Arizona has become a popular place to form an LLC because of its low cost and ease of formation. The state offers several benefits to entrepreneurs who want to incorporate their businesses.
LLCs are often confused with C corporations or partnerships. While they share some similarities, they also differ significantly. This article will go into how to specifically start an LLC in Arizona alone.
To start an LLC specifically in Arizona, you first need to register your company with the ACC. You then need to select a good statutory agent who will receive legal documents and communications from your state.
Then you’ll need to prepare a good operating agreement and file it with the IRS. Finally, you’ll have to try and publish the notice of your LLC company in an approved style newspaper.
With its business-friendly climate, scenic state parks, and friendly attitude toward businesses, Arizona could be the perfect place to start your new venture.
To set up an LLC in Arizona, there are some things you should know about. You must file articles of organization with the Secretary of State within 30 days of forming the company.
You must pay a $50 filing fee to register as an LLC. You must then pay annual fees ranging from $25-$75 depending on the type of LLC you form. If you’re going to incorporate in Arizona, you’ll also need to pay an additional $100 per year in franchise taxes.
What Is An LLC?
LLCs are limited liability companies that provide owners protection from lawsuits. They can be used for many business purposes, including, corporations, partnerships, and sole proprietorship.
Limited Liability Companies (LLCs) are one of the most common forms of business organization. An LLC is a type of corporation that allows individuals to limit their personal exposure to risk by limiting their liability.
An LLC may offer more flexibility than other legal structures such as sole proprietorship or partnership. For example, it can have multiple members that each own a percentage of the company. It can also have managers that oversee operations.
An LLC is not subject to double taxation like a corporation. Instead, profits are taxed only once when distributed to shareholders.
The owner(s) of an LLC does not need to pay taxes on any income earned by the entity. However, if the LLC earns money through activities conducted within the state, then it must file tax returns.
The main advantage of forming an LLC over other business organizations is that it provides greater flexibility. Unlike a corporation where all decisions are made at the top level, an LLC gives you more control over how your business operates.
You can set up an LLC without having to go through costly corporate registration procedures. You will still need to register your LLC with the Secretary of State’s office before you can operate it.
If you plan to use an LLC for a new business venture, you should consult with a lawyer about what steps you need to take.
Arizona Requirements For Forming An LLC
To form an LLC in Arizona, you will need to meet certain requirements. These include:
- Have a minimum of two members. A member is someone who owns shares in the LLC.
- File articles of incorporation with the Secretary of State.
- Pay fees to the Secretary of State. Fees depend on the number of members in the LLC.
- Register the name of the LLC with the U.S. Patent & Trademark Office.
- Set up a bank account for the LLC.
- Open a checking account for the LLC. The bank account will serve as the primary source of funds for operating expenses.
- Obtain a federal Employer Identification Number (EIN).
- Apply for a sales tax permit.
- Determine whether you need to obtain a liquor license.
- Decide whether you need to get insurance.
Naming Your Arizona LLC
A business entity can be named anything as long as it doesn’t infringe upon another person’s rights. You should consult an attorney before naming your business.
You can register your unique business name by selecting a name from the list below. Once registered, you can add your company logo.
The business name cannot contain any of the following words: state, department, agency, bureau, office, division, section, or branch. You must also get your business license before you open up shop.
Choose a name that is easy to remember and spell. Also, make sure the name doesn’t violate any trademark or copyright laws.
There are many ways to get started. You can start an LLC by filing an application with the Secretary of State’s office. Or, you can file a paper return with the IRS instead. Either way, there are several steps involved.
But, once you’re done with those steps, you’ll have a new company ready to do business.
You may use any combination of upper- and lowercase letters. You may not use the word association. You may not use any of the other prohibited words. Your LLC name must be limited liability company, LLC, L.L.C., L.C., LC, or LLC.
Domain name searches show that there are many options for choosing a business name. Some are already taken by other companies, but some aren’t. There are also plenty of social media handles available for the same business name.
Choosing A Registered Agent
An Arizona LLC needs a specific statutory agent. Statutory agents are people who represent the company when it receives official legal papers. In this case, the company is an LLC.
The agent must have an address in Arizona. He must be on-site and available to accept documents. The agent must fill out the acceptance form with the articles of the organization.
You must have a unique registered agent who is physically located in Arizona. This person receives official documents and relays them specifically to your LLC’s leaders. Your unique registered agent doesn’t have to necessarily be your LLC headquarters.
Agents can be individuals or corporations or limited liability companies (LLCs). They need a physical address that is in Arizona, but a PO Box won’t work. An agent needs to sign up in writing.
Businesses should hire an attorney who specializes in corporate law to handle their legal needs. Having your own attorney keeps you tethered to your office roughly all day long, preventing you from going out and meeting new clients or having to take time off.
Hiring an attorney also allows them to take care of your legal matters, including any lawsuits filed against you.
