Choosing to form an LLC for your Arizona business is an excellent decision. It can also be a daunting prospect if you are unfamiliar with the various steps required to form an Arizona LLC. Missing a step or making a mistake along the way can be costly, both in terms of time and money. A better understanding of the LLC formation process, including the costs involved, is the best way to avoid problems along the way.
So, What’s the total cost when starting an LLC in Arizona? The total expense may vary depending on the unique nature of your business. Nevertheless, some costs involved in registering an Arizona LLC will apply to all newly formed companies. Forming an LLC can be a confusing and expensive process. However, having a clear understanding of the process or using an LLC formation service will dramatically reduce confusion and eliminate frustration when setting up your LLC. Because the cost of forming an LLC differs depending on the state in which it is created, you need to know what to expect when specifically registering an LLC in Arizona.
The legal creation and registration of an Arizona LLC is a complicated process involving multiple important steps. The following is a brief overview of the most significant steps and the costs associated with taking each action.
One of the first steps in your Arizona LLC formation is deciding on a name for your company. The name you ultimately select may be one that you are currently using, or it might be something entirely new. This name, however, must be officially available for use. To find out if a chosen name is available, you will need to conduct a name availability search on the Arizona Corporation Commission (A.C.C.) website. Searching for the availability of a name is a free service.
Your Arizona LLC name must also comply with several state requirements. The name must include “Limited Liability Company” or the abbreviation “LLC,” “L.L.C,” “L.C.,” or “LC.” If you are forming a professional LLC, the name needs to contain the words “Professional Limited Liability Company” or the abbreviation “P.L.L.C.,” “P.L.C.,” “PLLC,” or “PLC.” The name must also be distinguishable from other registered businesses and reserved names.
When you have settled on an available name, you can reserve that name by filing an Application to Reserve Limited Liability Company Name on the “Name Reservation” page of the A.C.C. website. An alternative is to complete the paper application and file the form in person or by mail. You must pay a $10 fee to reserve a name. The optional expedited service costs more. Reserving your name gives you 120 days within which to complete the formation and registration of your LLC.
The name you use to operate your business may differ from the formal, legal name of your LLC. This is often known as using a “Doing Business As” or “DBA” name. Although Arizona does not allow you to register a DBA, you can register a trade name.
If you want to use a trade name, you will need to perform another availability search, this time with the Arizona Secretary of State (AZSOS) on the “Entity Search” website. If your trade name is available, you can fill out a Trade Name Application on the AZSOS website. There is a fee of $10 for registering a trade name with the Arizona Secretary of State.
If your trade name is approved, you will receive a “Certificate of Registration” by email. An approved trade name is only good for five years. If you operate under a trade name, do not forget to renew your registration prior to the expiration of the five-year period to avoid losing the right to use the name.
Articles of organization are essential to the formation and daily operation of an LLC. They set forth the rights and powers of LLC members as well as the duties, liabilities, and obligations of all parties.
You can complete the articles of organization for your LLC online through the Arizona Corporation Commission website. You will need to create an account to use the online forms. Once completed, your articles of organization may be filed online, in-person, or by mail.
The cost of filing your articles of organization is $50 unless you need expedited service. In that case, you will pay an additional $35.
Arizona also requires notice of your newly formed LLC to be published in one of the state’s approved newspapers. It must appear in three consecutive issues, starting within 60 days of receiving notice from the Arizona Corporation Commission. There will be a publication cost; however, the expense varies depending on the newspaper you select.
Every Arizona LLC must appoint a statutory agent (commonly referred to as a “registered” agent in other states) and that agent must accept the appointment in writing by executing a Statutory Agent Acceptance Form. Your statutory agent is responsible for receiving all legal notices, documents, and correspondence on behalf of the LLC and informing the LLC of the existence of these papers.
