How to Form a Professional Corporation in Arizona (2024 Guide)

Steve Bennett
Business Formation Expert  |   Fact Checked by Editorial Team
Last updated: 
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Forming a Professional Corporation in Arizona

If you would like to start and learn how to form a corporation in Arizona, there are a few things that you should do now. However, in a professional corporation, professionals must create a special organizational structure to establish a professional or service corporation. Among the appropriate professions to organize a professional corporation in Arizona are accountants, physicians, engineers, architects, and attorneys.

Forming a professional corporation in Arizona or any business organization needs a certain number of steps. In this article, Webinarcare Editorial Team is going to share those steps. Keep in mind that these are general procedures. Depending on local law, it may be modified. For instance, your professional corporation may be subject to city or county-based rules.

What is a Professional Corporation in Arizona?

A professional service corporation (PSC), often known as a professional corporation (abbreviated as PC), is a particular type of organization that is permitted by state law to allow owners of specifically licensed professions to practice in the Arizona. A professional corporation’s owner is answerable for their own negligence or wrongdoing but is not held personally liable for the actions of other owners. The abbreviation PC or P.C. is frequently used to denote professional corporations.

This structure allows professionals to enjoy some of the benefits and protections of a traditional corporation while maintaining their professional status and abiding by the regulations of their respective licensing boards.

LegalZoom is the recommended corporation formation if you are thinking of forming a professional corporation from scratch. However, you can always start an LLC in Arizona, if you changed your mind.


How to Form a Professional Corporation in Arizona

To form a Professional Corporation in Arizona for the professional service you provide, you must follow a few steps that include verifying if you are qualified for a PC, naming your business, hiring a Statutory Agent, filing the Articles of Incorporation, outlining an operating agreement, requesting for an EIN, opening a bank account, getting a business license, and filing for an Annual report and taxes.

Step 1: Verify If You Are Qualified for a Professional Corporation

In forming a professional corporation in Arizona, you should know if you are qualified. There are specific professions that are allowed to form a professional service corporation, including-

To provide your service, you must be qualified and have a license. In most cases, you can now form a professional corporation after finishing your studies, passing the exam, and receiving your license. If you work in an industry that does not provide a license or professional certification, you should consider starting an LLC or corporation.

Step 2: Name your Professional Corporation in Arizona

After you have decided to form a professional corporation in Arizona, you must choose a name for your corporation. Here are some pointers to consider when naming your professional corporation.

  • The business name should have the word PC, frequently followed by the name of the principal owner in place of Inc or LLC. (Example. John Doe, MD, PC)
  • Limit of restricted words that need a license.
  • A unique name is needed with no match
  • No confusion with a government entity name.

In Arizona, if you do not wish to file your professional corporation right away but want to hold the name that you have decided on, then you can reserve your corporation name for 120 days. You must file a name reservation application in the Arizona Secretary of State to keep the name.

If not already present, a professional corporation, professional association, service corporation, or professional service corporation must be included in the name. You may register your business under a different legal name if your preferred legal name is unavailable. Once you’ve decided on a name, you can apply for Arizona DBA (doing business as). This way, you can run a clinic or law firm under your name.

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Step 3: Choose the Arizona Statutory Agent

The next step in forming a professional corporation is hiring a Statutory Agent, who accepts legal paperwork for your business. This person or business will receive important tax forms, legal documents, all notices of lawsuits, and other official government correspondence in Arizona. Forming a professional corporation for your service will be easier if you have Statutory Agent in Arizona.

Alternatively, you can serve as your own Statutory Agent if you have the time. Usually, in Arizona, a Statutory Agent costs is ranging from $50 – $150. To make it easier, you can hire Arizona Statutory Agent Services for your professional corporation.

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Step 4: File the Articles of Incorporation in Arizona

After you hire a Statutory Agent to form a professional corporation, the next step is to file the Arizona Articles of Incorporation. In writing the Articles of Incorporation, the business name, owner’s contact information, corporation address, and Statutory Agent contact information, should be written. Include the names of all co-owners as well. All owners must demonstrate that they have the necessary licenses to practice the profession in question.

