Starting a Corporation in Arizona | What You Need to Know


Steve Bennett
Steve Bennett
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Start a Corporation in Arizona

In Arizona, starting a corporation can benefit entrepreneurs looking to establish a separate legal entity for their business. Incorporating your business provides liability protection for its owners and offers potential tax benefits and a professional image. This comprehensive guide will walk you through Starting a Corporation in Arizona, from choosing a corporate name to fulfilling ongoing compliance requirements. Some people consider starting a corporation since it has advantages and benefits rather than Starting an LLC in Arizona.

Webinarcare Editorial Team will help you gain knowledge in starting a corporation with thorough research and market study. It would be best to cross-check all the factors in this article before forming a corporation.

What is a Corporation in Arizona?

A corporation in Arizona is a business organization recognized as a separate legal entity from its owners, also known as shareholders. When a corporation is formed, shareholders invest capital by purchasing shares of stock and, in return, become partial company owners. The corporation is managed by a board of directors elected by the shareholders to oversee the company’s operations and make important decisions. Corporations in Arizona are required to have at least One directors. One of the main advantages of a corporation in Arizona is that it provides limited liability protection to its shareholders, meaning their assets are not at risk if the corporation incurs debt or is legally sued.

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Common Types of Corporations

Before you start with a corporation, you should know what type of corporation you will form. There are several different forms of corporations you can take into consideration, depending on your corporation’s objectives and ownership structure.

C-Corporation

C-Corporation is the most known type of incorporation. They have almost all corporate distinguishing characteristics. Profits are distributed to corporate owners who are taxed at an individual level. The corporation is taxed similarly to a business unit.

S-Corporation

S-Corporation in Arizona is set up similarly to a C-corporation but has different tax implications and owner limits. An S-Corporation has no more than 100 stockholders and is not taxed separately. These business units must also file paperwork with the Internal Revenue Service (IRS) to obtain their status.

Nonprofit Corporation

Religious, educational, and charity institutions frequently use nonprofit businesses to run their operations without making a profit. Thus, a nonprofit corporation is exempt from paying taxes. The nonprofit organization’s gifts, contributions, or cash are reinvested in the company to fund its growth, future endeavors, or operations.

It is recommended to Start a Corporation in Arizona if you would like to provide limited liability protection to your shareholders rather than Arizona LLC. However, you may want to consult to LegalZoom’s Business Attorney before starting a business.

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How to Start a Corporation in Arizona

To start a corporation in Arizona, you must follow the below steps that, include choosing a corporate name, hiring a Statutory Agent, appointing directors, filing for Articles of Incorporation, creating corporate bylaws, holding the initial board of directors, issuing stock, obtaining required licenses and permits, registering with state tax agencies, and annual reporting and ongoing compliance. All these steps are basic ones. It can be changed depending on the type of corporation you form and the nature of your business.

Step 1: Choosing a Corporate Name

The first step in starting a corporation is choosing an available name that complies with Arizona naming rules. Most states require that the name of a corporation be distinguishable from other registered business names and include a corporate designator such as “Corporation,” “Incorporated,” “Company,” or an abbreviation thereof.

Here are some guidelines you must follow while naming your corporation in Arizona-

  • Your business name must contain entity identifiers, such as “Incorporated,” “Limited,” “Corporation,” or “Company,” or an abbreviation, such as “Inc.,” “Co.,” or “Ltd.”
  • Exclude any words in your business name, such as “Trust,” “Bank,” “Credit Union,” or “Trustee,” or words related to a government agency, such as “FBI,” “State Department,” or “Treasury.”

To check the availability of your desired corporate name, you can search the Arizona Secretary of State‘s business name database and Business Name Search in Arizona. If the name is available, you may choose to reserve it for a specific period of 120 days by filing a name reservation application and paying the online name reservation fee of $45 and mail name reservation fee of $45. If your corporation plans to operate under a name other than its legal name, you may also need to register a fictitious or “doing business as” (DBA) name.

The DBA filing can be done by several methods. Check Arizona Trade Name Handbook for more details., which costs around $10 for filing and $3 for each duplicate copy.. In addition, the DBA’s validity in Arizona is five years, which you can file in Arizona Secretary of State.

You can check out How to File a DBA in Arizona for clearer understanding.

Step 2: Hire a Statutory Agent

Hiring a Statutory Agent is essential in starting a corporation. Statutory Agent is a person or company responsible for receiving important legal documents, tax notices, and other correspondence on behalf of your corporation. They ensure that your corporation remains compliant with state regulations and requirements. There are Arizona Statutory Agent Services to check in forming Arizona Corporation. We reviewed some of the best-registered agent services and provided features as an add-on with their packages.

