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

LLC Costs in Arizona

Forming a Limited Liability Company (LLC) in The Grand Canyon State 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. This article will overview the initial and ongoing costs of establishing and running an LLC in Arizona.

If you would like to understand Arizona LLC Costs and to know more about how much it costs to form an LLC in Arizona, read the whole article until the end.

Webinarcare Editorial Team will help you understand how much an LLC Costs in Arizona. You must be guided by all the factors gathered in this article.

Initial LLC Formation 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.

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. 

You can serve as your own Statutory Agent or appoint a friend, family member, or professional Arizona Statutory Agent Services.

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 costs around $45, while the mail name reservation fee costs $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. for an easier way.

However, before filing Arizona DBA, you should know that you need to renew your DBA up to five years, which costs around $10 for filing and $3 for each duplicate copy.

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 in Arizona, 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 around $0 which can be paid on 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’s specific tax regulations. 

The franchise tax in Arizona costs Arizona does not have a franchise tax for LLCs.

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.

Arizona 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%. 

Arizona State Income Tax

Considering other taxes in Arizona, you should pay for the state income tax, which costs 4.90%. 

Arizona 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.

The self-employment tax consists of the Social Security tax and the Medicare tax. As of 2021, the self-employment tax rate is 15.3%, which consists of:

  • Social Security Tax: 12.4% (applied to the first $142,800 of net self-employment income in 2021)
  • Medicare Tax: 2.9% (applied to all net self-employment income)

Please note that these rates are subject to change, so it’s essential to consult the IRS website or a tax professional for the most up-to-date information. Additionally, some self-employed individuals may be eligible for deductions, which can reduce their taxable income and the amount of self-employment tax they owe.

Arizona 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 a Business License and permits. 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 in Arizona, it is highly recommended that LLCs draft an operating agreement. 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.

However, if you are wondering how to create an operating agreement, you can check out the Operating Agreement to know and understand how it works.

Professional Services

You may hire professionals such as attorneys, Arizona 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.

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. Each state has its own fees for filing the Articles of Organization, the primary document required for forming an LLC. These fees typically range from $50 to $500, depending on the state.

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. Arizona 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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