LLC Cost in Arizona | How Much Does It Cost to Start an LLC

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LLC Costs in Arizona

Forming a Limited Liability Company (LLC) in Arizona is a popular choice for entrepreneurs and small business owners who want to protect their personal assets and enjoy flexibility in their business operations. LLC formation costs vary from state to state, and it is essential to understand the costs involved in forming and maintaining an LLC in Arizona.

If you would like to know more about the Arizona LLC Cost, read the whole article until the end. Webinarcare Editorial Team will help you gain knowledge on how much an LLC Costs in Arizona. You must be guided by all the factors gathered in this article.

How to Start an LLC?

Before we dive into the LLC Cost in Arizona, you should know the step-by-step process of starting an LLC, including selecting a unique business name, appointing a Statutory Agent, filing the necessary documents, and fulfilling any additional requirements, such as obtaining licenses or permits that are specific to your industry or location.

Here are the steps in starting an LLC in Arizona:

  • Step 1: Choose a Unique Business Name
    The first step in starting an LLC in Arizona is to select a unique business name for your company. The name should be distinguishable from any other registered businesses in the state. You can check the availability of your desired business name by searching the state’s business name database. Once you’ve found an available name, you may need to include “LLC” or “Limited Liability Company” at the end of the name to comply with state requirements.
  • Step 2: Appoint a Statutory Agent
    A Statutory Agent is someone who will receive official legal and tax documents on behalf of your LLC. The Statutory Agent must have a physical address in Arizona and be available during normal business hours. You have the option to appoint yourself as the registered agent or hire a professional registered agent service.
  • Step 3: File the Articles of Organization
    To officially form your LLC, you need to file the Articles of Organization with the Arizona Secretary of State or the appropriate state agency. The Articles of Organization typically requires basic information about your LLC, such as its name, address, Statutory Agent details, and the name and address of the LLC’s members or managers.
  • Step 4: Create an Operating Agreement
    Once your LLC is formed, it’s highly recommended to create an operating agreement in Arizona. Although not required by Arizona law, an operating agreement is a crucial internal document that outlines the ownership, management, and operating procedures of your LLC. It helps establish clear guidelines and expectations among members, and it can be especially useful in the event of disputes or disagreements in the future. The operating agreement can be customized to fit the specific needs and goals of your LLC.
  • Step 5: Obtain Required Licenses and Permits
    Depending on the nature of your business, you may need to obtain specific licenses or permits at the federal, state, or local level. Research the licensing requirements in Arizona and apply for business licenses in Arizona related to your industry or activities. Common examples include professional licenses, health or safety permits, and sales tax permits.
  • Step 6: File for an Employer Identification Number (EIN)
    An Employer Identification Number (EIN) is a unique nine-digit number issued by the Internal Revenue Service (IRS) that is used to identify your LLC for tax purposes. Even if you don’t have employees, obtaining an EIN is typically required if you plan to open a business bank account, hire contractors, or file certain tax forms. You can easily apply for an EIN in Arizona through the IRS website.
  • Step 7: Comply with Ongoing Requirements
    Once your LLC is established in Arizona, it’s important to stay in compliance with any ongoing requirements. This may include filing periodic reports, paying Annual Report fees, and renewing licenses or permits. Familiarize yourself with the specific obligations for maintaining your LLC’s good standing in Arizona.

Remember, starting an LLC in Arizona involves some specific steps and requirements that may differ from other states. It’s advisable to hire an LLC Services in Arizona that specializes in business formation to ensure that you follow all the necessary procedures accurately and efficiently. We reviewed the Best LLC Services for you to check out.

LLC Cost in Arizona

It is crucial to consider the costs associated with the formation and maintenance of your business. The costs of establishing and operating an LLC in Arizona can vary based on several factors, including the initial formation fees, ongoing compliance requirements, and optional expenses.

Initial LLC Costs

When starting a limited liability company (LLC), knowing the initial costs associated with forming and registering your new business entity is essential. Understanding and preparing for these expenses can help you budget effectively and set your Arizona business on a path to success. Some common initial costs associated with forming an LLC include Articles of Organization filing fees, Statutory Agent fees, and additional services, such as business name reservation fees. 

Articles of Organization Filing Fee

The first step in forming an LLC in Arizona is to file the Arizona Articles of Organization with the Arizona Secretary of State. This document officially creates the LLC and includes essential information about the business, such as its name, address, and Statutory Agent. 

This document includes essential information about your LLC, such as:

  • The name of your LLC
  • The address of your LLC’s principal office
  • The name and address of your Statutory Agent
  • The purpose of your LLC (optional in some states)

You can typically file the Articles of Organization online, by mail, or in person. A filing fee is associated with this process, which costs around $50. You can also file by mailing it to Arizona Secretary of State, which is located at Arizona Corporation Commission, Corporate Filings Section, 1300 W. Washington St., Phoenix, AZ 85007.

