How to Form an LLC in Arizona?
This guide will help you register a limited liability company in the state of Arizona, and answer relevant questions on how to form an LLC in Arizona. You will learn how to:
Everyone must follow six steps for creating an LLC in Arizona. In the first step, you will need to check if the name of the company is available to register. You may check the name availability by consulting Arizona Corporation Commission name database.
After reviewing the availability, it’s time to select a statuary agent. The statuary agent can be an individual or a legal entity that has a physical address in Arizona. The third step is to file the article of organization. The article of organization is a form, which highlights your business profile. More information on how to file an article or organization is provided in the following paragraphs.
After completing the form, you must pay the relevant fee, which is $50 for standard filing and $85 for expedited filing. After the payment, you must publish a notice of publication in a state-approved newspaper about the initiation of your new company. Once done, members of LLC must sign an operating agreement that complies with the update legal requirement.
While answering how to get an LLC in Arizona, this article also discusses how to properly submit the article of organization to prevent delays and clarification from state authorities. In addition, you will learn how to apply for EIN, Employer Identification Number.
How to select a name for your Arizona for LLC?
To select a name for your limited liability company, it’s important to consider that the name is unique to the state of Arizona, and it doesn’t interfere with the trademarks of other organizations.
Checking the availability of name is easier than you may think. Just go to Arizona LLC Search Corporation Commission Name Database at https://ecorp.azcc.gov/EntitySearch/Index to make sure that the name is available for registration. Please note that you can file “article of organization” without checking the name; however, the ACC will reject your application if it finds a duplicate name or if the name interferes with the trademark. Therefore, make sure that you go to the database to review the availability of the name before filing the article of organization.
While it’s easier to think about a unique name, professional business practices require consumers to consider various factors before naming the company. For instance, you want to make sure that your name doesn’t infringe on trademark and copyrights of other companies and products. Secondly, it is also practical to think a name that is easy to remember. In today’s dynamic world where thousands of companies open each day, a simple name will positively affect brand identity.
It is also logical to name the company according to the product and services offered by your organization. Likewise, savvy entrepreneurs make sure that a relevant domain name is also available for them to purchase.
Regarding trademark infringement, you can check the name of your company and variations of the name in the searchable database of US Patent and Trademark office. If the name is common, there are chances that it may infringe upon the trademarks of other products or services. While it doesn’t mean that you will not be able to register the name, it may affect your expansion as you try to expand your businesses to other states.
You can get a strong trademark by trying variations of arbitrary trademarks. Some examples of famous arbitrary trademarks are Xerox, Kodak, Exxon, Aspirin, and Apple, among others. These names don’t mean anything, but they seem like they are a part of the language or another language. If you’re not sure about a name, just make sure to give your company a simple name, which is not difficult to pronounce.
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Select the Statuary Agent
Every business in Arizona must have a statuary agent. Also known as the registered agent, the primary purpose of the statuary agent is to ensure that each registered business can get legal documents at a physical address in Arizona. It also means that the statuary agent must have a physical address because the P.O. Box will not suffice. A statuary agent also receives the summons, complaints, and other public notices from state authorities.
The statuary agent can be a person or a legal entity. Any person over 18 years of age residing in the state of Arizona can be named an agent. Similarly, a domestic company based in Arizona can also be a registered agent. In fact, a foreign company that has a physical address in Arizona can be named as a statuary agent. Similarly, any limited liability company that has a physical presence in the state can be an agent. It should be noted that you cannot name your own company to become a statuary agent for your business. A statuary agent is a distinct entity separate from your business legal framework.
A statuary agent is extremely necessary for conducting the business because the state wants someone to receive legal notices at a physical address in the state. As such, you may name a resident of Arizona to become an agent; however, the person should be able to receive mail at the address. In case they miss an important document by the state, the state is not responsible for miscommunication. To ensure reliability, a lot of companies select a professional company to become their registered agents.
These professional companies are regulated by the state authorities to provide “statuary agent” services to new companies. As part of their business offerings, they offer businesses a chance to get their legal document delivered to them in a timely manner without any delay. For a couple of dollars, you can also hire a professional company to become your statuary agent. Mostly, you can also get access to an online portal providing the scan of important documents for you so you can read the documents without picking it from the registered agent office.
Besides, professional companies also offer a variety of related services that includes phone services, physical address, meeting space, virtual office, phone numbers and a lot of important business-related services. It is common for these companies to bundle their services in a package reducing the overall cost of services. Usually, the overall price package is a great value for businesses that don’t have a physical space in Arizona. Thousands of online businesses, out-of-state companies and foreign business designate statuary agents to streamline their business operations at a low monthly cost.