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Step 3: Appointing Directors

Corporations in Arizona are required to have at least One directors, though some states may require more. Directors are responsible for overseeing the corporation’s management and making major decisions on behalf of the company. In Arizona, directors must be at least 18 years old and do not need to be state residents.

When appointing directors, it is essential to consider individuals who are knowledgeable, trustworthy, and capable of making sound business decisions. Maintaining a record of appointed directors, including their names, addresses, and terms of service, is also a good idea.

Step 4: Preparing and Filing Articles of Incorporation

After you appoint the initial board of directors in your Arizona corporation, the next step is to write and file a Articles of Incorporation. In writing, the Arizona Articles of Incorporation, the corporation name, principal place of business, the purpose of business, Statutory Agent contact information, and the names and addresses of incorporators and initial board members, should be written.

To officially form your Arizona corporation, you must prepare and file Articles of Incorporation with the Arizona Secretary of State. The Articles of Incorporation is a legal document that outlines essential information about your corporation, such as its name, address, purpose, and details about its stock.

The specific requirements for Articles of Incorporation vary by state, but generally, the document must include the following:

  • The corporate name
  • The purpose of the corporation
  • The name and address of the registered agent
  • The names and addresses of the initial directors
  • The number of authorized shares and their par value
  • The name and address of the incorporator(s)

Once the Articles of Incorporation are complete, please submit them to the Arizona Secretary of State’s office, along with the required filing fee. Fees vary by state, but in Arizona, the Articles of Incorporation filing fee costs around $60 for filing in-person and by mail. It is crucial to provide accurate and complete information on this document, as errors or omissions may result in delays or rejection of your filing.

  • Online Filing: There’s no online filing available.
  • Offline filing: Send the form by mail or drop it in person to Arizona Corporation Commission, Corporate Filings Section, 1300 W. Washington St., Phoenix, AZ 85007

Step 5: Creating Corporate Bylaws

Now you are done filing Articles of Incorporation in Arizona, the next step is to draft corporate bylaws. While not always required by law, creating corporate bylaws is essential in establishing Arizona corporation. Bylaws are the internal rules and regulations that govern the corporation’s operations and management. They outline the rights and responsibilities of directors, officers, and shareholders and provide guidelines for holding meetings and making decisions.

Key provisions to include in your corporate bylaws may include:

  • The corporation’s purpose and principal place of business
  • The roles and responsibilities of directors, officers, and shareholders
  • The process for appointing and removing directors and officers
  • The procedures for holding annual and special meetings
  • The methods for amending the bylaws and Articles of Incorporation
  • The procedures for issuing stock and maintaining shareholder records

Once the bylaws are drafted, they must be adopted by the corporation’s board of directors. Keeping a copy of the bylaws with your corporate records and updating them to reflect changes in the corporation or applicable laws is essential.

Step 6: Holding the Initial Board of Directors Meeting

The initial board of directors meeting is a crucial milestone for your Arizona corporation. During this meeting, the directors will adopt the corporate bylaws, elect officers, and make other key decisions to set the foundation for the corporation’s operations.

The agenda for the initial board meeting may include the following:

  • Adopting the corporate bylaws
  • Ratifying any pre-incorporation actions taken by the incorporator(s)
  • Electing corporate officers (e.g., president, vice president, secretary, treasurer)
  • Designating a corporate bank account
  • Authorizing the issuance of stock
  • Approving necessary licenses, permits, and tax registrations

It is essential to keep detailed minutes of the initial board meeting, documenting the decisions made and actions taken. These minutes should be stored with your corporate records.

Step 7: Issuing Stock

Corporations in Arizona are required to issue stock to their owners, also known as shareholders. When preparing to issue stock, you must determine the number of authorized shares and their par value, as outlined in your Articles of Incorporation. You may choose to issue different classes of stock, each with its rights and privileges, such as voting rights and dividend preferences.

The process for issuing stock typically involves the board of directors approving a stock issuance resolution, determining the price per share, and recording the issuance in the corporation’s stock ledger. Maintaining accurate and up-to-date records of all stock transactions, including transfers and cancellations, is crucial to ensure proper ownership tracking and compliance with securities laws.

