Form An LLC
Step 1) Verify & Secure Your LLC Name
First off, in order to launch a successful Arizona LLC, you need to give it the right name. Your business name needs to be catchy for branding purposes and legitimate for legal purposes. We go into depth on this topic in our LLC naming guide, but we’ll go over the legal basics below.
Legally, your business name must:
- Contain the words limited liability company or limited company, or the abbreviation LLC or L.L.C
- Not contain the words bank, credit union, deposit, savings association, building association, thrift or trust unless you’ve gotten approval from the Arizona Department of Financial Institutions.
- Be distinguishable from any other entity or trade name registered in Arizona.
For an exhaustive list of naming rules, you can visit the Arizona Corporation Commission website.
If you’re having trouble coming up with a name that captures your brand, don’t let that stop you from forming your LLC. For now, you can focus on the legal requirements and consider filing a DBA (doing business as) name after you’ve nailed down your branding.
What To Do:
Once you’ve decided what you’d like to call your LLC in Arizona, do a business name search to find out whether or not it’s in the cards. If your business name is available, you’ll be able to lock it down when you file your Articles of Organization.
Quick Note: Before you commit 100% to a name, you should see if there’s a decent URL available. Use Weebly to search your options. If there’s a quality domain name for purchase, we advise buying it right away because even if launching a business website isn’t on your radar right now, it’s going to be soon.
Step 2) Elect An Arizona Statutory Agent
When you file your Articles of Organization, you will be asked to appoint a Arizona Statutory Agent.
Your statutory agent will be responsible for receiving important legal documents like tax forms and service of process notices on behalf of your LLC. Your registered agent can be an individual resident of the state or a company that’s legally authorized to represent businesses in Arizona.
Arizona does give you the option to act as your own registered agent, but many business owners choose to appoint a professional instead. Here are a few things to think about before you decide to act as your own:
- You’ll have to maintain normal (9 am - 5 pm) business hours at the address you provide.
- If you run your business from home, you’ll be required to make your personal address public.
- You must keep up on important notices, dates, and deadlines.
- You could be served in front of your family or coworkers.
What To Do:
If you’re considering acting as your own registered agent, do some research, starting with our registered agent guide. If you decide you’re up for the task, go ahead and list your own name and address on your Articles of Organization.
If you’re leaning toward hiring a professional, we recommend doing so through an online LLC formation service. Many of these companies (like Northwest) offer up to one year of registered agent service free when you form your LLC with them.
Step 3) File Articles Of Organization
Now you’re ready to officially form an LLC in Arizona! You’ll do this by filing Articles of Organization with the state. To do so, you need:
- Your entity name and known place of business address
- Your statutory agent’s name and physical address
- The life period of your LLC (if there is no end date, you can leave it blank)
- The management structure of your LLC (member-managed or manager-managed)
- Your organizer’s name and signature (whoever is submitting the filing)
Arizona accommodates filing online or on paper. If you choose the online method, you won’t have to download or print anything out — you’ll take care of everything digitally, including the signatures and $50.00 filing fee. If you prefer the old-school approach, you’ll have to print out and complete the following forms, along with a $50.00 check:
- Articles of Organization
- Statutory Agent Acceptance
- Manager Structure Form or Member Structure Form
- Cover Sheet
Those forms need to be sent to the following address:
Arizona Corporation Commission
Corporate Filings Section
1300 W. Washington St.
Phoenix, Arizona 85007
Keep in mind that if you want to expedite your filing, you can send them an extra $35.00.
Step 4) Publication Requirement
New businesses in Arizona are required to publish a Notice of LLC Formation for three consecutive weeks in an approved newspaper in their county. This must be done within 60 days of formation. Note: this does not apply to Maricopa and Pima County businesses.
You are required to publish your LLC name, address, and Statutory Agent info. You need to state whether your LLC is member-managed or manager-managed, as well as the names and addresses of your manager(s) or members.
For more detailed information about Arizona's publication requirements, read this guide.
Step 5) Draft An Operating Agreement
Creating an LLC operating agreement is the only way for you and your members to fully define your roles and lock down your LLC’s management and ownership structure. Having this document in place will also give you all something to return to if a dispute or lawsuit arises.
