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Last Updated on October 1, 2024 by Dr. Gabriel O’Neill, Esq.
For aspiring entrepreneurs in Arizona, one key consideration stands out: the cost of forming a Limited Liability Company (LLC).
Many business owners ask, “How much does it cost to start an LLC in Arizona?” or “What are the fees involved in forming an LLC?” Understanding the details of this process helps break down the factors that influence the total expense of setting up an LLC in the state.
In the midst of these complexities, services like ZenBusiness offer valuable support, helping streamline the LLC formation process and reduce costs. This article explores the specific costs of forming an LLC in Arizona and highlights how ZenBusiness can assist entrepreneurs in managing these expenses efficiently.
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What Is the Cost of Forming an LLC in Arizona?
Starting an LLC in Arizona entails a primary $50 fee for regular processing and $85 for expedited processing of the Articles of Organization with the Arizona Corporation Commission.
Moreover, new LLCs must adhere to a publication mandate, requiring them to publish a Notice of LLC Formation Service in an authorized county newspaper for three consecutive weeks within 60 days of formation; the cost varies from $60 to $300, contingent on the county, with exceptions for businesses situated in Maricopa or Pima counties.
Here’s the LLC Cost Guide for all US States:
Arizona Foreign LLC Formation Costs
In the scenario where you possess an existing LLC that has been duly registered in another state and you desire to extend your business operations into the state of Arizona, the procedure entails enlisting your LLC as a foreign entity within Arizona’s jurisdiction.
It’s important to note that the fee for establishing a foreign LLC within Arizona is $150. To effectuate the registration of a foreign LLC in Arizona, you’re required to submit a Foreign Registration Statement (Form L025).
Annual Cost for LLCs in Arizona
Establishing a Limited Liability Company (LLC) in Arizona involves accounting not only for initial costs but also for ongoing expenses linked to LLC maintenance. In contrast to several states, Arizona does not mandate annual or biennial reports; however, important recurring costs include the statutory agent fee, ranging from $100 to $300 yearly, and the renewal fee of $10 every five years for LLCs with trade names.
Consideration of these continual expenditures is crucial when outlining your LLC’s financial plan, along with awareness of any specific state-level regulations. Seeking advice from a business or tax advisor is advised for tailored financial guidance.
How Much Does It Cost to Start an LLC in Arizona With the Best LLC Service?
ZenBusiness LLC Formation Cost
The initial fundamental expense for initiating an LLC application within the state of Arizona amounts to $85, with the potential for escalation. Regarding processing duration, the standard period stipulated is between 2 to 3 weeks. However, individuals have the option to accelerate processing, spanning 4 to 6 days, at an additional fee of $50, or expedite it further to 1 – 2 days at a cost of $100.
ZenBusiness presents a range of three distinct pricing tiers for its business formation services: Starter, Pro, and Premium. The Starter plan, priced at $0 plus state fees, suits fundamental formation needs. The Pro plan, priced at $199 plus state fees, encompasses enhanced features like expedited filing and registered agent services.
The Premium plan, costing $349 plus state fees, represents the most comprehensive option, encompassing all Pro plan features along with unlimited Worry-Free Compliance, designed to assist businesses in adhering to both state and federal regulations.
Moreover, with the purchase of any plan, ZenBusiness extends a complimentary year of Worry-Free Compliance.
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Additional Costs When Starting an LLC in Arizona
Arizona LLC Name Costs
You can name your Arizona Limited Liability Company without incurring any expenses, as the Arizona Corporation Commission (AZCC) doesn’t mandate a fee for Name Reservation or similar processes. All you have to do is provide your preferred business name in the Articles of Organization.
Following this, the AZCC will assess your submission and decide whether to approve or decline your chosen LLC name. Importantly, this naming procedure doesn’t involve any financial obligations for your Arizona LLC.
Arizona Registered Agent Costs
When establishing an LLC in Arizona, it’s necessary to appoint a Statutory Agent, also known as a “Registered Agent,” as per state law. This individual or entity is responsible for receiving legal paperwork (referred to as “Service of Process”) in the event of a legal matter involving your LLC. If you or someone you’re acquainted with takes on this role, there are no extra charges.
Alternatively, if you opt to enlist a Registered Agent Service, this service typically incurs an annual fee of around $125. Opting for a Commercial Registered Agent can be beneficial, particularly if you lack a state address (as AZ law mandates a physical in-state address for a Statutory Agent) or wish to safeguard your privacy by avoiding the publication of your address in public records.
Arizona Operating Agreement Costs
The Arizona LLC Operating Agreement ($0) serves as a written agreement among the LLC Members, encompassing crucial details about the ownership, management, and profit distribution of the LLC. Both Single-Member and Multi-Member LLCs are advised to create this agreement, retain it in their business documentation, and provide copies to all Members.
While numerous platforms typically charge between $50 to $200 for such documents, this template is available at no cost.