Step 8: Obtaining Required Licenses and Permits

Depending on the nature of your corporation’s activities and location, you may need to obtain various licenses and permits to operate legally. These may include federal, state, and local requirements, such as:

  • A Federal Employer Identification Number (EIN) for tax reporting and employee withholding purposes.
  • State sales and use tax registration, if your corporation sells taxable goods or services
  • Professional or occupational licenses for specific industries (e.g., healthcare, construction, food service)
  • Arizona Business Licenses, zoning permits, and health department approvals

Researching and obtaining all required Arizona licenses and permits before commencing operations and maintaining compliance with any ongoing renewal or reporting requirements is essential.

Step 10: Registering with State Tax Agencies

In addition to obtaining licenses and permits, your Arizona corporation may also need to register with various tax agencies. This may include registering for sales and use tax, obtaining an Employer Identification Number (EIN) in Arizona for payroll tax purposes, and filing state income tax and franchise tax returns.

An EIN will serve as the tax ID for your Arizona corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Arizona can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

Each state has tax requirements, so consult a tax professional or Arizona Department of Revenue for guidance on your specific obligations.

Step 11: Annual Reporting and Ongoing Compliance

Once your Arizona corporation is up and running, you must fulfill ongoing reporting and compliance requirements to maintain good standing. This may include filing Annual Report with the Arizona Secretary of State, updating your corporate records to reflect changes in directors or officers, and staying current on any required licenses or permits.

In addition, it is essential to stay informed about changes in corporate laws and regulations that may impact your business and to seek professional advice when needed.

Paying Your Taxes in Arizona

Even if you have established your corporation in Arizona, pay your taxes and keep everything up to date so you won’t pay any penalty. Unlike an LLC, there is a corporate tax that every corporation in Arizona has to pay. On the other hand, they must pay income taxes based on their business income. Some other types of taxes in Arizona are sales tax, franchise tax (not applicable to all the states), and other state taxes.

Cost of Forming a Corporation in Arizona

In forming a corporation in Arizona, a filing and Annual fee must be paid. Without it, your corporation won’t operate. A corporation’s initial filing fee may vary from state to state. However, in Arizona, it costs $60 for filing in-person and by mail. The corporation in Arizona also has to file an Annual Report (though it might not be mandatory, it is recommended to file one). Ensure you comply with all the necessary fees and costs so your corporation will run successfully and smoothly.

