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Entrepreneur’s Guide to Setting Up an Arizona LLC

Entrepreneur’s Guide to Setting Up an Arizona LLC

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Entrepreneur’s Guide to Setting Up an Arizona LLC

Are you in the process of starting a business and looking to form a Limited Liability Company (LLC)? If so, you’ve come to the right place.

The Limited Liability Company (LLC) is a popular business structure for businesses in Arizona. It provides personal liability protection and has the potential to save money on taxes too. With our guide, I’ll show you how to start an Arizona LLC without an attorney by breaking down the steps and answering some common questions.

Related: Guide to starting a business in Arizona

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Steps To Form An Arizona LLC

Step 1: Choose an LLC Name

The first step in forming an Arizona Limited Liability Company is making sure the name you want is available. There can’t be another LLC in Arizona with the same name, and if you pick a name that already exists when registering your LLC, a message will pop up, saying, “The entity name is not available,” which puts you back at square one.

Related: How to do an Arizona LLC name search

In addition to having a unique LLC name, there are a few other requirements to note when naming an Arizona LLC.

For starters, the legal name of the LLC must include the following words or abbreviations at the end of the name:

  • Limited Liability Company
  • Limited Company
  • LLC
  • L.L.C.
  • LC
  • L.C.

Additionally, the name may not contain the words or abbreviations; “association,” “corporation,” or “incorporated” or use words such as “bank,” “deposit,” “credit union,” “trust,” or “trust company” unless the LLC is registered to operate as such.

If you have a name you like but aren’t ready to file for the LLC, a name reservation can be made for up to 120 days before filing the LLC.  To do so, fill out the Application to Reserve Limited Liability Company Name with the Arizona Corporation Commission.

Step 2: Arizona Statutory Agent Information

A statutory agent (referred to as a registered agent or resident agent in some states) is an individual or company with a physical presence in the state of Arizona. The statutory agent acts as a point of contact to receive legal documents, tax notices, summons, subpoenas, etc., on behalf of the LLC.

An individual can be the Arizona LLC statutory agent. This can be the owner, family member, accountant, employee, etc.,  provided they are at least 18 years old, have a physical street address in Arizona, and are generally available to receive service of process during normal business hours.  The agent ensures that the company receives all important documents, such as tax forms, summons, summons, and other legal documents, in a reasonable time frame.

While many owners will fulfill this role, the agent’s name and address become public record, which brings a loss of privacy. This is more important for some entrepreneurs, especially when they are doing business from home or are still employed. Hiring a commercial statutory agent service like Northwest Registered Agent will help keep the owner’s names from being publicly listed.

An important item to note is that the Arizona statutory agent must accept the confirmation email or accept the appointment in writing. This will be completed by submitting the Statutory Agent Acceptance form from the Arizona Corporate Commission within seven days of receipt.  Not confirming will delay the filing of the LLC until the confirmation is accepted.

Related: What is an Arizona statutory agent?

Step 3: File the Arizona Articles of Organization

The paperwork to create an LLC in Arizona is called Articles of Organization.

To file, either download the Arizona LLC Articles of Organization (Form L010) or create an eCorp account on the Arizona Corporation Commission’s website. 

All faxed and mailed Articles of Organization will need to be sent with a cover sheet. A PDF of the required cover sheet can be found on the Arizona Corporation Commission website in the “Miscellaneous Forms” section.

Turnaround time for approving the Articles of Organization is typically around three weeks.

If you have questions, contact the Arizona Corporation Commission.
Phone Number: 602-542-3026
Email: filings.corp@azcc.gov

Related: How to fill out the Arizona LLC Articles of Organization

Tips for Filling Out the Arizona LLC Articles of Organization

When filling out the Articles of Organization, there may be a few sections that don’t know how to fill out. I’ll explain a few of the more difficult sections.

Effective date: By default, the LLC is effective on the date submitted.  If you prefer to have the LLC officially start at a later date (up to 90 days), enter that date in the field

Character of business: Here, you can select the activities the business will be engaged in.  If you can’t find one that is relevant or want to keep options open, choose “Any legal purpose.”

Duration: Most businesses intend to exist forever and would suggest “perpetual.”  If you have a specific end date in mind (typically used for investment-related businesses), choose the close date.

Known place of business: Include the physical address for the LLC. This has to be a physical street address in Arizona and not a PO Box or personal mailbox service. The known place of business can also be the same as the Statutory Agent’s street address.

Member structure: The Manager/Member Information section asks if the LLC is Member-Managed or Manager-Managed.