Recommended: Filing formation papers is easy and hassle-free if you hire a professional service. We recommend using –

LegalZoom – ($0 + State Fee)

Statutory Agent Fee

An LLC in Arizona must designate a Statutory Agent who will be responsible for receiving legal and government documents on behalf of the business. You can act as your own Statutory Agent or appoint someone you know. Professional Statutory Agent in Arizona typically charge an annual fee ranging from $50 – $150.

 In Arizona, your Statutory Agent must:

  • Be a resident of Arizona or a business entity authorized to do business in the state.
  • Have a physical address in Arizona (P.O. boxes are not acceptable)

Choosing a reliable and responsible Statutory Agent is essential, as failure to receive and respond to legal documents can seriously affect your business. 

We reviewed some of the Best Registered Agent Services in Arizona and provided features as an add-on with their packages for you to check out.

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Business Name Reservation Fee

If you have a specific business name in mind and want to ensure it is available when you are ready to file your Articles of Organization, you can reserve the business name with the Arizona Secretary of State. 

In Arizona, your LLC name must:

  • Include the words “Limited Liability Company,” “LLC,” or “L.L.C.
  • Not contain any words or phrases that are prohibited by state law
  • Be distinguishable from the names of other businesses registered in the state

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

The online name reservation fee is $45, while the mail name reservation fee is $45. You can register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for a DBA (doing business as). If you have decided to file for a DBA, you can file it in several methods. Check Arizona Trade Name Handbook for more details. However, before filing Arizona DBA, you should know that you need to renew your DBA for up to five years, which cost $10 for filing and $3 for each duplicate copy..

Recommended: Embark on your entrepreneurial journey confidently and affordably with LegalZoom’s DBA service, the beacon that guides businesses to credible branding and comprehensive compliance. Discover how effortless success can truly be!

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Ongoing LLC Costs

After you know the initial costs of forming an LLC in Arizona, you should also know the ongoing costs once you have filed for an LLC. Here are the involved costs that you need to know.

Annual Report Filing Fee

To keep your LLC in good standing, you must file Annual Report with the Arizona Secretary of State. The Annual Report provides updated information about your LLC, such as changes in address, members, or Statutory Agent. 

In Arizona, the Annual Report fee costs $0 which can be paid every 1 year (though it is not mandatory to file one).

Franchise Tax or Annual LLC Tax

Some states require LLCs to pay an annual franchise or LLC tax, separate from the Annual Report filing fee. Franchise tax, or annual tax, is a fee imposed by Arizona on businesses, including LLCs and Arizona Corporations, for the privilege of operating within their jurisdiction. This tax is separate from income taxes and is usually based on factors such as the company’s net worth, assets, capital, or a fixed dollar amount, depending on the Arizona‚Äôs specific tax regulations. 

Arizona LLC Taxes To Be Paid

The State of Arizona is one of those rarest states in the United States that does not levy any personal income tax on businesses. However, the business LLCs must file other taxes with the State authorities.

  • Sales Tax: A sales tax is a government-imposed tax on the sale of goods and services. It is generally added to the price of a product or service at the point of sale and paid by the consumer. The tax is collected by the retailer or service provider, who then remits the collected tax amount to the relevant government authority. In Arizona, the sales tax rate is 5.60%. 
  • State Income Tax: Considering other taxes in Arizona, you should pay for the state income tax, with a rate of 4.90%. 
  • LLC Federal Self-Employment Tax: Federal self-employment tax rates are the same across all states. Self-employment taxes are imposed on self-employed individuals or members of a Limited Liability Company (LLC) taxed as a sole proprietorship or partnership.
  • Property Tax: The property tax is fixed at 0.62% of industrial, commercial, residential, agricultural, and all other properties.

Business Licenses and Permits

Depending on the nature of your Arizona business and the location of your operations, you may need to obtain permits and business licenses in Arizona. The costs of these licenses and permits will vary based on your specific business and location. In Arizona, the business license ranges from $50 – $300. However, research the requirements for your LLC in Arizona and budget for these expenses accordingly.

Optional LLC Costs

Here are the optional costs you must consider if you will form an operating agreement or hire a professional service.

Operating Agreement

Although not required by law, it is highly recommended that LLCs create an operating agreement in Arizona. This document outlines the LLC’s ownership structure, management, and operating procedures. Hiring a business attorney to draft an operating agreement can cost anywhere from $500 to $2,000, or you can use online resources and templates to create one yourself.

Professional Services

You may hire professionals such as attorneys, accountants, or business consultants to help you establish and run your Arizona LLC. These services can provide valuable expertise and guidance but come at an additional cost. Consider the potential benefits and weigh them against the costs when hiring professional assistance.