FAQs

What is the process for incorporating in Arizona?
The process for incorporation in Arizona involves filing Articles of Incorporation with the Arizona Corporation Commission.
Can I incorporate my business in Arizona if I am not a resident of the state?
Yes, you can incorporate your business in Arizona even if you are not a resident of the state.
What type of corporation should I choose for my business in Arizona?
The type of corporation you should choose for your business in Arizona will depend on your specific needs and goals. Options include C corporations, S corporations, and nonprofit corporations.
What is the filing fee for incorporating a business in Arizona?
The filing fee for incorporating a business in Arizona is $60 as of 2021.
How long does it take to incorporate a business in Arizona?
Incorporating a business in Arizona typically takes two to three weeks if you file the paperwork directly online.
Do I need to register my corporation with the state of Arizona every year?
Yes, you need to file an Annual Report with the Arizona Corporation Commission every year after incorporating your business in Arizona.
What information do I need to provide when filing Articles of Incorporation in Arizona?
The information you need to provide when filing Articles of Incorporation in Arizona includes the name of the corporation, the purpose of the corporation, the names of the directors, and the address of the primary place of business.
Can I change the name of my corporation after incorporating in Arizona?
Yes, you can change the name of your corporation after incorporating in Arizona by filing Articles of Amendment with the Arizona Corporation Commission.
Are there any restrictions on who can serve as a director of a corporation in Arizona?
There are no restrictions on who can serve as a director of a corporation in Arizona, as long as they are at least 18 years old.
Do I need to get a business license before incorporating my business in Arizona?
No, you do not need to obtain a business license before incorporating your business in Arizona, but you may need one depending on the nature of your business and where you plan to operate.
Can I incorporate my business in Arizona online?
Yes, you can incorporate your business in Arizona online by filing Articles of Incorporation through the Arizona Corporation Commission website.
What is the minimum number of directors required for a corporation in Arizona?
A corporation in Arizona must have at least one director.
Do I need to have a registered agent in Arizona to incorporate my business in the state?
Yes, you must have a registered agent with a physical address in Arizona to incorporate your business in the state.
Is there a residency requirement for directors or officers of an Arizona corporation?
There is no residency requirement for directors or officers of an Arizona corporation.
How do I dissolve my corporation in Arizona?
You can dissolve your corporation in Arizona by filing Articles of Dissolution with the Arizona Corporation Commission.
Can I incorporate my business myself, or do I need to hire an attorney?
You can incorporate your business yourself in Arizona, but it may be helpful to consult with an attorney to ensure that you meet all legal requirements.
What is the statute of limitations for filing a lawsuit against a corporation in Arizona?
The statute of limitations for filing a lawsuit against a corporation in Arizona is two years.
Do I need to obtain any special permits or licenses to incorporate my business in Arizona?
No, you do not need to obtain any special permits or licenses to incorporate your business in Arizona, but you may need them to operate your business depending on the nature of your business.
What is the corporate tax rate in Arizona?
The corporate tax rate in Arizona is currently 4.9% as of 2021.
Can I incorporate a nonprofit organization in Arizona?
Yes, you can incorporate a nonprofit organization in Arizona by filing Articles of Incorporation with the Arizona Corporation Commission.
What is an EIN, and do I need one for my corporation in Arizona?
An EIN, or Employer Identification Number, is a unique tax ID number used by the IRS to identify your business. You will need an EIN for your corporation in Arizona.
Can I file Articles of Incorporation for multiple corporations at once in Arizona?
No, you must file Articles of Incorporation separately for each corporation in Arizona.
What is the most common type of corporation in Arizona?
The most common type of corporation in Arizona is the C corporation.
Can I operate my corporation under a different name from the one listed on the Articles of Incorporation in Arizona?
Yes, you can operate your corporation under a different name from the one listed on the Articles of Incorporation in Arizona by registering a trade name with the Arizona Corporation Commission.
What is a Certificate of Good Standing in Arizona, and do I need one for my corporation?
A Certificate of Good Standing is a document issued by the Arizona Corporation Commission that indicates that your corporation is in good standing with the state. It may be required for certain business transactions.
What is the difference between a C corporation and an S corporation in Arizona?
The main difference between a C corporation and an S corporation in Arizona is how they are taxed. C corporations are subject to double taxation, while S corporations are pass-through entities that do not pay federal income tax on their profits.
Can I change the structure or ownership of my corporation after incorporating it in Arizona?
Yes, you can change the structure or ownership of your corporation after incorporating it in Arizona by filing appropriate paperwork with the Arizona Corporation Commission.
What’s the first step to start a corporation in Arizona?
You must create and file Articles of Incorporation with the Arizona Corporation Commission.
Can I use an online form to file the Articles of Incorporation in Arizona?
Yes, the Arizona Corporation Commission website offers an online service for submitting the articles.
How long does it take to receive a Certificate of Incorporation in Arizona?
It usually takes about five business days, but expedited processing is available for an additional fee.
Do I have to reserve a unique business name in Arizona before filing the Articles of Incorporation?
It’s not required, but you can submit a Name Reservation Request to make sure the name you want is available.
Are there any specific requirements for the contents of the Articles of Incorporation in Arizona?
Yes, it must include the corporation’s name, address, purpose, duration, number of shares, and initial board of directors.
How many people do I need to start a corporation in Arizona?
You only need one person to start a corporation in Arizona, but there’s no limit on the number of shareholders.
Do I need to have a physical office in Arizona to start a corporation there?
No, you can use a registered agent to receive legal notices and have a mailing address in Arizona.
Do I have to submit a certificate of good standing from another state if I want to start a corporation in Arizona?
No, but if your corporation is foreign and already exists in another state, you may need to file a Certificate of Existence or Certificate of Good Standing.
Can I be the sole shareholder, director, and officer of my corporation in Arizona?
Yes, you can fulfil all these roles by yourself in Arizona.
Will I have to pay Arizona taxes on income generated outside of the state by my corporation?
Any income generated by the corporation attributable to Arizona is subject to Arizona State corporate income taxes.
What’s the cost to register a corporation in Arizona?
The filing fee for Articles of Incorporation in Arizona is $60 but can increase depending on various factors.
Is it legal to add a Corporation identifier, like ‘Inc.’ at the end of my company name in Arizona?
Yes, and using an identifier is suggested to ensure legality-related convenience and just answerable with surety during your interactions.
Do I need to have my Articles of Incorporation notarized before filing in Arizona?
No, notarization is not required in Arizona.
Can I file the Articles of Incorporation on paper in Arizona or only electronically?
Yes, you can file the Articles of Incorporation on paper or electronically.
Can anyone serve as a registered agent for my Arizona corporation?
No, the legal agent must be either an adult individual, an authorized officer of the corporation, or a company authorized to conduct business in Arizona.
Is it compulsory to set up by-laws as a corporation owner in Arizona?
I am not sure, but it is recommended by corporations to set up by-laws to define significant factors and prevent potential disputes.
Do corporations in Arizona need a business license to operate?
Certain professions need specific state-issued licenses to operate, but most do not require a state business license in Arizona.
Can I file the Articles of Incorporation as a single-member LLC in Arizona?
No, you can form a single-member LLC in Arizona, For incorporating means an entirely discrete procedure involving enough and sufficient capitalization being raised through shares offering.
Do non-US citizens require any special “incorporating” consideration before opening a corporation in Arizona?
Firmly generally established US and immigration, and commercial trade laws should be considered while starting any corporation as approaches can differ for initial teams, employers, responsibilities, customers, and agreements and actions.
Do I need a lawyer to help me start my corporation in Arizona?
No, it is not mandatory to have an attorney to start a corporation in Arizona; however, it can be helpful in various legal concerns.
Can I change my corporation’s address after incorporating in Arizona?
Yes; law allows addresses kept or informing for updates required.
Are there any mortgage costs relate to creating a corporation in Arizona?
I am not sure, but individual funding and relevant costs should be clubbed with each investment provided for offerings.
How can I check that the name I want for my Arizona corporation is available?
You can check the current availability of a corporation name through the State of Arizona’s online Business Entity Search page.
How often do I need to renew my Arizona corporation?
Arizona corporations must file an Annual Report with the Corporation Commission and pay an annual fee.
What if I want to expand my corporation outside of Arizona?
It is allowed as long as the other states follow the compliance and guidelines required for a legitimate incorporation.
Can I start a profitable Small Business Corporation beneficial for local society in Arizona?
Arizona provides industry-friendly environments with statistically low unemployment rates crucial yet challenging markets, policymakers’ establishment, educational institutions serving resources for vocational aid, and fostering funding facilitation allowing you to build a long-lasting profit-making and community- engaging corporation as such.
Does it matter which business structure I choose when setting up a corporation in Arizona?
Yes, understanding the scope of the corporation structure, liability formation, taxes aspect, governance, and ultimately ethical norms should be calculatively factored and decided before the business setup.
Can I change my corporation’s name after it is registered in Arizona?
The corporation files documents to notify the state before any corporation name changes are done.