Filing the Articles of Incorporation in Arizona may be done with two ways, in-person and by mail. The Articles of Incorporation fee may vary from different state. However, in Arizona, it costs $60 for filing in-person and by mail. There’s no online filing available.. For 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: Write an Operating Agreement in Arizona

An operating agreement in Arizona is a document that contains all of your company’s organizational details. It is optional to draft an operating agreement in most states. Yet, having one as an internal document is strongly advised. The operating agreement includes information like-

  • About Business
  • Members and management
  • Capital contribution
  • Profit Distribution
  • Change of membership
  • Dissolution

Step 6: Designate the PC Board of Directors in Arizona

The next step is to form the first board of directors for your PC in Arizona. All of the initial directors must provide the owner with their contact information. The owner must keep records and submit them by the Arizona Secretary of State. As a shareholder and owner, you must ensure that a provision for appointing a new director is included in the By-laws. In Arizona, you must have One directors in forming your Professional Corporation.

Step 7: Write the Corporate Bylaws

Now that you are done forming the team of the board of directors, the next step is to draft corporate bylaws. Corporate bylaws are the basic rules that control a corporation. It includes the organization’s structure, processes, laws, and rules. As a result, all personnel, managers, and corporation members must obey the firm’s rules.

Creating comprehensive corporate bylaws requires specific knowledge about the company, its structure, and operations. However, I can provide you with a general outline of what corporate bylaws usually include. It is crucial to consult with Arizona Business Attorney or a legal expert to ensure that your bylaws comply with the laws and regulations governing your jurisdiction and industry.

  • Name and Purpose of the Corporation
  • Registered Office and Agent
  • Shareholders
  • Board of Directors
  • Officers
  • Committees
  • Indemnification and Insurance
  • Conflict of Interest
  • Records and Reports
  • Amendments
  • Miscellaneous

Step 8: Hold the First Board of Directors’ Meeting

Gather the board of directors for the first meeting after drafting the corporate bylaws. This meeting will conclude with the appointment of directors to manage the company’s daily operations, approval of the bylaws, selection of the corporation’s financial reporting year, and approval of the stock issue. Minutes should be taken at all board meetings and kept with the company’s records.

Step 9: Request an EIN in Arizona.

After the operating agreement’s documentation, you should get or request an Employer Identification Number (EIN) in Arizona. The tax ID for your professional corporation will be an EIN. The Internal Revenue Service can provide an EIN (IRS). It has nine digits and is comparable to a social security number. Nevertheless, EIN is different from SSN. Only business-related tasks, primarily filing general taxes, are performed using it. The form needs to be filled out and submitted online to the IRS.

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 the 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.

After you have your EIN number, you can benefit in several ways. It will give your professional corporation the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

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Step 10: Open a Bank Account and Prepare for Taxes.

You should open a business bank account as soon as you have applied for and received your Employer Identity Number because you will use this account for yourself, your clients, and your staff. Check out the Best Banks in Arizona for you to decide on which bank you are going to open an account.

Due to your organization’s increased legality and liquidity, having a US business bank account may make conducting business in Arizona easier. Most banks require an EIN for businesses other than sole proprietorships to open a business bank account. Also, keeping your accounts separate will prevent you from merging your personal and business finances. Also, filing taxes is simpler when you have an EIN. You can expect to pay employee and corporate taxes when you form a professional corporation.

Step 11: Get a Business License in Arizona

Before your professional corporation operates in Arizona, you must have Arizona Business License first. A business license is a formal document issued by a state government agency that allows you to conduct business in the geographic area governed by that agency. The cost of business licenses and permits in Arizona ranges from $50 – $300. You must check with the local authorities to see if any special licenses or permits are required.

Step 12: File Your Taxes in Arizona

Finally, you’ve arrived at the final process. Remember to file your taxes when you have obtained a business license and are ready to begin operations. To avoid a large tax bill, you should begin paying taxes quarterly as soon as possible. Each state has different tax requirements. Start examining the Arizona tax classification for the taxes that an LLC in Arizona must pay.

Main Characteristics of a Professional Corporation

In forming a Professional Corporation, the main characteristics must be distinguished before forming it. These are the general characteristics of forming a Professional Corporation in Arizona.