Your operating agreement should outline the following:
- each member’s responsibilities
- how new members will be admitted
- how existing members may transfer or terminate their membership
- how profits and dividends are to be distributed
From there, you can add as many provisions as you want, provided they are not in conflict with Arizona business law. To access a free operating agreement and learn more about how this document works in Arizona, click here.
Step 6) Get An EIN
The Employer Identification Number (EIN), or Federal Tax Identification Number, is essentially a social security number for your company. State and federal agencies use this number to track your business activity.
Your EIN will come in handy when it’s time to:
- Open a business bank account
- File Federal and State taxes
- Hire employees
We think the best way to get an EIN is by using the free online application on the IRS website. We prefer this method because it’s the most efficient, but if you’d prefer to apply via phone, fax or mail, read through our guide to find out how.
Maintain Your LLC's Personal Asset Protection
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
You can protect your business with these two steps:
1. Opening a business bank account:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
2. Getting a business credit card:
- Helps you separate personal and business expenses.
- Builds your company's credit history, which can be useful to raise capital later on.
Reduce the Liability of Your LLC
Business insurance helps you manage risks and focus on growing your business. The most common types of business insurance are:
- General Liability Insurance: A broad insurance policy that protects your business from lawsuits. Most small businesses get general liability insurance.
- Professional Liability Insurance: A business insurance for professional service providers (consultants, accountants, etc.) that covers against claims of malpractice and other business errors.
- Workers' Compensation Insurance: A type of insurance that provides coverage for employees’ job-related illnesses, injuries, or deaths. In Arizona, businesses with one or more employees, excluding officers and LLC members, are required by law to have workers' compensation insurance. Get a free quote with ADP.
The final step is to obtain any permits and licenses needed to be fully compliant with the state of Arizona. Unlike other states, Arizona doesn’t issue general business licenses, and depending on your trade you may need to obtain an array of special permits on the federal, state and local level.
- Federal: The Small Business Association website provides a list of occupations that require licenses/permits and points you to the corresponding federal agencies. Their article on small business taxes is also a decent resource, although the IRS website provides the details you'll ultimately need.
- State: Fill out the interactive licensing checklist on the Arizona Department of Commerce website to figure out if your business activity requires you to apply for special licenses with the state.
- Local: If your specific county or city has any requirements not addressed by the state, you can find out by consulting with your local Chamber of Commerce.
It’s possible you won’t even need to apply for any license at all, but it’s worth checking now to be sure you’re conducting business completely legally!
What To Do:
If you’ve got a hunch that your business is going to need a whole mess of permits and licenses, you can always recruit the help of a business license service.
These services will do 100% of the research on your behalf, and send you all the applications along with helpful information on how to fill them out. We don’t recommend this for every entrepreneur registering an LLC in Arizona, but in some circumstances, it’s worth the extra cost so you can focus on other areas of the business that need your attention.
Reduce Administrative Burden
There will be many demands on your time once you start your business. With that in mind, it’s a good idea to streamline your workflow and reduce administrative overhead from the get-go. The two most important business tasks to get help with are:
Getting your books in order right up front will save you headaches in the future. At the very least, you can have a professional setup your bookkeeping and accounting for you. This will save you money and time in the long run.
There are all in one services that will do your bookkeeping/invoicing/tax filing for you all for one monthly fee. Mazuma ($95/month) is a reliable all in one tax service.
2) Employee Payroll
If you have employees, a payroll service will save you a lot of time and also save you from having to become an expert on state compliance or employee tax withholdings and filings.
Gusto is a reliable and good payroll service for small businesses.
Need Help Forming An LLC?
When you’re starting an Arizona LLC, it might be worth getting professional help.
You have several resources at your disposal, and it’s up to you to decide which you’d benefit from the most. That said, here are two of the most popular LLC formation services and our reviews of them:
–Northwest ($49 + state fee) = Best Price & Overall Value
– LegalZoom ($79 + state fee) = Best For Brand Recognition
Note that this guide for forming an Arizona LLC isn’t a legal document or legal advice. It’s for informational purposes and the information above is subject to change. For specific legal questions regarding how to form an LLC in Arizona, consult with a business attorney.