Overview of Arizona LLCs

Arizona is one of the most business-friendly states in the nation for forming and maintaining a Limited Liability Company (LLC). Governed by Arizona Revised Statutes (A.R.S.) Title 29, Chapter 3 (Arizona Limited Liability Company Act), Arizona LLCs offer liability protection, pass-through taxation, and operational flexibility with minimal ongoing compliance requirements.

LLC formation and maintenance in Arizona is handled by the Arizona Corporation Commission (ACC) through the eCorp online filing system. Key features of Arizona LLCs include:

• $50 filing fee (online) - one of the lowest in the nation
• NO annual report requirement - zero ongoing state filing fees (unique advantage)
• Publication requirement - must publish formation notice in newspaper (Arizona-specific)
• No franchise tax - Arizona does not impose franchise or privilege tax on LLCs
• Fast online processing - 5-10 business days standard, same-day available
• Pass-through taxation at federal and state level
• Professional LLC (PLLC) option for licensed professionals
• No series LLCs - Arizona does not allow series LLC structures

Step-by-Step Guide to Forming an Arizona LLC

Step 1: Choose a Name for Your Arizona LLC

Your LLC name must comply with Arizona naming requirements under A.R.S. § 29-3112:

• Required Designation: Must include "Limited Liability Company," "LLC," or "L.L.C."
• Distinguishable: Must be distinguishable from names of existing entities on file with ACC
• Restricted Words: Cannot use "bank," "trust," "insurance," or similar terms without proper licensing
• Not Misleading: Cannot falsely suggest government affiliation

Check Name Availability

• Online Search: Use Arizona Corporation Commission eCorp Name Search
• Free Search: Name availability check is free
• Reserve Name: You can reserve a name for 120 days for $10 (renewable)
• Trade Name: Can also register trade name (DBA) for $10

Step 2: Appoint a Statutory Agent

Every Arizona LLC must have a statutory agent (Arizona's term for registered agent) under A.R.S. § 29-3104:

• Requirements: Must be an Arizona resident (individual) OR an Arizona business entity authorized to do business in Arizona
• Physical Address: Must have a physical street address in Arizona (P.O. boxes NOT allowed)
• Responsibilities: Receives service of process, legal notices, and official state correspondence
• Availability: Must be available during normal business hours
• Consent: Agent must consent to appointment (included in Articles of Organization)

Statutory Agent Options

Step 3: File Articles of Organization

File your Articles of Organization with the Arizona Corporation Commission to legally create your LLC:

Required Information

• LLC Name: Official legal name including LLC designation
• Known Place of Business: Physical address in Arizona (can be statutory agent's address)
• Statutory Agent: Name and Arizona street address
• Management Structure: Member-managed or manager-managed
• Organizer: Name and signature of person filing
• Effective Date: Immediate or specific future date (up to 90 days)
• Duration: Perpetual or specific termination date

Filing Methods & Fees

Online Filing: File at Arizona Corporation Commission eCorp

Mailing Address (Paper Filing):

Step 4: Publish LLC Formation Notice (Arizona-Specific Requirement)

Arizona is one of only a few states that requires publication of LLC formation in a newspaper (A.R.S. § 29-3202):

Publication Requirements

• Timeframe: Within 60 days of ACC approval of Articles of Organization
• Newspaper: Newspaper of general circulation in the county of the LLC's known place of business
• Frequency: 3 consecutive publications (typically 3 consecutive weeks or issues)
• Content: Must include LLC name, known place of business, statutory agent name and address, management structure, and names/addresses of members/managers
• Cost: Varies by county and newspaper ($40-$200 typical range)

How to Publish

1. Contact a newspaper of general circulation in your county
2. Provide the required information (ACC-approved Articles typically include publication text)
3. Newspaper will publish notice 3 consecutive times
4. Newspaper will provide you with Affidavit of Publication after final publication

Cost by Major County

Step 5: File Affidavit of Publication

After publishing, file the Affidavit of Publication with ACC:

