How to File an LLC in Arizona

Starting a business can be an exciting chapter filled with endless possibilities. However, many people may feel overwhelmed once their initial enthusiasm disappears, leaving them wondering how to get started. 

For small business owners, the best route might be filing as a limited liability company (LLC). An LLC is a type of business with fewer requirements than a regular corporation, giving owners more flexibility.

From Phoenix to Maricopa, filing an Arizona LLC doesn’t have to be a scary process. This article will break down each step so you can start in as few as 10 minutes.

Key Takeaways:

• An LLC has fewer requirements than a regular corporation, giving owners more management flexibility and tax benefits. 

• The IRS views LLCs as a “pass-through” entity, meaning all profits and losses pass through to their owners, and the company does not have to pay federal income tax.

• The LLC formation process includes filing Articles of Organization, choosing a statutory agent, creating an operating agreement, and getting an EIN.

What Is LLC Formation?

There are many benefits to forming a limited liability company. For one, the Internal Revenue Service (IRS) views LLCs as a “pass-through entity” instead of a separate tax entity like corporations. This means members report information on their personal tax returns.

The tax benefits make LLC formation appealing to small business owners. For example, all LLC profits and losses “pass-through” to their owners, and LLCs do not pay federal income taxes. However, while there are pros to liability protection and potential LLC tax savings that aren’t available to other business owners, there are some things to note.

LLCs owners must initially choose how they identify for tax purposes since LLCs side step paying average business taxes.[1] For example, according to the Arizona Income Tax Act of 1978, the Arizona Department of Revenue requires that LLCs choosing to be taxed as a corporation file an Arizona corporate income tax return each year.[2]

LLC owners can identify as one of four different tax filing statuses, as shown in the table below.[2] Note that a sole proprietorship is not the same as a single-member LLC.

Partnerships and sole proprietorships will file their taxes separately as they are both pass-through entities. The main difference is the number of people overseeing business operations and sharing profits, losses, and liabilities. This could be more appealing for small business owners who might not follow the default rules of business ownership and taxes the way corporations do.

While there are two different types of corporations, only one is considered a pass-through entity:

1. C Corporation

A C corp is the default corporation recognized by the IRS. It is taxed separately, meaning it is not a pass-through entity. It is a type of business that follows standard rules, regulations, and taxes according to the IRS’ default.

2. S Corporation

Alternatively, an S Corp has a unique tax status recognized by the IRS. As a pass-through entity, the business is not separately taxed, thus offering a specific set of tax advantages for business owners. Instead, the member will claim profits and losses through their own personal filing each tax year.

An LLC can take several different forms, which can also vary depending on the state. For example, Arizona allows individuals with specific skill sets to form professional LLCs, also known as PLLCs.[3] This can be a particularly enticing option for accountants, lawyers, and doctors who want to open and manage their firms and practices. 

In choosing which business structure best fits their legal interests, professional LLC owners must also check on state annual filing fees, sales taxes, and other state fees. No matter your chosen structure, filing an Arizona LLC can cost around $50-$85.

Step-By-Step Guide to Starting Your Arizona LLC

The filing process varies from state to state, so it’s essential to research what your state requires. You don’t want to find yourself paying unnecessary filing fees or missing required payments because you looked up the guidelines for the wrong place of business.

We’ll take you through starting an LLC in Arizona step-by-step, from choosing your unique company name to hiring a state-specific statutory agent and filing for an Employer Identification Number (EIN). 

Step 1: Choose a Business Name for Your Arizona LLC

Coming up with your unique Arizona LLC name comes with more responsibilities than just being creative and hoping no other business owner has already taken it. You should also consider registering your domain on the Internet, trademarking your business name, and reserving social handles. 

Note that an LLC differs from a DBA, which stands for Doing Business As. A DBA is a business that functions under a fake name. When creating an LLC, you are forming a company that operates as a legal entity under a legitimate name. LLCs provide more legal protections and freedom from liabilities than DBAs, which is why they appeal to entrepreneurs and small business owners.

Your LLC nameshould be distinct and individual.[4] You can check that no other business owner with our free business name search tool. While a seemingly simple step, this is very important because if someone else is already using the name, you could face legal consequences for taking it.

