How to Start an LLC in Arizona: Steps, Publication and Tax

How do I form an LLC in Arizona, and what does it cost?

File articles of organization with the Arizona Corporation Commission (ACC). The state fee is $50 (A.R.S. 29-3213); expedited review brings the total to $85 (ACC fee schedule). Faster same-day and next-day tiers cost more (table below). All fees are nonrefundable.

1. Name. It must contain "limited liability company", "limited company" or an abbreviation such as LLC or L.C. Check availability on the ACC site; reserving the name is optional (ACC instructions L010i).
2. Statutory agent. Name one with an Arizona street address, and have the agent accept before the ACC examines the filing (next section).
3. Management. Member-managed means the owners (members) run the LLC; manager-managed means named managers, owners or not, run it (A.R.S. 29-3407). A member-managed LLC lists every member's name and address; a manager-managed LLC lists each manager and each member owning 20% or more (A.R.S. 29-3201). These addresses and the principal address become public record; a home-based business may prefer another principal address (ACC FAQ).
4. File. Online through the ACC's Arizona Business Center (ABC), which the ACC recommends; its FAQ quotes $85 to file online, the expedited total. Paper filings need a cover sheet, the member or manager structure attachment, the agent's acceptance and payment.
5. After approval. Publish a notice if required, get an EIN, get a TPT license before any taxable sale, and decide on an operating agreement. Arizona does not require one and it is not filed with the ACC; without one, the statute's default rules apply (L010i). State-neutral steps are in how to form an LLC; see also who still files a BOI report.

What makes a case not simple: two or more members (a partnership return), an S corporation or pass-through entity tax election, taxable sales, a sole proprietorship moving into the LLC, or an owner who lives outside the US.

What to gather: the statutory agent's street and mailing address and its county; the principal address; each member's and manager's name and address; whether the LLC will have one owner or more; and what it will sell.

What is a statutory agent in Arizona, and must it accept first?

A statutory agent is Arizona's name for a registered agent: the person or company that receives lawsuits and official notices for the LLC. Every Arizona LLC must designate and keep one, and the appointment is not effective until the agent signs an acceptance (A.R.S. 29-3115).

The ACC rejects articles if no acceptance is in its system when it examines them. Online, the agent accepts through its own ACC dashboard; on paper, the agent signs form M002 (ACC instructions L010i).

• An individual agent must be an Arizona resident, at least 18, with an Arizona street address (ACC FAQ).
• A company agent must be authorized to do business in Arizona. The LLC cannot be its own agent, but a member or manager can serve as an individual.
• The ACC sends official notices to the agent, so a stale agent address means missed notices.

General rules, being your own agent and changing agents are in the registered agent guide.

Do I have to publish my Arizona LLC?

Only if the statutory agent's street address is outside Maricopa and Pima counties. Arizona law skips newspaper publication when the agent's street address is in a county of more than 800,000 people; the ACC then posts the notice in its own database (A.R.S. 29-3201). The ACC's instructions name Maricopa and Pima as those counties (L010i).

Everywhere else, publish a notice of the articles in a newspaper of general circulation in the agent's county, three consecutive times, within 60 days after the ACC files the articles. Do not publish before approval; the ACC's approval letter says whether and how to publish. Filing the newspaper's affidavit of publication with the ACC is optional; keep it with the LLC's records (ACC FAQ).

The test is the agent's county, not where the owner lives or the business operates. The same rule applies to a later amendment, such as a new name or a switch between member- and manager-managed; one that changes only member or manager names or addresses, the principal address or the agent needs no notice (A.R.S. 29-3202). Content, cost and other states are in the publication requirement guide.

Does an Arizona LLC file an annual report or pay a yearly fee?

No to both. The ACC says only corporations file annual reports (ACC FAQ), and its LLC fee schedule lists no yearly fee (ACC fee schedule). An Arizona LLC still has state filings when facts change:

Deadlines are from A.R.S. 29-3202; fees from the ACC schedule. The ACC may start to dissolve an LLC that goes 60 consecutive days without a statutory agent or principal address, leaves a fee unpaid 60 days past due, does not report an agent or address change within 60 days, or skips a required amendment or statement of change; the LLC then has 60 days after the ACC's notice to fix it (A.R.S. 29-3708). Until a required amendment is filed, the LLC also cannot sue in Arizona courts on its contracts (A.R.S. 29-3202). Reinstatement costs $100 plus every fee and penalty due before and during the dissolution, must be applied for within six years, and needs a new name if someone has taken the old one, which the ACC releases after six months (A.R.S. 29-3709); see reinstating your company. Every state's yearly fee and report are in the LLC annual fees table.

How is an Arizona LLC taxed?

Arizona follows the LLC's federal tax classification (Form 120S instructions). For a disregarded or partnership LLC, the owners pay Arizona income tax on their shares.

The single-member and partnership rules are in the Form 165 instructions. How the federal partnership return works is in how partnerships are taxed.

An LLC taxed as a partnership or S corporation may instead elect to pay Arizona tax at the entity level, at 2.5%, for owners who are individuals, estates or trusts and do not opt out (A.R.S. 43-1014). How the election works and whether it pays off are in the pass-through entity (PTE) tax guide.