• Deadline: Within 90 days of ACC approval of Articles of Organization
• Document: Affidavit provided by newspaper proving 3 publications occurred
• Filing Fee: $0 (no fee to file Affidavit of Publication)
• Filing Method: Online via eCorp or mail to ACC
• Consequence of Non-Filing: LLC remains valid, but may not be able to maintain lawsuit in Arizona courts until publication requirement met

Step 6: Create an Operating Agreement

While Arizona does not require LLCs to have an operating agreement, creating one is highly recommended:

Key Provisions to Include

• Member names, addresses, and ownership percentages
• Initial capital contributions
• Management structure (member-managed vs. manager-managed)
• Voting rights and decision-making procedures
• Profit and loss allocation
• Distribution rules
• Transfer restrictions and buyout procedures
• Dissolution procedures
• Indemnification provisions

Important: Operating agreement is an internal document - do NOT file with ACC. Keep it with your LLC records.

Step 7: Obtain an EIN (Employer Identification Number)

Most LLCs need a federal Employer Identification Number (EIN) from the IRS:

• Required For: Multi-member LLCs, LLCs with employees, LLCs taxed as corporations, opening business bank accounts
• Optional For: Single-member LLCs with no employees (can use owner's SSN, but EIN recommended for privacy)
• How to Apply: Free online application at IRS.gov
• Processing Time: Instant (receive EIN immediately upon online application approval)
• Cost: Free (beware of third-party services charging fees)

Step 8: Comply with Local Requirements

After forming your LLC with the state, comply with local requirements:

• Transaction Privilege Tax (TPT) License: Register with Arizona Department of Revenue if selling goods/services subject to TPT
• City/County Licenses: Obtain any required local business licenses
• Zoning Compliance: Ensure business location complies with local zoning
• Employer Registrations: If hiring employees, register for unemployment insurance

Arizona LLC Taxation

Arizona has a business-friendly tax environment with no franchise tax or entity-level tax for LLCs:

Federal Income Tax

• Default Classification: Single-member LLCs are "disregarded entities"; multi-member LLCs are partnerships
• Pass-Through Taxation: LLC profits/losses pass through to members' personal tax returns
• Self-Employment Tax: Active members pay self-employment tax (15.3%) on their share of profits
• Optional S-Corp Election: Can elect S-corporation tax treatment for potential self-employment tax savings

Arizona Individual Income Tax

Arizona has progressive income tax rates (2024 rates):

• Pass-Through: LLC income passes through to members who report on Arizona Form 140
• Non-Resident Members: Non-resident members pay Arizona tax on Arizona-source income

No Franchise Tax or Annual Fee

Arizona does NOT impose:

• No Franchise Tax: Arizona has no franchise or privilege tax on LLCs
• No Annual Report Fee: Zero ongoing state filing fees (huge cost savings)
• No Minimum Tax: No minimum annual tax regardless of revenue

Transaction Privilege Tax (TPT) - Arizona's Sales Tax

• State Rate: 5.6% base rate
• Local Rates: Cities and counties add local taxes (combined rates typically 7.5%-11%)
• Registration: Required if conducting business subject to TPT
• Filing: Monthly, quarterly, or annually depending on volume
• Contact: Arizona Department of Revenue

Ongoing Compliance Requirements

No Annual Report Required

Arizona LLCs do NOT file annual reports with the state. This is a major advantage:

• No annual state filing fees
• No annual deadline to remember
• Minimal ongoing compliance burden
• Significant cost savings over time

Update Statutory Agent if Needed

• Maintain Agent: Must have statutory agent at all times
• Update Changes: File Statement of Change if agent or address changes ($10 fee)

Federal & State Tax Returns

• Federal: Form 1065 (multi-member), Schedule C (single-member), or corporate return if elected
• Arizona: Form 165 (partnership), Form 140 (individual members)
• Estimated Taxes: Quarterly estimated tax payments if LLC owes significant tax

Employment Taxes (If You Have Employees)

• Federal: Quarterly Form 941 (payroll taxes), annual Form 940 (unemployment)
• Arizona: Withholding tax, unemployment insurance

Amendments & Changes

File amendments with ACC when making changes:

