This article will give you an understanding of how to form an LLC in the State of Arizona and regulatory and tax requirements thereafter.
Unlike several other states where businesses are formed and registered through State government sites, Arizona business entities, corporations are regulated through the Arizona Corporation Commission ACC. Within the ACC, the Corporation division grants LLC status of doing business in Arizona. In the state of Arizona, the LLCs do not file annual reports whereas the corporations do.
Eligibility to form an LLC in the State of Arizona
One or more person can form an LLC in the Arizona by filing Articles of organization.
An article of organization is a document that defines how a company is registered, operated and owned. .An operating agreement is created which contains the rules for the internal affairs and management of the company and the rights and duties of the members.
The first and foremost requirement for creating your LLC is to be filed an article of organization. It includes following information:
- Name of your business
- Type of your business
- Statutory agent if appointed. A statutory agent can be an individual, or a corporation or an LLC that is authorized to transact business in Arizona. You can hire some professional firm services as statutory agent. If an individual is hired as an agent, he must be based in Arizona with a permanent resident here.
- Complete mailing address of the principal place of business in Arizona. PO Box address is not acceptable.
- Duration of your business. However, you can leave this column blank as uncertainty exists in every business.
- You have to disclose on Articles whether your LLC is member managed or manager managed. A member managed LLC have at least one member and give members an authority to act on behalf of LLC.
Similarly, if you have a business structure where decisions are taken by the manager, then you are running manager managed LLC. Your company will be having at least one manager who has authority to act for the LLC and most day-to-day decisions are made by a majority vote of the managers, with each manager having one vote.
Depending upon the management of your business, you have to fill up a structure attachment available at ACC site that needs to be attached to the Articles of organization. This is a simple form which requires information regarding the name of the business along-with details of the manager/ members. Please check the ACC website for the forms.
What is the method and prescribed fee for filing Articles of organization?
You can file your application online or by mail. The Arizona Corporation Commission ACC has online filing option for LLCs. All forms and filing options are available at corporation website. A non-refundable filing fee of $ 50 is charged for Article of organization. If you want your application to be processed on urgent basis, then $ 85 fee is charged for the same.
How long will the processing time take?
Your LLC formation will come into effect at the time your application along with the supporting documents is received, processed and filed. Usually processing time for LLC filing is 2-3 working days.
Do I need to publish that Articles of Organization has been filed?
Yes, unlike some other states, Arizona has a statutory requirement that you once your company Articles of Organization have been approved by the authorities and you receive an approval notice for the same, you are required to publish a notice in a local newspaper for three consecutive weeks.
Why do I need an operating agreement?
It is a verbal or written agreement between the members of the LLC regarding the business operations and conduct of its business. That agreement signifies the consent among all members for profit and loss sharing. As such there is no mandatory requirement to have an operating agreement for a single member LLC but it is crucially important for LLC having more than one member because of profit and loss sharing, contributions of members. You can always consult a professional to advise upon whether you need one or not.
What are the details of than operating agreement?
Following are some of the details that you are required to include in your LLC operating agreement:
- Full name, complete mailing address of your business.
- Particulars of the registered agent of the company.
- Complete address of the registered office of the LLC.
- Business purpose and duration of the LLC.
- Details of the contributions each member make to the LLC.
- Details regarding the sharing of profit and loss of the LLC.
Do I need to open a bank account for my LLC?
Yes, and for opening a bank account, you will need to obtain an Employer Identification number, EIN by applying on Internal Revenue Service IRS website. Further, if you have more than one member LLC, then your bank account application should be supported by the operating agreement.
What are the requirements for business and professional licensing?
Depends on the city laws, requirements where your business is registered and conducted, you will obtain a business or professional license that the city requires. The Commerce Authority Small Business Services issues business and professional license in the State of Arizona.
What are the reporting requirements for my business in Arizona?
As such there is no annual reporting requirement in the State of Arizona for your newly established limited liability company, but there are several other tax return formalities that you will have to fulfill as per your LLC type.
Taxation Requirements in the State of Arizona:
Like some other states, Arizona also do not charge sales tax, but has a similar tax that is called Transaction Privilege tax TPT. So if you, after registering your entity as LLC, are in the business of buying and selling goods, you are subject to a tax that is levied on the seller of the good instead of buying. The seller than pass this tax to the consumer in the retail price, hence, making it more like sales tax.
Further, you have to know one thing that this tax is on a state level and you might be subject to further TPT at your city or municipal level.
For tax purpose, your LLC is classified any of the entity structure (i.e. corporation, limited liability partnership or S corporation. You are required to file income tax return form as per your LLC type. You are suggested to consult a tax specialist for the same.
Other Taxes in the State of Arizona
There are several other taxes in the state depending upon the nature and structure of your business. There is an employee withholding tax levied upon LLC who hires employees for its business.
Further LLC is subject to Income tax which is levied upon the personal net income. Several rates are applied ranging from 2.59% to 4.54% on various income slabs.
Do I need a special permit to submit my tax payment and tax return?
Yes, you will be needing Tax ID or EIN if you have opted for, your LLC to be taxed as Corporation and you want to submit your tax returns and tax payments to the department of revenue.