You may check out the Best Business Attorney Services in Arizona that offer their professional services to form your business.

Can I Set Up an LLC For Free?

It’s impossible to set up an LLC entirely for free, as state filing fees and other costs are associated with establishing an LLC. However, you can save money by handling the formation process instead of hiring a professional service. Here are some steps to help you minimize the cost of setting up an LLC:

  • Choose your LLC’s name and check for availability in your state. This can generally be done through the Secretary of State’s website.
  • Prepare and file the Articles of Organization yourself. Arizona offer an online filing option or downloadable forms on their websites. By completing this process independently, you can avoid paying additional fees for a professional service.
  • Act as your own Statutory Agent if permitted within Arizona. It allows the business owner to serve as the Statutory Agent, saving you the cost of hiring a professional registered agent service.
  • Create your own Operating Agreement using online resources and templates. Although not required in every state, an Operating Agreement is highly recommended to outline your LLC’s ownership structure and management. By drafting this document yourself, you can save on legal fees.
  • Research and apply for any required licenses and permits on your own. Depending on your business type and location, you may need specific permits or licenses. These costs can vary, but handling the application process yourself can save you the expense of hiring a professional service.

While you can’t set up an LLC for free, taking a do-it-yourself approach and minimizing the use of professional services can help you save money during the formation process. However, handling these tasks requires time and effort, and there may be additional legal or financial risks if mistakes occur.