Also Read

How to Save Money While Forming Your Arizona Corporation

One of the first steps to saving money when forming your Arizona corporation is to do your research. Before you dive into the process, take the time to educate yourself on the various options available for incorporating your business. There are different types of corporations, each with its own benefits and drawbacks, so it’s important to understand what will work best for your specific circumstances. By doing your research upfront, you can make informed decisions that will ultimately save you time and money in the long run.

Another way to save money when forming your Arizona corporation is to take advantage of online resources. There are many websites and online services that offer affordable options for incorporating your business. These online services can streamline the process, making it quicker and more efficient. While it may be tempting to hire a lawyer to handle the incorporation process, online services can be a cost-effective alternative that still provides quality results.

Additionally, when forming your Arizona corporation, it’s important to be mindful of the fees associated with the process. Many people are surprised by the various fees that come with incorporating a business, such as filing fees, local licensing fees, and annual reporting fees. By understanding these costs upfront and budgeting accordingly, you can avoid any financial surprises down the road. Additionally, be sure to explore options for any potential discounts or fee waivers that may be available to small businesses or new entrepreneurs.

Another way to save money when forming your Arizona corporation is to consider the long-term implications of your decisions. For example, weighing the benefits of various tax structures or choosing the right business structure can have a significant impact on your bottom line in the future. By taking the time to think strategically about these decisions now, you can make choices that will save you money in the long run.

Finally, one of the best ways to save money when forming your Arizona corporation is to be proactive and organized throughout the process. By staying on top of deadlines, filling out paperwork accurately, and communicating efficiently with all involved parties, you can avoid costly mistakes and delays. Remember that time is money, so being efficient and thorough in your approach to forming your corporation can ultimately save you both.

In conclusion, forming a corporation in Arizona doesn’t have to break the bank. By doing your research, taking advantage of online resources, understanding fees, making strategic long-term decisions, and being proactive and organized, you can save money during the process while still setting your business up for success. With a little bit of planning and effort, you can form your Arizona corporation without breaking the bank.

Conclusion

Starting a corporation in Arizona involves several critical steps, from choosing a corporate name to fulfilling ongoing compliance requirements. Following the steps outlined in this guide and seeking professional advice when needed, you can successfully establish your Arizona corporation and enjoy the benefits of limited liability, potential tax savings, and a professional business image.

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