Starting LLC in Arizona: Peculiarities & Detailed Manual
Want to start an LLC in Arizona? It is a profitable decision for a business, as the state has waived corporate tax in favor of gross corporate income tax. So you’ve decided to start an LLC? Not sure how to initiate the process? To start an LLC in Arizona, you need to get ready for several stages.
We’ve prepared a guide for you with just six steps to form your LLC and to get success! You can also refer to the virtual LLC formation service.
Note: ZenBusiness is the best service to file the LLC. You’ll surely appreciate reasonable prices, company values, and other peculiarities.
An Arizona LLC: The Notion & Essence
Many Arizona business owners choose to start an LLC. So, unlike a corporation, they can take advantage of flexible management. We’re talking about the protection of personal assets that sole proprietorships and general partnerships lack.
The state of Arizona puts forward simplified requirements for registration and maintenance of LLC and invites business owners to choose the type of taxation. Do you still have doubts about the LLC?
6 Stages to Form an LLC Correctly
Stage №1: Choose Your LLC Name
The LLC name is a significant aspect, as it is the name of your company that makes the first and strongest impression on the audience of your potential customers! The name must be different from existing company names and must meet Arizona’s regulatory requirements. Now get started with the following aspects.
LLC name in terms of jurisdiction
The State of Arizona obliges business owners to include the abbreviation DDS or the phrase – limited liability company in the name. Please note that the terms corporation or registered are prohibited. In addition, you cannot use the designations of other forms of business: banks or law firms.
Take care of the explanations
You must include in the title an explanation of the nature of your business. For example, if you are engaged in the computers’ repairing, write in the LLC title – computer wizard. If you have any values or principles, also indicate this. For example, if you are farming, use the term natural, nitrate-free, etc.
So, you need to get a little creative and fully comply with Arizona’s legal requirements.
Stage №2: Hire a Registered Agent
A registered agent is called a statutory agent in Arizona and will help you to start an LLC. The agent can be an Arizona resident, natural or legal attorney responsible for sending and receiving legal documentation on behalf of the future company. A company representative can also be an employee of the company or its owner. The State of Arizona notifies:
A Statutory Agent is a person or entity appointed by an LLC or corporation in order to receive paperwork on its behalf. All companies in Arizona must appoint someone to this role according to the statute. For instance, when the entity is facing a lawsuit, its Statutory Agent can receive all the needed papers and hand them over to the entity. According to the law, every LLC and corporation must have an agent who officially lives in Arizona. The local Corporation Commission might dissolve businesses that fail to do so. The administrative notices from the commission are sent to the agent.
A registered agent guarantees an excellent reputation for your Arizona LLC. Also, if your business gets worse, Arizona can take legal action against it without notifying you. The registered agent will always receive appropriate notification and will be able to take timely measures to protect your interests as an attorney.
You should apply to the online service to get started a business in compliance with all regulations and requirements. So, you will have the opportunity to filter spam and protect your personal and contact information. If you use the ZenBusiness and Northwest Registered Agent to form an LLC, you will receive the free services of a registered agent.
Stage №3: Applying for Registration
To register a business in Arizona, you must file the Articles of Association with the Arizona State Secretariat. If you are anxious about your LLC formation, you can submit your documents for pre-processing, which will allow the Secretary of State’s office to advise you of the eligibility. It can be a good option if you get started for the first time in an LLC without consulting an attorney. Be sure to provide:
- The desired name of your business.
- Personal and contact details of the registered agent.
- Business management form.
- Personal and contact details of the manager of your company.
- Signature of the applicant and registered agent.
- Date of application submission.
Unfortunately, there is no way to fill out the paperwork over the web in Arizona. You will have to deliver a completed copy of this form to the next address (either in person or by mail): Arizona Corporation Commission Corporations Division 1300 W. Washington St. Phoenix, Arizona 85007
Cost to Form an LLC: You will have to pay a $50 filing fee to start an LLC in Arizona.
Processing Time: The waiting time in Arizona may vary depending on the season. According to the latest data from the processing times document, non-expedited filings would take around 16-18 days and expedited filings only take around 5-7 days. However, these estimates are subject to change every week. Follow here to find out the most accurate processing time at the moment.
Do not forget that the processing will only start after the local Corporation Commission receives all the needed documents. You can speed up the process by paying the expedite fee of an extra $35. Check this Articles of Organization guide provided by the commission for more details.