If your LLC name is available, you have two options to move forward: 

1. Reserve the name through the ACC website. Your reservation lasts for 120 days and holds the name until you properly submit the paperwork to form the entity.[5]

2. Submit your formation documents with the ACC to officially form your LLC.

After checking if the name is available, you can buy a domain name that gives you full ownership of your business’s online presence. Note that the ACC isn’t where you purchase or register domain names, and owning the domain name doesn’t mean you own the business name through the ACC.[4]

Step 2: Fill Out Arizona Articles of Organization

After claiming the rights to your LLC name and starting your business’s online presence, the next step is to submit your articles of organization. If the legal structure you’ve chosen for your LCC is a corporation, you must also submit articles of incorporation. All these forms are available through the ACC’s website. 

Applicants need to get a few critical pieces of information before submitting their paperwork to file articles of organization:[6]

• LCC’s registered name and business address

• Indication of whether it’s a regular or professional LLC

• Description of services provided by the LCC

• Indication of whether the LLC is member- or manager-managed

• Statutory agent’s name and address

• Signature from the LLC’s organizer

You must file your Arizona LLC formation paperwork with the ACC, not the Secretary of State. We can help you file your paperwork so you can avoid any costly mistakes. If you file independently, expect to pay $50 for the filing fee or an additional $35 for expedited processing.

The ACC staff will thoroughly examine and approve your entity’s formation documents. If your LLC is approved, you will get an approval letter, which acts as a notice of LLC formation. This letter will come with additional instructions on how to proceed with starting your business. If your application gets rejected, the notice will instruct you on how to resubmit your LLC application.

Step 3: Hire an Arizona Statutory Agent

Next, you will need to hire a statutory agent. Also known as a registered agent, this is the primary point of contact to receive legal documents. They will also be the registered address associated with your LLC. 

The ACC requires all corporations and LLCs in the state to appoint a statutory agent in Arizona.[7] Regardless of how your LCC identifies for tax purposes, you must designate a separate individual or entity to accept legal documents, correspond with government officials, and file compliance paperwork.

In a nutshell, this is what an Arizona statutory agent can do for you and your business:

1. Act as the main point of contact for legal correspondence

2. Correspond with government officials

3. File compliance paperwork according to deadlines

4. Support business owners and allow them to focus on running operations

5. Accept legal documents

6. Alleviate administrative burdens

7. Reduce liabilities by handling official paperwork

8. Serve as the main street address for your LLC

When starting and maintaining your own business, getting the paperwork right matters. You don’t want to risk filing the wrong type of business license and facing legal repercussions later on. Something as small as getting an abbreviation incorrect can severely impact your business.

We encourage LLC members to hire an agent rather than act independently. Our reliable and professional registered agent service is available in all 50 states. You won’t have to worry about ever missing a filing deadline, and your business remains compliant while you keep your privacy.

Step 4: Meet the Arizona LLC Publication Requirement

Every state has its own set of LLC formation rules, and Arizona is one of just a few that has a publication requirement. This section will help walk you through the Arizona publishing notices you should remember, including the publishing timeline and associated costs. 

To keep up with state legislation, Arizona LLCs must publish a legal notice announcing their business has been created. A popular place to do this is in a local newspaper, which will also help market the company and its service to the audiences in the surrounding areas.

The Arizona Department of State mandates LLCs publish notice of the incorporation in three consecutive publications.[8]  Depending on the media outlet, members can expect to pay fees from $60 to $300 per publication.

You don’t have to fulfill the publication requirement if your statutory agent is in Pima County or Maricopa County. The ACC publishes a notice on behalf of the LLC in these two counties, so the owner does not have to fulfill the publication requirement themselves or pay a publication fee.

After successfully publishing your LLC in three consecutive publications, the newspaper will send you a Certificate of Publication. Also called an affidavit, this proves that your business’ ads have run successfully. 

Failing to publish your LLC can have some severe consequences. Most severely, the state may dissolve your business if you do not comply with the publication requirements.

Step 5: Create an LLC Operating Agreement

After choosing your name, hiring an agent, filing your articles of organization, and fulfilling Arizona’s publication requirements, you should create an Arizona LLC operating agreement. This legal document verifies several items and helps officially validate the business.

A written operating agreement is the only document verifying who owns the company. Running a business entity can get complicated, so it is essential to explicitly state critical information like this. 

There are two ways an LLC can be managed:

1. Member-Managed 

A member-managed LLC means that the owner or owners are responsible for making executive decisions for the business. If there are multiple members, they must come to a consensus on how they run business activities where all individuals agree. Once you sign the agreement, each member should keep an original copy.