  • Member-Managed LLCs have an active involvement in the day-to-day operations of the business.
  • Manager-Managed LLCs are managers of the LLC hired by the members to run the business, similar to a CEO of a corporation.

Most LLCs elect an LLC member-managed management structure.

If you are worried about making a mistake when forming your LLC, or just don't want to deal with filling out state paperwork, an LLC formation service will help guide you through the process. My top recommended services include:

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What To Do After Setting Up Your Arizona LLC

Once the LLC has been formed, there are a few additional steps to take. Below is a list of the most common tasks.

Arizona LLC Publication Requirements

After the LLC is approved, it is typically necessary to publish an ad in a newspaper (Notice of Publication) to complete the registration process. There is no publishing requirement for businesses whose principal address is in either Maricopa County or Pima County.  LLCs in other counties are required to publish an ad in the legal section of a newspaper with general circulation in their county within 60 days of filing the Articles of Organization.  This ad has to run for 3 consecutive weeks.

After the ad has run, an Affidavit of Publication will be sent, which should be kept with your business records. Although it’s optional, it’s generally recommended to record the Affidavit of Publication with the Arizona Corporations Commission, so it’s officially filed.

The Arizona Secretary of State provides a list of approved newspapers.

Prepare an Arizona LLC Operating Agreement

The operating agreement is an internal document that governs the framework of an LLC.  This document covers ownership percentage, ownership rights, LLC member responsibilities, how profits and losses are distributed, and more.

There is no state law requiring an Arizona LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
  • Member’s personal liability protection may be diminished.
  • Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Learn more about the Arizona LLC operating agreement

Obtain an EIN

If the LLC will hire employees or is owned by more than one member, an EIN is required. 

The EIN or Employer Identification Number (also referred to as a Federal Employer Identification Number, FEIN, or Federal Tax ID Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes.

Related: How to register for an Arizona EIN

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original formation paperwork from the state showing the creation of the LLC.
  • Government ID of the member(s).
  • Depending on the LLCs age, an Arizona Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state.

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be various business licenses and permits to register for before starting. Some common registrations include:

  • Business license: Some cities require businesses to obtain licensing before they can start.
  • Professional license: In Arizona, there are certain that certain types of businesses such as barbershops, accountants, salons, and others, must be licensed by the state to provide those services.
  • Transaction Privilege Tax License (TPT): – Sometimes referred to as a sales tax, the Arizona Transaction Privilege Tax is a tax on businesses from the Arizona Department of Revenue for the privilege of doing business in Arizona.

Related: What business licenses are needed in Arizona?

File the Arizona LLC Annual Report

An annual filing requirement for Arizona LLCs to file an annual report with the Arizona Corporation Commission.  The annual report updates ownership information and other details.

Related: How to file the Arizona Annual Report

File the Beneficial Owner Information Report

Beginning in 2024, any individual who owns at least 25% or has “substantial control” of an LLC or corporation in Arizona or any other state must file the Beneficial Ownership Information (BOI) form with the Financial Crimes Enforcement Network (FinCEN). BOI reports are filed electronically through FinCEN’s website.

This material is property of StartingYourBusiness.com

Arizona LLC FAQs

How much does an Arizona LLC cost?

The initial cost to form an LLC in Arizona includes both the state filing fee plus the advertising publishing cost:

State Filing Fee: $50 for standard processing. Expedited processing is available for an additional cost.
 
Publishing Costs: Varies by newspaper, but averages between $60 – $130

How long does it take for an LLC to be approved in Arizona?

It normally takes 3 weeks for the LLC paperwork to be approved in Arizona.
 
Expedited processing reduces the filing time to 7 – 10 business days.

How much are the recurring Arizona LLC fees?

There are no recurring fees to keep the LLC active.

What happens if I don’t publish my LLC advertisement?

If the LLC does not comply with the Arizona publication requirement within 60 days of formation, the Arizona Corporations Commission will terminate the LLC. 

What is a Foreign Limited Liability Company?

An LLC that is physically operating in states outside of where it was formed. Physically operating means having a presence, such as having an office or employee. The LLC will need to register as a foreign LLC in each state where it plans to operate.

Related: What is a Foreign LLC?

What is a Professional Limited Liability Company?

Businesses that require state licensing, such as accountants, attorneys, podiatrists, physical therapists, acupuncturists, etc., often must file as a Professional Limited Liability Company (sometimes referred to as a Professional LLC or PLLC) instead of an LLC. Filing for a PLLC is very similar to that of the regular LLC.

Related: What is a Professional LLC?

Author

  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

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Entrepreneur’s Guide to Setting Up an Arizona LLC

Entrepreneur’s Guide to Setting Up an Arizona LLC

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