the Arizona Department of Revenue (ADOR). You can reference the ADOR website and the Arizona Commerce Authority Small Business Services website for details on these requirements.
Next, you will need to register your Arizona LLC within the city for which your business is located (or county, if unincorporated). Registering in your city will be for transaction privilege tax, income tax, and other business or occupational licenses required in your area. The Arizona Commerce Authority Small Business Services website can provide you with additional resources regarding taxes and licensing.
8. Business Bank Account
Lastly, you will need to open up a business bank account through your approved bank or credit union. The ACC will not accept any temporary checks that don’t have names printed directly on them, so fees associated with filing might have to be paid through a separate, established account.
9. Purchase Domain
Once you have chosen a unique name for your business, you can go ahead and purchase a domain name that matches your business entity.
Apply for an Arizona LLC Online
You have a few options when creating and registering your LLC. You can do it yourself (DIY) or use an online website that incorporates. You can easily apply for an LLC online. You have the option to do it yourself with the Secretary of State or use an online company to do it for you.
Arizona Corporation Commission (ACC)
To form an Arizona LLC, you will need to complete the Articles of Organization paperwork. You will need to submit all of the completed documentation to the ACC via their online services, fax, or mail.
If you are looking for assistance online, there are plenty of options out there for you. Some of the more prevalent business formation online service providers include:
ZenBusiness built its platform to meet the needs of your business throughout its lifetime. When you pay for their services, you’ll receive a personalized dashboard to your business to store documents, receive alerts, and manage your website.
ZenBusiness charges based on a tier system. There are three different tiers with pricing as follows:
- The Starter = $49 annually
- The Pro = $199 annually
- The Premium = $299 annually
IncFile provides you with a full suite offering startup services to best support your business formation.
Their pricing model also depends on the state you are filling. You can generate a personalized quote on their website by entering in the necessary information of your business.
LegalZoom is an online legal service provider that helps you to be able to create legal documents without having to pay the expensive lawyer fees. Some of the services they provide assistance to include business formation, copyrights, and trademarks.
LegalZoom has many different pricing options available. For their LLC service, pricing begins at $79 + the allotted state fee.
After Starting an LLC
Once you’ve started the process of forming your LLC, there are a few other pieces of business to handle. Make sure to keep in mind these following things and make sure you take care of them accordingly:
- Set up taxes
- Set up unemployment insurance
- Decide who handles your accounting
- Acquire permits
- Determine insurance policies
- Double-check Arizona law around hiring
- Open a bank account
- Apply for business licenses
Although you have followed the steps to creating your LLC, the job is not done. Following these additional steps will ensure the safety and security in the setup of your business.
Don’t go it alone. It’s easy to make mistakes when getting your business off the ground. Using an LLC formation service such as ZenBusiness as your go-to business solution will make things easy. From filing your documents to getting the advice you need to move forward, ZenBusiness is there every step of the way.
Once you’ve completed your LLC filing through the Arizona Corporation Commission and received your Certificate of Status via an online formation service such as ZenBusiness. What’s next?
You’ll need to figure out your brand voice and how you want to speak to your audience, create a logo, colors, branding, website, phone number, and how you will get the word out to the public.
If you’re in it for the long haul, trademarking your name should be on the list. Finally, once all the moving parts are in place, it’s time to schedule your launch. This could entail having a pre-sale or something different, but it’s always best to create a schedule and stick to it.
Get started with forming your Arizona LLC today with ZenBusiness.
How Much Does It Cost to Start an LLC in Arizona?
Forming an LLC in Arizona will cost $50 that will be paid directly to the Arizona Corporation Commission (ACC). This fee is associated with filing the Articles of Organization as required by the state.
How Long Does It Take to Form an LLC in Arizona?
The Arizona Corporate Commission will take anywhere from around 22-27 days to process the documents you submitted. After this time, you will receive a notification via mail on whether your paperwork has been approved and the next steps to take.
Can You Start a LLC on Your Own?
Yes, you can start forming an LLC on your own by following the step-by-step instructions provided in this article. For additional help, seek resources from online tools or by hiring a lawyer.
Do You Need a Lawyer to Start an LLC
No. You do not need a lawyer to start an LLC. It is entirely legal for you to prepare and file the necessary documents on your own. You can also utilize online business formation services, like those listed in this article, with ZenBusiness being at the top of the list.
Does an LLC Need to Make Money
LLCs are not required to have income or post any profits. Keep in mind that if an LLC business owner is claiming tax deductions without reporting income, this will likely flag the IRS to conduct an audit to determine if the LLC has been set up for the right reasons.
What Is the Downside to an LLC?
While LLCs reap the benefits of partnerships and corporations, there are some downsides to consider before forming one of your own. LLCs members are deemed self-employed and must pay self-employment tax contributions towards both Medicare and Social Security.