Prepare and File Article of Organization
In Arizona, the article of organization consists of eight sections. Each section contains vital information about the company, which needs to be filled correctly.
Section 1 :
Entity Type : In this section, you need to indicate if you want to register a limited liability company or a professional limited liability company. A professional limited liability company is usually registered by a tradesperson who needs a special permit or license from the government to operate their business. These can include doctors, real estate advisors, health professionals, and construction companies, etc.
On most occasions, you will establish a regular LLC instead of creating a professional limited liability company. However, your trade organization may require you to establish a professional LLC, which has particular tax and legal advantages. If you are not sure, it is better to call your trade organization or the authority that provides the licensing to see if they require you to register as a professional LLC. Remember, agents at Arizona Trade Commission are not authorized to provide you such information because it contains legal and tax advice. If you are using a professional agent, you can also ask them to help you verify the information.
Section 2 :
Entity Name : In this section, you just need to write the name of the company. We have already covered the details on how to name your company. As a formality, you must include Limited Liability Company or Limited Company while naming your company. You can also use any abbreviation of the name including L.L.C., L.C., LLC or LC. Besides, you should not use the words that include such words as association, corporation, incorporated or any abbreviation of these words. If you want to use these words or words associated with Banks, Trust, Loan Association, and Savings Association, you must ask the Department of Financial Institution before naming the company.
Section 3 :
Professional LLC Company Services : If you have selected to register a professional limited liability company, then you must indicate the type of service that your professional LLC will offer. You may write law firm, medical, and accounting as the type of professional service you are offering. If you are registering a standard limited liability company, then you should skip this section entirely.
Section 4 :
Statuary Agent for Services of Process : In this section, you will need to write the name and address of the statuary agent. We have already discussed the role of a statuary agent. If the statuary agent has a different street address and mailing address, then you also need to write the mailing address of the statuary agent.
It is important to name a responsible person as your statuary agent because the state law requires the statuary agent to receive mail from the state authorities and pass it to the legal entity. Since the responsibility of communication lay on the statuary agent, it may be important to select a professional agent instead of naming a single individual to represent you. In the case of miscommunication or the person not present to receive the document, the statuary agent will be held responsible for their duties.
To ensure that the statuary agent realizes its responsibility, the state requires the statuary agent to sign and accept a separate form known as “statuary agent acceptance form”. You will need to send the form along with the article of organization to the state authorities. Follow the link to download relevant forms including article of organization and statuary agent acceptance form.
Website Link: Arizona Corporate Commission Website
Section 5 :
Arizona Known Place of Business Address : This is a self-explanatory section where you are required to indicate the physical address of your business. If you don’t have a physical presence or you have designated a statuary agent as your registered address, then you can skip this section.
Section 6 :
Duration : This section asks you to indicate the duration of your business. Most business owners open their business for an indefinite period, which means that they want to run their business for as long as possible without any closing date. If the life period of the LLC is “forever”, you can skip this section and move to the next sections.
On the other hand, you may want to fill the time period if you know the ending period of your business. Sometimes, foreign entities and business franchise sign contracts with the parent company to operate a business for a particular period. In other instances, the office or the business space is leased for a specific time, which requires the owners to let the state authorities know about the duration of business.
Section 7 & Section 8 :
Type of LLC : Depending on who runs your LLC, you will either need to fill section 7 or section 8. You will fill section 7 if one or more managers are given responsibilities to run your company. If you or other members of the company will run business affairs, you are required to complete section 8. Following are instructions on how you may properly fill each section:
Manager-Managed LLC : If the company is run by one or more managers, you will need to attach manager structure attachment form along with the article of organization. The manager structure attachment form is available on the Arizona Corporate Commission Website indicated above. Your application will be rejected if you fail to attach this form.
The form asks the LLC to list the name of each manager and member of the company. You will need to list the name and address of the manager or all the managers in your company. Likewise, you will also need to list all the members of your company; however, you only need to list members that have a 20% or more profit-sharing or capital investment in the company. If any member doesn’t have more than 20% profit-sharing agreement or the member did not invest more than 20% in the company, there is no need to list the name of that particular member.
Usually, the form has space for only six profiles but you can attach another manager structure attachment to complete additional profiles, if required.
Section 8 :
Member Structure Attachment: Just like the previous entry, you are required to complete this form along with the article of organization. Each LLC is required to complete the profile of each of its members irrespective of the share of profit or capital investment. In simple words, you must list all the members of the company in this form.
Please note that you need to complete either Section 7 or Section 8. Accordingly, you should not send both Section 7 and Section 8 because you will likely get a clarification request from state authorities delaying the entire process.