Arizona EIN Cost
Obtaining an EIN (Employer Identification Number), also referred to as a Federal Tax ID Number (FEIN), is essential for your Arizona LLC. While numerous websites may charge for assisting in acquiring an EIN, the process itself is cost-free. You can secure an EIN for your LLC directly from the IRS without incurring any charges.
Arizona LLC Taxes
LLC owners in Arizona are responsible for various types of taxes related to their LLCs, such as
Federal Income Taxes
When it comes to federal income taxes, the treatment of your LLC by the IRS depends on its structure and ownership. Single-member LLCs are regarded as Disregarded Entities, meaning the owner files the federal income tax return. If owned by an individual, it’s taxed as a Sole Proprietorship; if owned by a company, it’s treated as a branch/division.
Multi-member LLCs are taxed as Partnerships. They file a 1065 Partnership Return and issue Schedule K-1 to members, who report their share of profits on personal returns.
Husband and Wife LLC Taxes
In community property states like Arizona, a husband and wife LLC can choose to be taxed as a Single-Member LLC (Qualified Joint Venture) instead of a Multi-Member LLC. This can be selected during the EIN Application or requested with the IRS later. Otherwise, the default status is Partnership taxation.
Electing Corporate Taxation
LLCs can choose to be taxed like Corporations, namely S-Corporation or C-Corporation. S-corporations can reduce self-employment taxes for profitable businesses, while C-corporations may be beneficial for larger employers’ healthcare benefits. This election isn’t common, and seeking professional advice is recommended before making the switch.
Arizona State Income Tax for LLCs
Single-member LLCs typically don’t file a state-level return; the owner reports profits on a personal state return. Different forms (140, 140A, 140EZ) are used based on factors like income, adjustments, deductions, and credits. Multi-Member LLCs might need to file an Arizona Partnership Return (Form 165) and issue K-1s to members. Federal Partnership returns no longer need to be attached.
LLC Taxed as C-Corporation
C-Corporation-taxed LLCs must file Arizona Form 120 and pay income tax regardless of income level. No need to attach federal Form 1120.
LLC Taxed as S-Corporation
Similar to C-Corporation taxation, LLCs taxed as S-Corps file Arizona Form 120S and pay income tax. Federal Form 1120S is no longer required.
Local Income Tax
LLCs and owners might need to file local income taxes in municipalities. Professional help is advised.
Arizona Sales Tax
LLCs selling to Arizona consumers might require a Transaction Privilege Tax (TPT) license, permitting sales tax collection. It’s crucial to understand TPT requirements and consider using expert assistance.
Arizona LLC Payroll Taxes
LLCs with employees need to manage payroll taxes, including federal and state income tax withholding, Social Security, Medicare, and unemployment taxes. Professional guidance is recommended due to the complexities involved.
Arizona LLC Cost FAQs
How Much Does It Cost to Open an LLC in Arizona?
The initiation cost for an Arizona LLC amounts to $85, covering the sole filing fee for the LLC Articles of Organization.
How Much Does an LLC in Arizona Cost Per Year?
The annual expenses for an LLC in Arizona involve a subscription fee of approximately $125 if you utilize a Registered Agent service. Whether your Arizona LLC necessitates a business license or permit varies based on industry and location, with renewal fees determined by the issuing board for professional licenses. As for annual report fees, Arizona LLCs do not incur any such charges.
Should I Hire an LLC Formation Service?
While it’s not obligatory to hire a professional service to establish your Arizona LLC, forming it on your own is permissible as a third-party company remains an optional cost. For those seeking time efficiency and accurate filing, we suggest considering ZenBusiness.
It streamlines LLC setup with robust support, a complimentary first-year Registered Agent service, an included Operating Agreement and expert guidance for Annual Report submissions.
Conclusion
To wrap things up, forming an LLC in Arizona comes with several costs that entrepreneurs need to keep in mind. These generally include filing fees, publication costs, and potential fees for legal or professional services.
The total expense can vary depending on the business structure’s complexity and the level of assistance required, so having a solid grasp of these costs is essential for smart budgeting and planning.
Services like ZenBusiness can be incredibly helpful, offering guidance through the formation process while reducing the chances of errors or delays.
It’s always a good idea to research the latest information and consult with legal or financial experts to ensure accurate cost estimates and a smooth LLC formation process in Arizona.
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About the author
Dr. Gabriel O'Neill, Esq., a distinguished legal scholar with a business law degree and a Doctor of Juridical Science, is a leading expert in business registration and diverse business departments. Renowned for his academic excellence and practical insights, Dr. O'Neill guides businesses through legal complexities, offering invaluable expertise in compliance, corporate governance, and registration processes.
As an accomplished author, his forthcoming book is anticipated to be a comprehensive guide for navigating the dynamic intersection of law and business, providing clarity and practical wisdom for entrepreneurs and legal professionals alike. With a commitment to legal excellence, Dr. Gabriel O'Neill, Esq., is a trusted authority dedicated to empowering businesses within the ever-evolving legal landscape.