Starting a business in Arizona can be an exciting and rewarding experience, but at the same time, it can also be challenging and confusing. One of the first considerations when setting up your company is the cost, and this is especially true when it comes to an LLC. Given this, it is essential that we discuss in greater detail all the fees associated with forming an LLC, including having a professionally drafted operating agreement, even for a single-member LLC in the Grand Canyon State.
We will explain everything from filing fees to ongoing maintenance expenses and provide you with the information you need to make the right decision about forming an LLC in Arizona. From the benefits to requirements, like taxes and filing an annual report. As a result, you will have a better understanding of the Arizona LLC fees and will be able to navigate the process with confidence.
An LLC, or Limited Liability Company, is a business setup that merges personal asset protection with the tax advantages and simplicity of a sole proprietorship or partnership. This type of company can have one or more members and is a distinct legal entity that is separate from the individuals who own it. You can form an LLC by submitting Articles of Organization with the state.
An LLC provides several key benefits, including:
Generally speaking, forming an LLC is quite affordable, considering other investments you'll have to make in your business. You will face two basic types of expenses: LLC startup costs and LLC maintenance costs. The cost of starting an LLC mostly depends on the state in which it is formed. On the other hand, the maintenance of your LLC entails a few continuing expenses.
The good news is that Arizona LLC fees are relatively inexpensive compared to other states. Still, there are several different expenses that you need to be aware of when setting up your business, and it's essential to understand what each one is for and how much it will cost.
The state filing fee is the first Arizona LLC cost you will encounter. In fact, you won't be able to submit your Articles of Organization to the Arizona Corporation Commission (ACC) if you do not cover this expense. The filing fee ranges between $40 and $500 depending on the type of LLC you are forming and the number of members you have. As of 2020, the average filing fee for an LLC in the United States is $132, but in Arizona, it's $50 for standard LLCs.
In this section, we will take a closer look at the different Arizona LLC costs you can expect to encounter when setting up your business.
The starting costs include all the expenses and fees associated with forming your LLC, including the state filing fee, name reservation fee, publication fee, registered agent fee, and operating agreement fee. On average, you will need around $500 to create an LLC in Arizona, but this can vary depending on the specific circumstances of your LLC.
The LLC filing fee is a one-time fee paid to the state to form a standard LLC, and in Arizona, it usually amounts to $50. You will need to pay it to be able to submit your Articles of Organization to the ACC.
However, you actually have two options with filing fees: ordinary ($50) or expedited ($85). The amount you spend ($50 vs. $85) and the mode of filing (by mail vs. online) determine how long it takes to establish your Arizona Limited Liability Company. Simply put, if you pay the lower fee, you will wait 14–16 business days. On the other hand, if you decide to pay for the expedited process, it will take 7–9 business days.
Although going through this step yourself seems like a good way to save money, hiring a legal services provider is well worth the extra cost. Working with a professional reduces the chance of submitting papers incorrectly, which could result in additional charges to correct the application or reapply.
Arizona is one of the few states in the US that asks for LLC Publication Requirements. That means newly established LLCs must post a Notice of LLC Formation for three weeks in a row in an authorized newspaper in the county where their central office is located. You must do this within the first sixty days after forming your business.
That said, the publication cost varies by county and ranges from $30 to $300. The only exceptions are LLCs with their main offices in Pima or Maricopa counties — they do not have to publish a notice of LLC formation.
If you’ve decided on a company name but need more time to file your LLC formation forms, you can secure it by submitting an Application to Reserve LLC Name form. The cost to file this application expeditiously is $45, while the cost to file by regular is $10. With this request, you can stop anyone from using the name of your choice for up to 120 days. Do note that this fee is non-refundable and can't be transferred or applied to any other document.
To register a DBA name, you will need to submit a Trade Name Application. This fee is also known as a fictitious name and costs $10. It is not usually required when forming an LLC in Arizona, but business owners who want to create different brands under their main LLC choose to pay the fee and make a fictitious name too.
You might also need to acquire a Certificate of Good Standing, otherwise known as a Certificate of Status or Certificate of Compliance. This document confirms that your LLC has complied with all legal requirements and is currently eligible to conduct business in the state. Even though not all companies will need one, this certificate is often necessary to:
Arizona charges $10 for a Certificate of Compliance, and you can order it with the Secretary of State. However, if you want to speed things up a bit, you can pay for the expedited processing, which is an additional $45.
Arizona LLCs must request a Transaction Privilege Tax (TPT) license from the Arizona Department of Revenue and the city in which they want to conduct business. The TPT is a charge for the right to conduct business within the state. This Arizona LLC cost varies based on your business type and the cities and counties in which it is situated.
Your company might also need federal, state, and municipal permissions and licenses to operate legally in Arizona, depending on your sector and location. That said, this process can be a bit challenging for two reasons.
First, the number of requirements changes depending on your specific business. Second, it can be difficult to determine which licenses and permissions you need because so many similar kinds are available. Therefore, it would be beneficial to get professional help to see you through this process.
At Wyoming LLC Attorney, we offer to assist you in identifying the specific licenses, permits, and registrations that may be required for the type of business you own. That way, you will ensure your Arizona Limited Liability Company can safely conduct business from day one.