Submission of Article of Organization
Once you have prepared the article of organization, it’s time to send it to state authorities. Before you send the paperwork, make sure that you have everything in order for state authorities. In most cases, you are required to send three official Arizona LLC forms:
• Article of Organization: This is the form that we discussed in the preceding paragraphs. You are required to complete each relevant section and sign it. Anyone sending the article or a member of the organization can sign the form but it is recommended that a responsible member of the company or a manager of the company sign article of organization.
If you have selected a professional agent to complete the paperwork, they will take care of all the legalities for you.
• Statuary Agent Acceptance Form
As described earlier, your statuary agent must sign this form. You cannot be your own statuary agent, and you should not try to sign the form yourself. Always make sure that you send the form to the statuary agent ensuring that the agent understands the responsibility. Due to the responsibilities of a statuary agent, most LLCs are represented by a professional firm that acts as their statuary agent.
• Manager Structure Form or Member Structure Form
You must send one of these forms. Don’t send both forms.
Altogether, there are three forms that you must send to complete your registration process. However, if the structure of your LLC is more complex or there is additional information that you must send to state authorities, you can send additional forms, as required. To discuss additional requirements, it is best to talk to a professional company or a lawyer.
Most professional agents include a cover sheet with the documents making it easier for the agents to process the documents. You can also include a cover sheet. Once done, it’s time to pay the fee. The easiest method to submit the form is using the online method. We will discuss the method in the next section; however, if you want to hand the papers to state authorities, follow these guidelines:
The ACC offices are located in Phoenix and Tucson, which are normally open from 8 o’clock in the morning to 5 o’ clock in the afternoon, except holidays. You will need to take the three forms, the cover letter, and the cash or a cheque to the offices located at:
- Phoenix office: 1300 W. Washington, 1st Floor, Phoenix, AZ 85007.
- Tucson office: 400 W. Congress St., Tucson, AZ 85701
You should make three copies of your forms and article of organization. Keep one copy for your records until you get back the original document. Submit the original forms to state authorities and ask them to stamp an additional copy to show the date when an article of organization was delivered to them. You can show the stamped copy to your bank or trade partners to initiate business proceedings until you get the official paperwork from the state authorities.
If confused, just make sure to submit the original copies. If everything is in place, you should get a registered mail with the official certificate of registration within a week or ten days, maximum.
Pay the Filing Fee?
If you’re using the online channel, you may pay the $50 filing fee using any major credit card. On the other hand, if you are submitting the documents by hand or you are sending it through a registered mail, you can pay by cheque. Anyone visiting the offices can also pay by cash.
If you want expedited service, there is a separate charge of $35 to speed up the registration process. By paying $85, you will likely get your certificate of registration within five to seven business days. For normal processing times, it usually takes 15 to 17 days to complete the entire procedure. Experts recommend that you should spend an extra $35 to expedite the process.
Expediting the process seems a practical suggestion as you don’t want to wait almost a month only to get some kind of clarification request from state authorities. Please note that the processing times are identical irrespective of the method of filing you chose. For instance, you are likely to get your documents within 5 to 7 days for expedited services if you submit it online or by hand.
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Publish a Notice of Publication in ACC Approved Newspaper
The next step is to publish a notice publication in a local newspaper if your physical address or address of the statuary agent is outside Maricopa County or Mipa County. The notice of publication is a general notice to the public which indicates the name of the company, its members, address, and other basic particulars.
According to the state laws, the notice must be published for three consecutive days in a local newspaper of a county where your business is established. You should plan to spend anywhere from $65 to $90 for such publications. These publications must be submitted within the first 60 days of your business registration in the state of Arizona. If you fail to realize the responsibility, the state has the right to revoke your business registration.
If you have hired a professional agent to serve your business interest, they will take care of all the formalities for you saving you the cost and time associated with such publications. If you want to do it yourself, you can use the following format to publish the notice or publication:
- Mention the name of your company and the date of its registration.
- The address of your company or the address of the statuary agent.
- The street address of your company. If you don’t have a physical address in Arizona, then indicate the address of your statuary agent. If you have a physical presence in the state, the company’s address may be different than the address of your statuary agent.
- Name and address of managers, if the company is managed by a manager or multiple managers.
- The name and address of each member
Often, it is difficult to provide a streamlined notice of publication that will fit every company. Therefore, it is better to consult a professional agent or the local newspaper to ask them about the details.
After registering the company, you will require important documents to run your business. Following is an overview of such documents:
- Operating Agreement
- EIN, Employer Identification Number
An operating agreement is fundamental to running a profitable business. According to the new Arizona state laws, all limited liability companies are encouraged to submit an operating agreement to ensure smooth operations. A standard operating agreement usually indicates the duties, roles, and responsibilities of each member of a company. It tells others about the structure of the business, capital investments of each member, and profit-sharing.