FAQs

What is the cost to form an LLC in Arizona?
The cost to form an LLC in Arizona is $50.
How much does it cost to file Articles of Organization in Arizona?
It costs $50 to file Articles of Organization in Arizona.
Is there an annual fee to maintain an LLC in Arizona?
Yes, there is an annual fee of $0 to $300 to maintain an LLC in Arizona.
Can I form an LLC online in Arizona?
Yes, you can form an LLC online in Arizona through the Arizona Corporation Commission’s website.
What is the expedited review fee in Arizona?
The expedited review fee in Arizona is $35.
How long does it take to form an LLC in Arizona?
It typically takes 5-7 business days to form an LLC in Arizona.
Can I waive the requirement to publish the Articles of Organization in Arizona?
No, the requirement to publish the Articles of Organization cannot be waived in Arizona.
What is the minimum number of members required to form an LLC in Arizona?
There is no minimum number of members required to form an LLC in Arizona.
Can an LLC in Arizona have a single member?
Yes, an LLC in Arizona can have a single member.
What taxes does an LLC in Arizona have to pay?
An LLC in Arizona has to pay state and federal income taxes.
How much does it cost to obtain a business license in Arizona?
The cost to obtain a business license in Arizona varies by city and type of business.
Do I need a business license to form an LLC in Arizona?
No, you do not need a business license to form an LLC in Arizona.
Do I need to register my LLC with the Arizona Department of Revenue?
Yes, you need to register your LLC with the Arizona Department of Revenue if you generate revenue in Arizona.
How can I dissolve an LLC in Arizona?
You can dissolve an LLC in Arizona by filing Articles of Dissolution with the Arizona Corporation Commission.
What is the penalty for failing to file the Annual Report in Arizona?
The penalty for failing to file the Annual Report in Arizona is $10 per month.
How can I make changes to my LLC in Arizona?
You can make changes to your LLC in Arizona by filing Articles of Amendment with the Arizona Corporation Commission.
What is the publication requirement for LLCs in Arizona?
LLCs in Arizona are required to publish their Articles of Organization in a newspaper of general circulation for three consecutive weeks.
How much does it cost to publish the Articles of Organization in Arizona?
The cost to publish the Articles of Organization in Arizona varies by newspaper.
Can I amend the Articles of Organization after they have been published?
Yes, you can amend the Articles of Organization after they have been published.
What is the processing time for Arizona filing?
The processing time for Arizona filing is typically 5-7 business days.
Can I file for expedited processing in Arizona?
Yes, you can file for expedited processing in Arizona for an additional fee.
What is the difference between a domestic and foreign LLC in Arizona?
A domestic LLC is formed in Arizona, while a foreign LLC is formed in another state and does business in Arizona.
What is the fee for a foreign LLC registered in Arizona?
The fee for a foreign LLC registered in Arizona is $150.
Do I need a registered agent for my LLC in Arizona?
Yes, you need a registered agent for your LLC in Arizona.
Can I serve as my LLC’s registered agent in Arizona?
Yes, you can serve as your LLC’s registered agent in Arizona.
Can a minor be a member of an LLC in Arizona?
Yes, a minor can be a member of an LLC in Arizona.
Do I need to file an Operating Agreement with the Arizona Corporation Commission?
No, you do not need to file an Operating Agreement with the Arizona Corporation Commission.
Can I have a non-profit LLC in Arizona?
No, Arizona does not allow non-profit LLCs.
Do out-of-state LLCs need to obtain an Arizona business license?
Yes, out-of-state LLCs need to obtain an Arizona business license if they engage in business in Arizona.
What is an LLC?
An LLC, or Limited Liability Company, is a legal business entity that combines the liability protection of a corporation with the flexibility and tax advantages of a partnership.
How do I form an LLC in Arizona?
To form an LLC in Arizona, you must file articles of organization with the Arizona Corporation Commission and pay a filing fee.
What are the benefits of forming an LLC in Arizona?
Some benefits of forming an LLC in Arizona include limited liability protection, flexible management structure, pass-through taxation, and ease of formation.
How much does it cost to form an LLC in Arizona?
The cost to form an LLC in Arizona is $50 for the filing fee.
Do I need a lawyer to form an LLC in Arizona?
No, you don’t need a lawyer to form an LLC in Arizona, but it’s recommended to seek legal advice to ensure compliance with Arizona state laws.
Do I need an operating agreement for my LLC in Arizona?
Yes, an operating agreement outlines ownership, management, and operational policies for your LLC, so it’s recommended to have one to protect your business rights.
What taxes does an Arizona LLC have to pay?
Arizona LLCs are subject to both federal and state taxes, including income tax, sales and use tax, and excise tax.
How do I obtain a state tax ID number in Arizona for an LLC?
You can obtain a state tax ID number from the Arizona Department of Revenue by filling out an application, which can be done online.
Does Arizona have an annual LLC fee?
Yes, Arizona LLCs are required to file annual reports and pay an annual fee of $0.
Can I change my LLC’s name in Arizona?
Yes, you can change your LLC’s name in Arizona by filing an amendment with the Arizona Corporation Commission and paying the appropriate fee.
Do I need an Arizona business license to run an LLC in the state?
Yes, most Arizona LLCs are required to obtain a business license from the city or county where their business is located.
Can I run an LLC out of my home in Arizona?
Yes, you can run an LLC out of your home in Arizona as long as you comply with zoning laws, business licenses, and other regulatory requirements.
How do I dissolve an LLC in Arizona?
To dissolve an LLC in Arizona, you must file articles of dissolution with the Arizona Corporation Commission and pay a filing fee.
How much does it cost to file for LLC dissolution in Arizona?
The cost to file for LLC dissolution in Arizona is $35.
Can I reinstate an LLC in Arizona after it has been dissolved?
Yes, you can reinstate an LLC in Arizona by applying for reinstatement with the Arizona Corporation Commission and paying a reinstatement fee.
What happens to an Arizona LLC when one of the members dies?
When a member of an Arizona LLC dies, their membership automatically ends, and their ownership interest passes to their estate or heirs.
Can I convert my Arizona LLC to another legal entity, such as a corporation or partnership?
Yes, you can convert your Arizona LLC to another legal entity by filing a conversion with the Arizona Corporation Commission and paying the appropriate fee.
How much does it cost to convert an Arizona LLC to another legal entity?
The cost to convert an Arizona LLC to another legal entity varies depending on the type of conversion, but there is usually a fee involved.
What is the difference between an Arizona profit LLC and an Arizona nonprofit LLC?
An Arizona profit LLC is set up for the purpose of generating profit for its owners, while an Arizona nonprofit LLC is set up for a specific purpose, such as a charity or social club, and is prohibited from earning a profit.
Is an Arizona LLC required to have a registered agent?
Yes, an Arizona LLC is required to have a registered agent with a physical address in Arizona to accept legal, tax, and other important documents.
Can an Arizona LLC have just one member?
Yes, Arizona LLCs can have just one member, known as a single-member LLC.
How do I change the Registered Agent for my Arizona LLC?
You can change your Arizona LLC’s registered agent by filing a Statement of Change with the Arizona Corporation Commission and paying the appropriate fee.
What is the transfer tax in Arizona for the sale of an LLC?
Arizona does not have a transfer tax for the sale of an LLC.
Do I need workers’ compensation insurance for my Arizona LLC?
Employers in Arizona are required to have workers’ compensation insurance if they have more than one employee, including LLCs.
How do I get an Employer Identification Number (EIN) for an Arizona LLC?
You can obtain an EIN number for your Arizona LLC by applying to the IRS online or by mail.
Can I use an online service to form my Arizona LLC?
Yes, there are many online services that can help you form your Arizona LLC for a fee.
Can I dissolve my Arizona LLC if it has outstanding debts?
Yes, debts and other obligations are settled during the dissolution process of an Arizona LLC.

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Conclusion

Forming and maintaining an LLC in Arizona involves various costs, including initial filing fees, ongoing annual report fees, and taxes. Understanding and planning for these costs is essential when establishing your LLC. Additionally, consider any optional expenses, such as hiring professional services or drafting an operating agreement, to ensure the success and longevity of your LLC in Arizona.

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