As long as you’re okay with sharing your name & address on the public record – you can be your own Registered Agent in the state of Arizona. You’ll have to maintain regular business hours to accept the service process -in person.
However, if worried about missing an important Legal Notice when you’re not available, or don’t want to share your personal Address on Public Documents – it’s worth hiring a Registered Agent Service that will put its Business Address on Forms instead of yours.
Arizona requires that an agent maintain a physical street address in the state. He/she should be available at this address during regular business hours. He/she accepts service of process and other legal documents on behalf of your company and forwards them to you promptly.
File The Articles Of Corporation
An LLC is a business entity that allows individuals to operate as separate legal persons. In order to start an LLC, you must first create a company. Once created, you can then decide what type of company you want to be (professional or regular).
Then you fill out the Articles of your Organization, which lays out the details of how the company will function.
A professional LLC must be registered with the Secretary of State. It is managed by the manager, or managers, who may also be members.
Members must sign the articles of the organization. The articles must be filed with the Secretary of State before the LLC becomes a legal entity.
File your articles of organization with the Arizona corporation commission. Once approved, this official step creates your Arizona limited liability company.
The state requires 4-6 weeks before articles of organization can be filed. Additional $35 fee for expedited processing.
The articles of the organization should include the owner’s name, address, state registration number, and an acceptance-specific form. The LLC should be either a member-managed or manager-managed LLC.
The actual mailing address for the business should also be included. The LLC should be named something simple, such as “ABC Company”.
Creating An Operating Agreement
Operating Agreements are important documents for any company. An operating agreement is a document outlining how an LLC will be run.
A written operating agreement is beneficial because it provides clarity and allows you to settle any disputes that may arise. Operating agreements can include, but are not limited to, the listed items.
The duration of an LLC can range from 1 year to 10 years. The name and address of the LLC should be included in the document. The name and address of the statutory agent should also be included. The purpose of the company should be stated.
Information about the articles of the organization should be included. The information about the members should be detailed.
The procedure for admitting new members should be included. The management of the LLC should be detailed. The indemnification clause should be included. Liability clauses should be included.
Arizona requires all LLCs to publish a notice of formation for three consecutive weeks in the newspapers of the county where the LLC’s principal place of business is located.
An LLC must provide the following information: name, principal business address, state of incorporation, type of organization (manager/member), and names and addresses of managers or members.
The first thing you are going to need to do is set up your Arizona Operating Agreement. This document spells out how the LLC will operate. It also gives you some protection if something goes wrong.
Ownership agreements protect your company from lawsuits and other liabilities. Customize them to fit your needs. Managers may be appointed to manage your company.
A well-drafted agreement should specify the rules and the overall procedures to govern an LLC. It should also create a plan of succession for the company if a member dies.
And it should be drafted in such a way as to provide for the transfer of ownership of the company upon the death of a member.
Getting An EIN Number
A 9-digit number is used to identify businesses. This number helps you file taxes at the state and national levels. You must get this number before opening a business bank account.
A business must register with the federal government if it wants to be taxed. To do this, you must get an EIN. This number allows the business to file taxes and make payroll. You should get an EIN before opening a business bank account.
You can actually get your LLC’s FEIN number online, by mail, or via phone, but if you’re not fond of dealing with that particular governmental agency, they can do it for you.
Only the LLCs that employ people or are even taxed as types of corporations must obtain their EIN style number.
But most LLCs do actually need the EIN specifically to get the bank account. And obtaining the EIN also can help to protect you from the need to give out your private social security number to any vendors and any other strangers.
Your EIN is a unique number assigned to your business. It is used by the IRS for tax reporting. To obtain an EIN, you must first file a Form SS-4 application with the IRS.
Once approved, you will receive a letter confirming your EIN. You may also be required to pay a fee to renew your EIN annually.
Frequently Asked Questions
Do I Need A Business License?
Your LLC must get a license if you want to do business in Arizona. You need to check out the guide to see what kinds of licenses your LLC needs. Consult with a city clerk for details on local licenses and permits.
What Are The Tax Requirements?
Depending on the type of business you run, you might need to actually file taxes. You should check if any requirements exist before filing.
A TPT license is required to sell products in Arizona. Sales taxes are collected by the state, but rates vary depending on the business type and city.
You must file a professional annual style report with the state if you have more than 10 employees in Arizona. Your business must also pay unemployment tax and employee withholding tax.
Arizona LLCs are actually taxed specifically as the Pass-Through Entities by a rough default. This will mean that the LLC alone is actually not taxable.
Instead, these profits of it pass through the overall business and to the specific owners, who will then report the overall profits as an income.
If you’re looking into starting an LLC in Arizona, this article has covered the basics.
But there are many things to consider when forming an LLC, so don’t hesitate to contact guides that can help you if you need the extra guidance along with this information.