How to form an LLC in Arizona in 6 easy steps
Arizona is known for beautiful natural landscapes, sprawling national parks, and delicious Mexican grub. And it is also a wonderful place to start a business!
The following 6 steps will give you a general idea of what it takes to establish a Limited Liability Company (LLC) in Arizona and hopefully answer any looming questions you may have about the process.
1. Check if your business name is available
Every LLC needs a business name. That’s one of the most significant parts of the formation process. You must conduct a name search to ensure your business name is not already used. The State of Arizona sets forth some requirements for naming an LLC.
- LLC names must satisfy the requirements of Arizona Statute A.R.S. § 29-602.
- LLC names shall contain the words "limited liability company" or "limited company" or the abbreviations "L.L.C.,” "L.C.,” "LLC,” or "LC.” It shall not contain the words "association,” "corporation,” "incorporated,” or an abbreviation of those words.
- If you are a Professional LLC–typically used by lawyers, accountants, and other professional service businesses–your name shall contain the words "professional limited liability company" or one of the following abbreviations: "P.L.L.C.,” "P.L.C.,” "PLLC,” or "PLC,” in upper- or lowercase letters.
If you reserve your business name, it is not the same as a trade name or Doing Business As (DBA) name. A name reservation gives you time to form a business entity. Whereas a trade name may give you other rights, including trademark protection.
2. File Articles of Organization
Congratulations! You are officially an LLC owner. Now, you need to file the Articles of Organization. The filing fee is $50, and it’s a one-time fee–no need to keep paying every month or year! Processing the LLC articles is 15 to 17 business days. You will need to provide the Arizona Corporation Commission (ACC) with the following:
- Cover sheet
- Your business entity type (LLC or Professional LLC)
- Entity name
- LLC services (if you are a Professional LLC)
- Statutory agent (registered agent) information
- Street address for place of business
It is required by Arizona state law that the statutory agent service (or registered agent service) of choice accepts the appointment by an LLC by filling out a Statutory Agent Acceptance form and submitting it to the Arizona Corporation Commission ecorp.
You will also need to indicate whether you are manager-managed (or single-member LLC) or member-managed, also called multi-member LLCs. A manager-managed LLC is typically overseen by one person, whereas a member-managed LLC is overseen by all members who have a stake in the business.
Now, if your LLC is formed in another state or country, you will need to submit a Foreign Registration Statement. This does require a little more information than the Articles of Organization. For this form, you will need to provide the following:
- Business structure
- LLC name in state or country of formation
- Arizona LLC name
- Professional LLC services (if applicable)
- Country or state in which LLC was initially formed
- Date of the original formation
- Purpose of business
- Arizona statutory agent information
- Business address
- Jurisdiction of formation
Some business activities are exempt from a foreign LLC. These include but are not limited to: selling through independent contractors, securing or collecting debts, and defending or settling a lawsuit.
3. Write your operating agreement
According to the Arizona Corporation Commission, an operating agreement is not required for LLC formation. However, it is advised that you have one if you do not wish to be solely governed by the LLC statutes currently in place–which may not address all of your needs as a business. The difference between having or not having an operating agreement becomes greater when voting power comes into play.
The LLC Operating Agreement requires the following information:
- LLC name
- Management structure: Member-managed or manager-managed
- Management duties: Oversight of business transactions and operation guidelines
- Distribution of finances: How profits and losses are distributed amongst members.
- Dissolution: How the business will be dissolved if members leave the business.
- Succession planning: Identifying positions within the organization
- Severability: Description of how unenforceable aspects can void the rest of the agreement and the procedure for this action.
If you look at sample operating agreements, you may also find a section detailing capital contributions made to the company by a member(s). =
4. Publish Notice of Incorporation
State law does not require LLCs to file a Statement of Information or annual report. However, you will need to publish a Notice of Incorporation. This notice includes the business name and address and the name and address of the registered agent.
This announcement will typically be published in approved newspapers, and you can find a complete list here. Arizona businesses must wait for the Arizona Corporation Commission to send an approval notice with publication requirements and instructions.
5. Pay your taxes
All LLCs must pay corporate income tax to the Arizona Department of Revenue. That being said, you will need to obtain an Employer Identification Number (EIN). This can be obtained from the Internal Revenue Service (IRS), and you will need this number come time for filing federal income tax and state taxes. If an LLC does not have an EIN, then the member or manager in charge of the business entity will need to provide a Social Security Number.
The corporate tax rate in Arizona currently sits at approximately 6.9% of net income. You may also have additional LLC tax obligations—such as Transaction Privilege tax (or sales tax) and business taxes—which we will discuss more in depth below.
6. Wrap up other regulation and sales tax requirements
We’re almost to the finish line! Depending on the type of business, you may need to obtain a few additional types of legal documents for your Arizona LLC. Let’s say you are opening a bar in Tucson. You will need an Arizona state liquor license, as well as a food service license. You may also want to look into a license for hosting musicians should you wish to have live entertainment at your establishment.
If you are going to be accruing business expenses, you will need to set up a business bank account. Many banks will outline how to open a bank account for an LLC, so do some research before your visit. Once you have your business bank account, you can apply for a credit card to cover any business-related expenses.
Get LLC insurance in minutes by following these steps
So, you now know what it takes to start an LLC in the State of Arizona. So, all you need to do now is protect it with LLC insurance. Huckleberry offers several options to help you get the right coverage for your business.
Here’s how to get started:
- Visit Huckleberry.com and click on the “Instant Estimate” button. Here, you can get quotes for various insurance coverage types.
- Type in your industry, so Huckleberry knows what insurance coverages are right for you.
- Answer a few questions about your LLC, including payroll estimates, revenue projections, and more.
In less time than it takes to tour the Grand Canyon, Huckleberry will provide you with quotes for multiple small business insurance options.
In need of workers’ comp coverage? Use our quick workers’ comp rate estimator to get a free, no-commitment cost estimate.
Setting up an LLC is simpler than ever for Arizona entrepreneurs, and the state has provided new business owners with plenty of helpful resources to get through the process. Most people choose to establish their company as an LLC for excellent liability protection, so it’s wise to continue to protect your new venture with small business insurance. Hopefully, we have answered all of your burning FAQs, and we wish you all the luck in the world as you embark on this next chapter as a business owner!
Whether you’re looking to enroll in workers’ comp coverage online or you need a general liability policy for your company, Huckleberry can help. And within just 5 minutes!
Now that your LLC is off the ground, it’s time to offer yourself peace of mind and enroll in the small business insurance policy that works best for you and your business.