An LLC's ownership and management structure are described in the Operating Agreement that serves as the governing document. It is a contract between all the members of your company and includes details about the ownership, distribution of profits, and the way the LLC is run. Whether single-member or multi-member, every LLC should create an Operating Agreement, store it alongside their other legal documents, and provide a copy for each member.
Everyone can make this contract on their own for free. However, it would be better to contact professionals to ensure everything is done properly regarding the division of earnings and losses among owners. Usually, you can engage a local lawyer or have legal service providers perform the process for anywhere between $50 to $200. It is a small and necessary cost that will prevent future arguments and ensure every member is aware of the terms and obligations.
After creating your LLC, you must acquire an EIN (or Employer Identification Number), which serves as your company's equivalent of a Social Security number. Simply put, it enables you to pay taxes, open business bank accounts, pay employees, and get credit cards.
In some cases, business owners opt to submit papers directly to the IRS and acquire an EIN for free that way. However, if you want to avoid applying through the IRS, you can always pay your formation provider an additional fee to handle the procedure. This service usually costs $60–$70.
You can order copies of your Arizona Limited Liability Company documents from ACC for $5 plus an additional $0.50 for each page. Moreover, certified copies are available for $15 plus $0.50 a page.
If you operate a registered LLC in one of the other US states, and you want to expand to Arizona, you must register your company as a foreign LLC. You can do this by submitting a Foreign Registration Statement and paying a $150 fee.
When it comes to maintaining an LLC in Arizona, you should keep in mind there are annual fees you will be expected to pay. These ongoing expenses are necessary to keep your LLC in compliance and in good standing with the state.
Luckily, Arizona is among a handful of states that do not ask for annual reports. Nevertheless, depending on your type of business, there can be license or permission fees.
LLCs must pay taxes just like any other person or organization. That said, an LLC does not pay the federal government directly for its share. Instead, taxes are taken as a pass-through income from the owners' earnings. However, LLCs are able to deduct some initial expenditures (up to $5,000), such as legal fees, market research charges, office space, equipment, and so forth.
States typically tax profits from LLCs in a similar manner to how the federal government does it — through members' personal tax returns. When it comes to Arizona LLC taxes, they can come in a variety of forms, such as payroll taxes or state taxes. It would be best to work with some of the experts from Wyoming LLC Attorney to determine which taxes your company needs to cover.
The agent serves primarily as your point of contact with the state. More important, though, is that they are in charge of accepting Service of Process if your company is sued.
Any adult at least 18 years old who resides in the state where the LLC is established and is available during business hours may act as the registered agent. That means you can be your own registered agent (sometimes referred to as a statutory agent) if you want to avoid paying the fee. Nevertheless, many business owners choose to employ a registered agent service because it provides privacy, compliance, and efficacy in keeping your Arizona Limited Liability Company up and running.
As mentioned above, fees associated with forming an LLC can vary depending on the state in which the LLC is formed. Take a look at some of the examples.
The cost to form an LLC with the Secretary of State ranges from $40 to $500 across the US.
Depending on your state's requirements, publishing costs can be between $40 and $2000. For example, in Arizona, Nebraska, and New York, entrepreneurs face additional charges compared to other states. In essence, LLCs in these states must issue notices in one or more newspapers distributed among one or more cities or counties for a predetermined amount of time.
If you want to create an LLC in Alabama, you will have to reserve the name and pay a $10–$28 fee. This fee is not obligatory in any other US state.
Some states charge LLCs an annual fee (also called a franchise tax). This is often a flat tax, although, in some states, it may change depending on the yearly profits of your LLC. For instance, California has a minimum $800 annual franchise tax, while Delaware charges a $300 franchise fee.
The majority of states demand that LLCs produce an annual or biannual report containing any changes to the LLC's name, address, or ownership. States have different fees for these filing reports, but the annual average is about $100.
Most US states require LLCs to select a registered agent after they complete the certificate of formation. If you choose a service provider to act as your registered agent, you will have to pay a fee that ranges from $100 to $300 a year.
Among a number of business structures you can choose, LLCs offer plenty of benefits. Some of them include personal asset protection, pass-through taxation, flexible management, no restriction on the number of members, and no requirement for annual meetings and formalities. It's a perfect solution for small business owners and entrepreneurs who want to protect their personal assets and have more control over their business while also enjoying the tax benefits and simplicity of a sole proprietorship or partnership.
Opening an LLC is an important step for any business owner. But before you venture into the process, you should have a clear understanding of the Arizona LLC cost and all the expenses associated with it, like state filing fee, name reservation fee, publication fee, registered agent fee, and operating agreement fee. That way, you will have the resources you need to get your business up and running smoothly. By understanding the Arizona LLC fees, you can take full advantage of having a separate legal entity that provides personal liability protection and tax advantages.
If you need additional help or have any questions about forming or maintaining an LLC in Arizona, we invite you to schedule attorney time with one of our experienced team members. Our basic package covers all the necessary components to aid you in establishing your business. Take advantage of our expertise and form an LLC now!