The LLC itself cannot act as the statutory agent; however, an individual member of the LLC can serve as the agent in his/her individual capacity at no cost. Given the important duties and responsibilities of your statutory agent, you may decide to use a professional service, in which case you will pay an average yearly fee of $199 to $400. We offer statutory agent service for an annual fee of $199.
Although an operating agreement is not legally required when forming an Arizona LLC, creating one is highly recommended. Moreover, once executed, an operating agreement becomes a binding contract under Arizona law governed by A.R.S. Section 29-3105.
An operating agreement goes a long way toward preventing disputes and eliminating confusion while you operate the business. Your agreement may cover everything from ownership and profit sharing to liability protection and management structure.
Of course, you can create your own operating agreement for free or pay an attorney to write one for you (which could easily cost $1,000 or more). Another option is to create your operating agreement as part of our overall LLC formation service.
Depending on the type of business you establish, you may have additional expenses when creating your LLC and operating your business after it is officially formed. While not all of these costs will affect your LLC, it is important to know which ones apply. This will help keep your business running smoothly – and legally.
The State of Arizona does not require a general business license to conduct business in the state; however, your specific type of company may require additional licensing or permits to operate legally. For example, you may need to apply for a Transaction Privilege & Use Tax (TPT) license, a Marijuana Excise Tax (MET) registration number, or various permits to ensure that your business remains in compliance with all local and state laws. The Arizona License Compliance Program is an excellent resource to help you determine if any additional state or local licensing or permitting regulations apply to your business.
Almost all states require an LLC to file an annual report with the state. This is an informational report used to verify that the business remains in operation and in compliance with all laws and regulations. Filing the annual report typically incurs another ongoing fee when you operate an LLC. One important advantage of forming an Arizona LLC is that you are not required to file an annual report. It is important to note, however, that this is the current Arizona situation. This requirement may change over time and it’s essential to stay in good standing with the state and maintain annual compliance in the case the requirement will change.
For a small business owner forming an LLC, the necessary costs can seem overwhelming. The good news is that many of these expenses are deductible for federal tax purposes. Some costs that you may be able to write off include:
Always consult with a professional financial advisor or certified public accountant to be certain what expenses and fees are deductible for federal or state tax purposes.
To wrap up the cost of forming an Arizona LLC, the following are the most common fees. Remember, however, that the costs and fees you incur may vary, depending on factors such as the type of business and your specific location, whether you need an expedited processing, etc.
Also, keep in mind that all filing fees are nonrefundable, and cash is only accepted at the Phoenix office for in-person submissions.
Fee/Service | Cost |
LLC Filing fee | 50$ (85$ for expedited processing) |
Filing fee for registration of foreign limited liability company | $150 ($185 for expedited processing) |
Name reservation (optional) | 10$ document fee (plus a $35 expedited processing fee if filed online, $100 for next-day service, $200 for same-day service, or $400 for two-hour service) |
Transfer of name reservation | $10 |
Trade name registration (optional) | 10$ |
Registration of trademark or service mark | $15 |
Operating agreement (optional) | 0-1,000$ |
Statutory agent registration | no charge unless you need expedited processing, which is $35 |
Statutory agent service (optional) | 199$-400$ yearly |
Publication cost | Depends on the newspaper in which the notice is published |
Business licenses & permits | Starting at 50$ |
Between the complex steps involved and the costs associated with the process, the thought of forming an Arizona LLC can be intimidating. Nonetheless, it is often the best thing you can do for your business. Not only does it provide liability protection for members, but it can also establish a clear management roadmap that decreases the likelihood of costly disputes.
To make the entire process more straightforward and less stressful, you may choose to use an LLC formation service like the one we offer. We can walk you through the process step by step, providing expert guidance along the way, to ensure that each step is completed without any errors. Best of all, the expense of using our service can be written off as a tax deduction, making it an even more attractive option when forming your Arizona LLC.
Contact us to learn more about how we can help get your Arizona LLC created, registered, and operating quickly and efficiently.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness. It also does not indicate any affiliation between Tailor Brands and any other brands, services or logos.
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