As responsible businessmen, you should submit the operating agreement to state authorities as early as possible because it may save you from liabilities in the future. In fact, banks and other financial institutions will also like to see an operating agreement before initiating business talks with you. Similarly, your trade partners and other business associations may also require an operating agreement. Overall, creating an operating agreement shows that you are a professional company that is managed by responsible individuals who realize their respective duties.
While there are a lot of standard operating agreement samples that you can download from the Internet, it is still better to consult a professional if you are registering the business in Arizona. It is recommended because LLC companies may need an ALLCA compliant operating agreement due to the recent changes in companies’ state ordinance.
If you are the only member in a LLC, it is better to craft an operating agreement as you will need it for opening a bank and trading accounts. For further details, consult your lawyer or a professional agent who can guide you in drafting an operating agreement according to your requirements.
Why Creating an Operating Agreement is necessary?
It is important for LLCs to draft a workable operating agreement because the state law takes precedence in case there is no operating agreement in place. While this may seem a trivial issue to most readers, it is extremely important because you do not want the state laws to govern your business operations.
If you are a multi-member company or your company is operated by a manager, you should immediately draft an operating agreement because state laws may not be conducive to how you want to share profits and returns if your business stops operating. Most disputes occur because non-professional LLC doesn’t have an operating agreement that can define the role and responsibility of each member.
For instance, the state law requires that the distribution of money should be made in accordance with the capital contribution of each member before the profit is shared with other members. In such cases, if you earn a profit of 20% from the proceeds, you may not get anything if other members, who have contributed more capital than you, don’t get their returns when the company defaults.
The law may seem unfortunate for members who have always done their jobs according to their duties. If you don’t have an operating agreement, you may not get anything from the profits or proceeds from the sale of inventory and properties. By adopting an operating procedure according to your desires and taste, you will be able to get your fair share of business proceeds. If you are not sure how to draft such an agreement, talk to your professional agent or a lawyer who are adept in crafting operational agreements for LLC companies.
When to Amend an Operating Agreement according to the State Law?
The state law requires every limited liability company to send a new operating agreement to state authorities if certain things change. Failure to send the new and updated version of the operating agreement within thirty days of the change may result in revocation of the operating agreement. It also means that the state of Arizona will be forced to use its default laws to solve issues pertaining to the article of organization.
Here are four instances where every business owner must send a revised and an updated copy of article of organization:
1. If you feel that a statement in the article is incorrect, you should send a revised copy to the state authorities. If there is a change of address or a change of statuary agent, the original articles will remain intact, which means that there is no need to send a revised version once the address of the statuary agent is changed.
2. Whenever a new member comes in a member-managed company, you will need to send a revised copy of the operating agreement with details of the member profile, duties, and profit-sharing. Similarly, if any of the members leave the company, you will be required to send a revised version.
3. If there is a change in a manager in the manager-managed company, the LLC is required to send a revised version. It means that you will rewrite the name of the new manager and delete the name of the previous manager. You should also disclose any changes in the roles and duties of the manager if required.
4. A manager-managed company is also obligated to revise its operating agreement if any of the members holding a 20% or greater capital interest in the company leaves or another person become a member based on a similar criterion. If an existing member of the company acquires a greater capital interest in the company, which exceeds 20%, the LLC should send a revised copy of the operating agreement. As such, if the existing member of the company reduces its capital contribution, which is lower than 20% stake, you should also send a revised agreement.
While creating and amending the operating agreement may be easier, creating an agreement that abides by all the laws of the state is trickier. Accordingly, all multi-member companies ask their lawyers or the professional agent to help them with such matters. As a responsible business owner, you should also get an expert opinion before crafting an operating agreement.
EIN, Employer Identification Number
After registration, you will need to apply for an employer identification number. You can easily get EIN free of charge by submitting an online request. As a response to your request, you can get EIN instantaneously to use it for various business and tax purposes.
Sometimes, single-member company owners do not get EIN, which causes problems when they want to pay tax or negotiate a deal with trade partners. Irrespective of the status of your company, getting EIN is important because you will need it for everything from opening a commercial bank account to taking a loan. D
Don’t delay the process as you can easily get an employer identification number within hours. If you are not sure how to apply for EIN, call a professional agent or the local small business organization to guide you through the process.
Overall, registration of LLC Arizona is easier than most of us think. If you follow this guide, you can get your company registered within a week. In fact, if you are a single-member company, you may register your company without creating an operating agreement. On the other hand, multi-member companies should consult a professional agent before starting the process. Hopefully, this article has answered all of our most basic questions about how to set up an LLC in Arizona allowing you to start the process with confidence. Still, if you have questions in mind, please do not hesitate to contact us for further guidance. Check out our next guide on LLCs in Arkansas here.