Dissolving an Arizona LLC

Step 1: Member Vote

• Follow dissolution procedures in operating agreement
• Document decision in written resolution

Step 2: Wind Up Business Affairs

• Notify creditors, customers, and business partners
• Pay all outstanding debts and obligations
• Liquidate assets
• Distribute remaining assets to members
• Cancel business licenses and permits
• Close EIN with IRS

Step 3: File Articles of Termination

• Form: Articles of Termination
• Fee: $0 (no fee to file termination)
• Filing: Online via eCorp or mail to ACC
• Required: Statement that all debts paid or adequate provision made

Step 4: File Final Tax Returns

• File final federal and Arizona tax returns marked "FINAL"
• Pay any remaining tax liabilities

Professional LLCs (PLLCs)

Arizona allows certain licensed professionals to form Professional Limited Liability Companies:

Eligible Professions

• Attorneys
• Physicians and surgeons
• Dentists
• Optometrists
• Chiropractors
• Podiatrists
• Certified public accountants
• Architects
• Engineers
• Other licensed professionals

PLLC Requirements

• Licensed Members: All members must be licensed in the profession
• Name: Must include "Professional Limited Liability Company," "PLLC," or "P.L.L.C."
• Professional Liability: LLC does not shield members from their own professional malpractice
• Formation: Same process as standard LLC

Common Mistakes to Avoid

• Forgetting Publication Requirement: Must publish within 60 days and file Affidavit within 90 days
• Using P.O. Box for Statutory Agent: Statutory agent must have physical street address
• No Operating Agreement: Failing to create operating agreement leaves gaps in governance
• Commingling Funds: Mixing personal and business finances can pierce LLC liability protection
• Not Updating Statutory Agent: Failing to file Statement of Change when agent changes
• Paying for Free EIN: Many services charge $50-$300 for free IRS EIN application
• Assuming Annual Report Exists: Arizona has NO annual report - don't pay scam companies claiming you need to file one

Frequently Asked Questions

How much does it cost to form an LLC in Arizona?

The Arizona LLC filing fee is $50 for online filing (or $85 for expedited filing). You must also publish notice of formation in a newspaper (typically $40-$200 depending on county) and file an Affidavit of Publication ($0 filing fee). Total first-year costs are approximately $90-$250. Arizona has NO annual report requirement, making it one of the most affordable states for ongoing LLC compliance.

Does Arizona require an annual report for LLCs?

No! Arizona does NOT require LLCs to file annual reports. This makes Arizona one of the most business-friendly and cost-effective states for LLC maintenance. There are no ongoing state filing fees after formation (except statutory agent if using commercial service).

What is the publication requirement for Arizona LLCs?

Arizona requires LLCs to publish notice of formation in a newspaper of general circulation in the county of the known place of business for 3 consecutive publications within 60 days of ACC approval. After publishing, file an Affidavit of Publication with ACC within 90 days. Cost varies by county ($40-$200). Failure to publish does not invalidate the LLC but may result in inability to maintain lawsuit in Arizona courts.

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

Standard online filings through Arizona Corporation Commission eCorp are typically approved within 5-10 business days. Expedited same-day processing is available for an additional $35 fee.

Does Arizona require an operating agreement for LLCs?

Arizona does not legally require an operating agreement, but it is highly recommended. An operating agreement outlines ownership structure, management, profit distribution, and procedures for major decisions. While not filed with the state, it provides legal protection and clarity for members.

What taxes does an Arizona LLC pay?

Arizona LLCs pay federal income tax (pass-through to members), Arizona individual income tax (2.5%-4.5% progressive rates on members' share), and no entity-level tax or franchise tax. Sales tax varies by location (5.6% state base rate plus local taxes). Arizona has no annual report fee, making it one of the most tax-friendly states for LLCs.

What are Arizona LLC name requirements?

Arizona LLC names must include "Limited Liability Company," "LLC," or "L.L.C.," be distinguishable from existing business names on file with ACC, and not contain restricted words ("bank," "trust," "insurance") without approval. Check availability using the Arizona Corporation Commission eCorp name search.