  • Limited Liability Protection: A professional corporation provides its owners, shareholders, or members limited liability protection like a regular corporation. This means the shareholders’ personal assets are generally protected from business debts, obligations, and lawsuits, except in malpractice or professional negligence cases.
  • Arizona Licensing Requirements: All shareholders must typically be licensed professionals in the same field in a professional corporation. The corporation must also comply with specific state regulations and licensing requirements that govern the profession.
  • Governance and Management: A professional corporation is governed by a board of directors, who the shareholders elect. The board appoints officers to manage the day-to-day operations of the corporation. All directors and officers must be licensed professionals in the same field as the corporation.
  • Taxation: Professional corporations are taxed as C corporations, where the corporation pays taxes on its income, and shareholders pay taxes on dividends received from the corporation. However, some professional corporations may be eligible for S corporation status, allowing pass-through taxation. Income, losses, deductions, and credits flow to the shareholders, who report this information on their income tax returns.
  • Restrictions on Ownership and Transfer of Shares: Professional corporations often restrict the ownership and transfer of shares to ensure that only licensed professionals in the same field can become shareholders. This helps maintain the professional nature of the corporation and adheres to state licensing requirements.
  • Malpractice Liability: While a professional corporation provides limited liability protection for general business debts and obligations, it does not shield shareholders from liability for their own malpractice or professional negligence. Shareholders can still be personally liable for their actions in providing professional services.

In summary, a professional corporation is a specialized corporate structure designed for licensed professionals, offering limited liability protection and a formal governance structure while adhering to state licensing requirements and regulations.

Maintain Professional and Business License in Arizona

You must maintain or renew your professional license regularly now that you have established your professional corporation. Even if your company is well-established, it is only meaningful if you have a valid operating license. And it makes no difference if your professional license is still valid for a year or two, but your business license has already expired.

Make time at least once a year to check the status of your licenses. You won’t miss anything important this way. You can address any issues that arise.

Filing Annual Report in Arizona

In Arizona, you must submit a report. The owners’ and Statutory Agent’s names and contact details are listed in the Annual Report. Also, it should include all of your yearly financial activity. You must submit the report every 1 year (though it is not mandatory to file one) in the Arizona Secretary of State.