Stage №4: The Operating Agreement Background
While an operating agreement is not binding in Arizona, creating one could significantly improve the company’s climate. An operating agreement is a document that describes the structure of a project, the way it works, the rights and obligations of each partner.
This document reflects the consistency of partners and thereby reduces the chance of controversy and disputes. Therefore, it is significant that all members of the future LLC carefully read this document before joining the company.
An attorney can help draw up an operating agreement and determine the way income and liabilities will be distributed among the owners of your LLC. You will find more information about the operating agreement here. Prepare to enter the following information:
- Names of all participants.
- The rights and obligations of each of the listed participants.
- Description of procedures for voting or resolving differences between members.
- Regulations on the financial share of participation of LLC members.
- Description of the way you’re going to manage the LLC.
So, do not neglect this stage of LLC formation. It largely guarantees your safety and the observance of your rights by all members of the business project.
Stage №5: Tax Compliance
To conduct a business that you want to register as an LLC successfully, you need to comply with several tax requirements at various levels.
Requirements of Federal Significance
Does your LLC involve multiple owners? Then you need to take care of the EIN! The EIN, or Employer Identification Number, is a unique nine-digit number assigned by the IRS to US corporations. This number must be obtained by all business owners under whose leadership the hired employees work. A business owner can obtain an EIN from the IRS in person or by mail.
Your state’s cess requirements
LLCs that have only one owner does not need to pay income taxes. However, the proprietor needs to report those taxes on Schedule C of their individual income tax statement. LLCs in a partnership have similar pass-through taxes but they identify how much each member should pay according to Form 165. Businesses that prefer to be taxed as corporations are required to pay the Corporate Income Tax of Arizona, which is 4.9% by the time of writing.
There is also a sales tax in Arizona. It is official name is the Transaction Privilege Tax. It has to be paid by vendors in selected industries such as hotels, commercial leases, mining, and more. Companies that need to pay the state sales tax can find more details and apply here.
As for the use tax, it is levied on LLCs if they buy out-of-state items for commercial use (not for resale). It should be filed on the same form as sakes tax. Moreover, you might need to pay luxury taxes on certain products such as cigarettes or liquor. Read the official taxation basics guide provided by the government for detailed instructions.
Local Tax Business Demands
In addition to the above-listed taxes, you might also be obliged to pay local taxes in Arizona. It depends on the location of your company. The most frequent type of local tax is a property tax. They are evaluated by the property assessor of the county. Look for your county’s property assessor to check which documents you must file.
Stage №6: Getting Business Licenses & Permits
In the state of Arizona, LLCs do not need to receive a general business license. However, there are companies that sell specific goods or provide certain services that have to pay the privilege tax (check Step 5 for more information). In that case, they will have to apply for a TPT license. As soon as you receive it, you will be able to operate within the state without any problems.
In addition, the state complies with the federal and local licensing requirements, as well as industry-specific obligations. Therefore, you might need to get the right license for your field of business. Feel free to check all the license requirements in the state of Arizona here.
Other Stages for Business Owners After LLC Registration
After completing the six mandatory steps towards starting an LLC, you need to take care of the following.
Opening a business bank account
Separate your personal and LLC accounts. Thus, you will be sure of the safety of your personal and financial data. Besides, you won’t have any hassle when filing your charge returns. Your EIN will help you open a business account quickly, no matter what you choose a bank or credit union.
Business Insurance
All owners of companies/corporations, regardless of their form of management that attracts employees, must go through the compensation insurance procedure. All basic and detailed information is available with the Arizona Bureau of Workers’ Compensation.
This policy aims to protect the rights of workers who are injured at work and unable to work. It will not be superfluous to get a civil liability insurance policy, as well as pay attention to some other types of insurance.
Income reporting
As the name suggests, income reporting is the process of reporting the income you managed to receive from your company. Please remember to fill the form regardless of your financial success over the year. Entrepreneurs are obligated to do it even if they have not earned any money.
You will essentially complete your LLCs tax filing in Arizona when paying the privilege tax. Companies that operate in a single location only can fill out this form and send it by mail. Businesses with several locations must complete the form over the web here.
Referring to the services of a qualified accountant
Annual reports are not necessary for LLCs in the state of Arizona. In contrast to most of the other states, only corporations here are required to file them.