2. Manager-Managed

Alternatively, if some members want to refrain from participating in running the business or coming to agreements for the LLC operations, they can appoint a manager. An external party, another LLC member, or a combination of both can serve as the manager of the LLC and make operating decisions on behalf of other members. 

Members still have ownership even if you appoint someone else to manage on your behalf. The ACC also requires a manager-managed LLC to have at least one member listed if they own 20% or more of the business.[6] 

Ironing out these seemingly trivial details is vital, and there are different types of forms if you’re a single-member or multi-member LLC. See the table below for more information.

Step 6: File for an Employer Identification Number

Lastly, LLC formation requires members to apply for an Employer Identification Number (EIN). In some instances, the ACC may require businesses to get a federal Tax Identification Number (TIN) instead. Arizona business owners can find information on the Arizona Commerce Authority website to answer any questions regarding taxes. 

Similarly to an individual social security number (SSN), an EIN and TIN are unique numbers used to identify a tax-paying entity. While they sound very similar, know the difference between an EIN and a TIN. A TIN is a general tax ID, while an EIN is an employer ID number. Ultimately, an EIN is a type of TIN. The IRS uses each to identify different tax IDs to tell them apart.

In the case of forming your LLC, we’ll focus on the EIN. This unique, nine-digit number aims to identify your specific business when you file your tax return. No matter the legal structure you choose when registering your business, you must apply for this number to hire employees, open a business bank account, get a credit card, apply for required licenses, and report your taxes.

We can obtain your EIN for a small fee, or you can get an EIN online through the IRS. Here are some things you should be aware of when applying for your EIN:

• If you apply online, you do not need to fill out IRS Form SS-4.

• You can get your EIN in as little as seven business days, and completing the form electronically will result in quicker processing times.

• You can complete the form physically and send it by post, but it will lead to longer processing times. 

• You should apply for your EIN five weeks before filing your LLC tax return to have the number ready.

Let Us Handle Your LLC Paperwork

The Swyft Filings service is a one-stop solution to ensure the steps to form your Arizona LLC are done correctly, saving you time and energy to focus on your business. Applying for an LLC through our easy-to-use portal can take as little as 10 minutes. With over 300,000 businesses created since 2015, we know how to get your unique business up and running.

FAQs

How much does it cost to set up an LLC in Arizona?

Setting up an Arizona LLC will cost anywhere from $50 to $85 if you file yourself. The standard filing fee is $50, but owners can pay an additional $35 to expedite the process. Having someone else or a service file for you can cost more, but it may be worth paying to ensure it’s done correctly.

How is an LLC taxed in Arizona?

The way LLCs are taxed in Arizona varies depending on whether they choose to be taxed as a C corp, S corp, partnership, or sole proprietorship. Although LLCs provide professional services like other businesses, they are not treated as separate tax entities and benefit from “pass-through” taxation.

What are the benefits of an Arizona LLC?

Depending on your business needs, an Arizona LLC can offer many benefits. Small business owners might find them especially attractive because they are relatively inexpensive and easy to form compared to larger corporations. They can also be incredibly flexible in taxation, liabilities, ownership, and management since they operate on a smaller scale. 

How do you dissolve an LLC in Arizona?

The ACC requires members to submit an article of termination and a cover sheet by mail or in person when dissolving an Arizona LLC.[9] There is also an associated fee, starting at $35 to file and ranging up to $400 for a two-hour service. For more information, check out the ACC’s guide to terminating your Arizona LLC.

Bibliography:

1. Toptal. “C Corp vs. S Corp, Partnership, Proprietorship, and LLC: What Is the Best Business Entity?” Accessed January 17, 2023

2. Arizona Department of Revenue. “Corporate Income Tax.” Accessed January 18, 2023. 

3. State of Arizona Department of Real Estate. “How to Create a Professional Group (PC/PLLC). Accessed January 18, 2023. 

4. Arizona Corporation Commission. “Ten Steps to Starting a Business in Arizona.” Accessed January 18, 2023. 

5. Arizona Corporation Commission. “Application for Reservation.” Accessed January 18, 2023. 

6. Arizona Corporation Commission. “Articles of Organization.” Accessed January 18, 2023.

7. Arizona Corporation Commission. “Statutory Agent Acceptance.” Accessed January 18, 2023.  

8. Arizona State Legislature. “29-3201: Formation of Limited Liability Company, Articles of Organization.” Accessed January 18, 2023.

9. Arizona Corporation Commission. “Articles of Termination.” Accessed January 18, 2023.