How do I go about forming a professional corporation in Arizona?
You’ll need to file the proper articles of incorporation with the Arizona Corporation Commission.
Is forming a PC in Arizona the only option available to me?
No, but it is the most popular type of business structure for licensed professionals in Arizona.
Can I form a PC with my spouse in Arizona?
Yes, as long as your spouse is also a licensed professional in the same industry.
Are there any licensing requirements I need to meet before forming a PC in Arizona?
Yes, all shareholders in a PC must hold a valid Arizona professional license.
How do I determine the right name for my PC in Arizona?
There are a few guidelines you need to follow, such as using “Professional Corporation” or “PC” in your entity name.
Can I form a PC in Arizona with a former client of mine?
You can, but disclosure requirements and conflict of interests may apply.
Do I need an attorney to help me form a PC in Arizona?
While it’s not required by law, it is highly recommended to work with an experienced attorney in Arizona.
Can a non-licensed professional become a shareholder in an Arizona PC?
No, all shareholders must hold an active professional license in the state.
What documents do I need to prepare to register a PC in Arizona?
You’ll generally need to prepare and file articles of incorporation, as well as any other additional filings specific to your profession or area of expertise.
How much does it cost to form a PC in Arizona?
Fees can vary depending on several factors, but you can expect to pay at least $150 in filing fees.
How long does it take to get my Arizona PC approved by the Corporation Commission?
It generally takes about 5-7 business days for electronic filings to be approved and about 10-14 business days for paper filings.
Do I need to hold regular shareholder meetings for my Arizona PC?
Yes, it’s important to hold regular meetings to keep your PC in good standing with the Arizona Corporation Commission.
What type of liability protection does a PC provide me in Arizona?
A PC provides you with limited liability protection, meaning your personal assets are generally shielded from company liabilities.
Can an Arizona PC sell products or services to non-Arizona residents?
Yes, an Arizona PC can generally do business with anyone, as long as its business activities are legal and within the scope of the company’s professional license.
Can a PC in Arizona have a physical office in another state?
Yes, but that PC must generally be registered as a foreign entity with that state’s secretary of state.
Can I form a multi-state PC with licensing in multiple states, including Arizona?
A multi-state PC generally requires licensed shareholders in each state where the PC plans to offer its services.
What tax implications does a PC have in Arizona?
A PC usually needs to file an annual tax return with the Arizona Department of Revenue and pay annual fees to the Arizona Corporation Commission.
Do I need to keep any special records for my Arizona PC?
Yes, all PC shareholders must maintain accurate licensing and professional records for the life of the company.
What happens if I violate any of Arizona’s PC regulatory requirements?
Failing to comply with any of Arizona’s PC regulatory requirements can result in fines, suspension, or revocation of your company’s license.
Can creditors go after my personal assets if my Arizona PC goes bankrupt?
Generally, as a shareholder in a PC, your personal assets are shielded from creditors of the corporation.
Can shareholders in an Arizona PC create different supervisory or billing responsibilities for each other?
Yes, shareholder agreements can dictate a variety of supervisory or billing responsibilities for PC shareholders.
Can multiple licensed professionals come together to form an Arizona PC?
Yes, as long as all shareholders have a valid and current professional license in the state.
Can an Arizona PC provide multiple forms of professional services?
Yes, as long as all shareholders have licenses for the particular set of professional services your PC provides.
Are there any other regulations or insurances I need to worry about for an Arizona PC?
Yes, your profession or industry may require additional insurances or specific regulations, check with any regulatory body in your profession.
Can an Arizona PC merge or sell with another professional corporation?
Yes, but the regulatory factors involved and applicable legal requirements swell up to dictate the process in the State.
Do I need to follow any breach reporting requirements for my Arizona PC?
Yes, certain data breaches or leaks may require reporting to specific bodies in accordance with Arizona state law.
Can an amended certificate of formation be filed for an Arizona PC?
Yes, if necessary, you can amend your filings to fix any errors or changes to your business.
Can I choose a different name for my Arizona PC if I registered as a different entity in another state?
Yes, the company name you want may still be available and allowed for use in Arizona.
What is a professional corporation in Arizona?
A professional corporation in Arizona is a legal entity that allows certain professions to incorporate in order to limit personal liability.
Which professions are eligible to form a professional corporation in Arizona?
Accountants, architects, attorneys, chiropractors, dentists, engineers, optometrists, physicians, podiatrists, psychologists, and veterinarians can form professional corporations in Arizona.
Can a nonprofessional own shares in an Arizona professional corporation?
No, only licensed professionals can own shares in an Arizona professional corporation.
What is the process for forming an Arizona professional corporation?
The process involves filing articles of incorporation with the Arizona Corporation Commission and obtaining the necessary licenses and permits for the specific profession.
How long does it take to form an Arizona professional corporation?
The timeline varies, but it generally takes a few weeks to a few months to form an Arizona professional corporation.
Do Arizona professional corporations have to pay taxes?
Yes, Arizona professional corporations must pay corporate income taxes.
What are the benefits of forming an Arizona professional corporation?
Benefits include limited personal liability, separate legal entity status, and the ability to raise capital.
Do Arizona professional corporations need to have a board of directors?
Yes, Arizona professional corporations are required to have a board of directors.
How many directors are required for an Arizona professional corporation?
Arizona law requires at least three directors for an Arizona professional corporation.
Can an Arizona professional corporation offer stock options to employees?
Yes, an Arizona professional corporation can offer stock options to employees.
How often do Arizona professional corporations need to hold board meetings?
Arizona professional corporations should hold board meetings as often as necessary, but at least annually.
Can an Arizona professional corporation be dissolved?
Yes, an Arizona professional corporation can be dissolved voluntarily or involuntarily.
What happens to the assets of an Arizona professional corporation if it is dissolved?
The assets are distributed according to Arizona law and the corporation’s operating agreement.
Does an Arizona professional corporation need to have a registered agent?
Yes, an Arizona professional corporation is required to have a registered agent.
Can an Arizona professional corporation be sued?
Yes, an Arizona professional corporation can be sued.
Are shareholders personally liable in an Arizona professional corporation?
Shareholders in an Arizona professional corporation are generally not personally liable as long as they are acting within the scope of their duties.
Can an Arizona professional corporation own property?
Yes, an Arizona professional corporation can own property.
How can an Arizona professional corporation raise capital?
An Arizona professional corporation can raise capital through the issuance of stocks or taking out loans.
Do Arizona professional corporations need to file annual reports?
Yes, Arizona professional corporations are required to file annual reports with the Arizona Corporation Commission.
Can an Arizona professional corporation be used as an estate planning tool?
Yes, an Arizona professional corporation can be used as an estate planning tool in certain situations.
Can a professional in Arizona operate as a sole proprietor?
Yes, a professional in Arizona can operate as a sole proprietor, but it may not provide the personal liability protection of a professional corporation.
How does the liability protection of an Arizona professional corporation compare to that of a limited liability company (LLC)?
The liability protection of an Arizona professional corporation and a limited liability company (LLC) offer similar levels of protection, but the choice should reflect the specific needs of the profession.
Are Arizona professional corporations required to have bylaws?
Yes, an Arizona professional corporation is required to have bylaws that govern the corporation’s internal operations.
Can an Arizona professional corporation elect to be taxed as an S corporation?
Yes, an Arizona professional corporation can elect to be taxed as an S corporation.
Is Arizona an attractive state for forming a professional corporation?
Yes, many professionals choose to form professional corporations in Arizona due to its pro-business environment and relatively low tax burden.
Are there downsides to forming a professional corporation in Arizona?
There may be additional costs and regulatory requirements to comply with Arizona’s professional corporation statutes.
What fees are associated with forming an Arizona professional corporation?
The initial filing fee with the Arizona Corporation Commission is in the range of $60 to $200, depending on the number of authorized shares. There are also other costs such as attorney fees and potential ongoing regulatory fees.
Do Arizona professional corporations need to have insurance?
Yes, it is recommended that Arizona professional corporations have insurance to protect against potential claims.
What can an Arizona professional corporation do to protect against lawsuits?
A thorough risk management and policy compliance program can help protect an Arizona professional corporation against potential lawsuits.
Can an Arizona professional corporation have subsidiaries?
Yes, an Arizona professional corporation can have subsidiaries as long as they comply with legal regulations.