Do I need a transaction privilege tax (TPT) license?

Yes, before the first sale, if the LLC does a taxable activity. The Arizona Department of Revenue (ADOR) lists retail sales, restaurants and bars, hotel and motel lodging, commercial leases, amusements, personal property rentals and contracting, among others (ADOR). A business may not operate until it holds the license (A.R.S. 42-5005).

TPT is often called sales tax, but ADOR describes it as a tax on the vendor for the privilege of doing business (ADOR). If the LLC does not show the tax on an invoice, it still owes it; it may factor the tax out of its receipts when it reports (tax factoring). Tax added to a customer's bill and not paid over is also a personal debt of whoever fails to remit it (A.R.S. 42-5028).

• The state license costs $12 per location and is renewed each calendar year with no state renewal fee.
• A city that levies its own privilege tax needs a city license too, applied for through ADOR, at a fee of up to $50 set by the city. Its renewal fee, up to the same amount, is due January 1 and late after the last business day of January; staying in business on an expired city license adds a civil penalty (A.R.S. 42-5005). A city may also require its own business license, separate from TPT (ADOR).
• Rates vary by activity, city and county; ADOR collects for the counties and cities.
• A license does not transfer when ownership changes, and ADOR says a sole proprietor becoming a corporation or partnership may need a new one; check before the LLC's first sale (ADOR license changes).

Renting homes or apartments for 30 days or more carries no state, county or city TPT, but the property must still be registered as a rental with the county assessor, which may fine an unregistered one (ADOR residential rental). Stays of fewer than 30 days are taxable lodging: the owner needs a TPT license and must show its number on every listing (ADOR short-term lodging).

A seller with no Arizona presence must register once its sales into Arizona exceed $100,000 in the current or previous calendar year (ADOR); remote and marketplace rules are in when you must collect sales tax.

What if my Arizona LLC is taxed as a corporation?

An LLC that elects C corporation tax files Arizona Form 120 (or the short Form 120A if all its business income is taxable only in Arizona) and pays the greater of $50 or 4.9% of Arizona taxable income (A.R.S. 43-1111; Form 120 instructions). One that elects S corporation tax files Form 120S. Both elections are made federally and Arizona follows them: Form 8832 for C corporation tax, or Form 2553 for S corporation tax, with every member's signed consent, filed no more than 2 months and 15 days after the start of the tax year it is to take effect (Form 2553 instructions). Both have lasting effects; see should you elect S corporation status.

How long does it take to form an LLC in Arizona?

Regular review typically takes 14 to 16 days; expedited review typically takes 3 to 5 days (ACC FAQ). The ACC posts current wait times each week.

Fees and conditions are from the ACC fee schedule. If the articles meet every requirement, the LLC exists from the day they were delivered, unless they set a later date of up to 90 days. If the ACC asks for more and gets it within 30 days, the original delivery date still counts (L010i).

Example

These examples are illustrative; figures are in US dollars.

A Phoenix contractor with a Maricopa County agent

A single-owner contracting LLC names an agent with a Phoenix street address and pays $50 for regular review, or $85 to expedite. Because the agent is in Maricopa County, the ACC posts the notice and no newspaper is needed. It will build new structures, a taxable contracting activity, so before its first job it gets a Registrar of Contractors license, posts the bond ADOR requires of most new contractors, and applies on paper (new contractors cannot apply online) for its state TPT license ($12) and any city license. A contractor whose every job is maintenance, repair, replacement or alteration below ADOR's threshold needs no TPT license; it pays tax on materials when it buys them (ADOR contracting guidelines). It files no annual report, and the owner reports the profit on Form 140.

A Flagstaff shop with its agent in Coconino County

The ACC files the shop's articles on March 2. The owner publishes the notice in a Coconino County newspaper three consecutive times, finishing by May 1, and keeps the affidavit. The shop gets its TPT license before its first sale.

A two-member Tucson LLC

Two equal members earn $80,000 of profit. The LLC files federal Form 1065 and Arizona Form 165 by March 15, and each member reports a $40,000 share on an Arizona return. With a Pima County agent, it skips newspaper publication.

Different for you?

• Two or more members: a partnership return and Form 165 follow every year; see how partnerships are taxed and splitting ownership between LLC partners, set it up with business formation help, and get the yearly returns done with business tax help.
• Weighing an S corporation or PTE election: see should you elect S corporation status and the pass-through entity tax guide, and before you elect get business formation help at setup, or business tax help for an LLC already running.
• Already in business as a sole proprietor: see sole proprietor to LLC for the new EIN, bank account and tax return changes.
• The LLC will hold a rental: see books for an LLC per rental property, with bookkeeping help.
• Missed the publication window or a change filing, or the LLC was dissolved: see the publication requirement guide and reinstating your company, with business formation help.
• Taxable sales, or sales already made without a TPT license: see when you must collect sales tax and catching up on uncollected sales tax, with bookkeeping help for the filings.
• Owner outside the US: follow a US LLC for non-residents, step by step, with cross-border tax help.
• Still choosing a state, or operating in another state too: see which state to form in and registering in another state.
• Comparing total cost: see LLC cost by state.