In 2020, Arizona registered a record-breaking 83,707 new limited liability companies. That’s nearly double the amount compared to previous years! Now is clearly an opportune time to start a limited liability company (LLC) in Arizona.
An LLC is a business structure designed to protect its owners’ personal finances. It offers the monetary protection of a corporation and the flexibility of a private business. LLC owners can often enjoy special tax benefits as well!
Learn how to get an LLC in Arizona and decide if you need an Arizona LLC operating agreement.
Is an LLC Operating Agreement Required in Arizona?
An LLC in Arizona doesn’t require an operating agreement, but it’s an important internal document for your business. The operating agreement is vital in outlining:
- Ownership division
- Profit distribution
- Management methods
- Member obligations
- Company regulations
If you don’t have an Arizona operating agreement in legal situations, the rules will default to the State laws. It can leave you and your company in a vulnerable position. This can especially affect multi-member LLCs!
An operating agreement is vital even if you’re the sole owner of a company. In the event of any disputes or legal proceedings, you’ll be more aware of how they will proceed.
Arizona Operating Agreement Laws
You can find the general operating agreement laws in Section 29-3105 of the Arizona Revised Statutes. But let’s look at some legislation that is unique to Arizona.
Types of LLCs
Arizona allows the formation of three different limited liability companies.
- A single-member LLC has a single owner
- Multi-member LLCs have several different owners
You can also register a professional limited liability company (PLLC) in Arizona. It’s specifically for individuals who will be providing professional, licensed services. Doctors, veterinarians, and accountants will need to establish a PLLC.
Check with the Arizona Corporation Commission (ACC) to see which type of LLC you should choose!
The name of your limited liability company must contain any version of these phrases or abbreviations:
- Limited Liability Company
A professional LLC’s name must contain any of these phrases or abbreviations:
- Professional Limited Liability Company
The name cannot contain corporation, incorporated, or association. Any abbreviations of these words aren’t allowed either. You can reserve your LLC’s name with the Arizona Corporation Commission for 120 days.
A statutory agent is a person or corporation that will accept legal papers on behalf of your company. These are usually legal documents, but they can also be tax-related.
In Arizona, a statutory agent can be any of the following:
- Any permanent, full-time resident of Arizona
- A corporation or LLC registered in Arizona
- A foreign business authorized in Arizona
There are specific businesses that provide statutory agent services. You can also nominate a lawyer, friend, family member, or even yourself!
How Much Is an LLC in Arizona?
Arizona offers some of the cheapest fees for forming an LLC. You’ll only need to pay the articles of incorporation filing fee. Domestic applicants pay $50, while foreign applicants will need to pay $150.
An optional cost is the name reservation filing fee. If you apply by post, you’ll pay $10 or $45 online. Same-day service will cost you $210, next-day service will be $110, and the 2-hour service for $410.
How to Form an LLC in Arizona
If you’re wondering how to register an LLC in Arizona, the answer is very simple! Follow these six steps, and you’ll quickly be the proud owner of a limited liability company.
Step 1 – Reserve Your Name (Optional)
Arizona doesn’t require LLC name registration before submitting your articles of incorporation. This means you can state your company’s name when submitting your entire application.
But if you want to reserve your name while you prepare the documents, you can do that! A name reservation with the Arizona Corporation Commission lasts for 120 days. It prevents any other individual or company from using your chosen name.
If you want to proceed with a reservation, the first step is to check the ACC Entity Name Search. Corporation laws state you must choose a unique name that isn’t held by another business. You also need to follow the special naming legislation mentioned above.
To apply through mail, download the application to Reserve LLC Name from the ACC website. Then send the completed form with a cover letter to Arizona Corporation Commission, Corporations Division – Examination Section, 1300 W. Washington St., Phoenix, Arizona 85007.
Or, for a faster option, apply online at the ACC website! While the cost is a little more, the expedited service is worth it.
Step 2 – Nominate a Statutory Agent
The next step is nominating your statutory agent. We’ve already covered your three options for choosing an agent. Once you’ve selected an agent, you’ll need to file a Statutory Agent Acceptance form.
This form is usually filed together with your articles of incorporation. You can download the Statutory Agent Acceptance Form M002 from the ACC website. Your agent will need to sign the form to officially accept the position.
Step 3 – File Articles of Incorporation
Filing your articles of incorporation is an integral step in the process. Once your submission is approved, you’ll be an official owner of an LLC! If you don’t receive approval, the ACC will provide a list of reasons and steps to take in the future.
You can choose to submit your entire application packet by mail. The fees are the same as the online submission.
- Download the articles of incorporation form
- Fill it out online (no handwriting)
- Attach your Statutory Agent Acceptance and cover letter
- Include the $50 fee by check, money order, or credit card information
- Send everything to Arizona Corporation Commission – Corporate Filings Section, 1300 W. Washington St., Phoenix, AZ 85007
To submit your documents online, head to the ACC website and create an eCorp account. You’ll be able to upload your documents, fill out the proper forms, and complete your payment.
Step 4 – Create Your Operating Agreement
Luckily, the operating agreement isn’t legally required in Arizona. You don’t need a lawyer to draw up a contract, meaning you can use our Arizona operating agreement template! Fill in the required information and circulate the document to all members of your company.
Step 5 – Apply for an Employer Identification Number (EIN)
After your articles of incorporation get approved, you’ll need your EIN application. This registration with the IRS will identify your LLC as a business for tax purposes. If you don’t have employees, you might not need an EIN.
But an EIN can be helpful in other regards like business banking and taxation, so it’s a good idea to apply. You can apply online or by mail through the Internal Revenue Service.
Step 6 – Satisfy Arizona’s LLC Publishing Requirements
A unique element of Arizona LLC formation is the publication requirement. The rule states that your notice of LLC formation should be published within 60 days in an Arizona-based newspaper.
The ACC provides a helpful list of approved newspapers to choose from. But if you’re registering your LLC in Maricopa or Pima counties, you can skip this step!
Arizona LLC Operating Agreement Template
Now that you know how to create an LLC in Arizona, are you ready to start? Use our LLC operating agreement template below!
LLC Operating Agreeement