Also Read

How to Save Money While Forming Arizona Professional Corporation

One of the key steps to save money when forming an Arizona professional corporation is thorough research and planning. Before diving headfirst into the process, it is essential to understand the legal requirements, licensing, and permits that are necessary for your specific profession in the state. Taking the time to educate yourself on the intricacies of the process could help you avoid costly mistakes or setbacks down the road.

Partnering with professionals who specialize in forming professional corporations can also prove to be a wise and money-saving decision. While there is a cost associated with hiring experts or attorneys in the field, their experience and expertise can guide you through the process efficiently, bringing valuable insight. A professional who is well-versed in Arizona’s corporation laws can help you make informed decisions, allowing you to avoid unnecessary expenses and potential legal repercussions.

An essential aspect often overlooked when trying to cut costs is careful consideration of the business structure. Choosing the appropriate structure for your professional corporation can have significant financial implications. Weighing the pros and cons of different options such as sole proprietorship, partnership, or limited liability company (LLC) can help you make an informed decision that aligns with your financial goals. Seeking advice from an accountant or a financial advisor can further clarify the tax implications and financial benefits of each business structure.

Another way to save money during the formation of an Arizona professional corporation is to take advantage of online resources and services. With advancements in technology, there are numerous platforms and tools available that streamline the incorporation process. Online services can offer cost-effective solutions for filing paperwork, managing compliance, and obtaining licenses. These platforms often provide step-by-step guidance, ensuring that you navigate the process correctly while keeping expenses to a minimum.

While it is essential not to compromise on legal requirements, evaluating your professional corporation’s needs can help you avoid unnecessary expenses. In the initial stages, it may be wise to focus on the essentials rather than investing in premium features or unnecessary expenses. Adopting a lean approach and prioritizing key aspects of your professional corporation can translate into substantial cost savings.

Additionally, networking and collaborating with other professionals who are going through or have already gone through the process can prove invaluable. Learning from their experiences and gathering tips and recommendations can help you navigate common pitfalls and avoid additional costs. Building a network of like-minded individuals can even open opportunities for cost-sharing or cooperative endeavors, ultimately reducing expenses further.

While setting up an Arizona professional corporation may seem overwhelming, implementing these money-saving tips can significantly ease the financial burden. Proper research and planning, partnering with professionals, leveraging online resources, choosing the right business structure, and networking are all crucial steps in saving money while forming your professional corporation – allowing you to redirect your investment towards the growth and success of your business.


In conclusion, forming a professional corporation in Arizona is a strategic decision for licensed professionals who seek to combine their expertise and services under a single corporate entity. This business structure offers limited liability protection, a formal governance structure, and compliance with state licensing requirements. However, it also comes with certain restrictions on ownership, transfer of shares, and personal liability for professional malpractice. By carefully considering the advantages and disadvantages of a professional corporation, professionals can determine whether this structure aligns with their business goals, regulatory requirements, and risk management needs, ultimately contributing to a more organized, secure, and compliant professional practice.

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