How to Start an LLC in Arizona: Attorney's 10-Step Guide

Forming an Arizona limited liability company is one of the least expensive, least complicated, and most valuable things a rental real estate owner or a business owner can do. The Arizona Corporation Commission will accept your Articles of Organization for a $50 filing fee, and Arizona is one of the rare states that does not make LLCs file an annual report or pay an annual franchise tax. The hard part is not the filing. The hard part is everything the filing does not do for you.

I have formed more than 10,000 Arizona LLCs since 1992. In that time I have seen hundreds of people who filed their own Articles of Organization, printed the one-page approval, and believed they were finished. They were not finished. They had no operating agreement, no EIN, no capital contribution records, no membership certificates, no resolutions, and in many cases they had put their home address into a permanent public database that anybody on earth can search. Some of them learned the consequences years later, in a lawsuit, in a divorce, in a partner dispute, or in an audit.

This guide walks through the entire process of forming an Arizona LLC the right way: the decisions you must make before you file, the mechanics of the filing itself, the newspaper publication trap, the federal and Arizona tax elections, the licenses you may need, and the ongoing habits that keep your liability shield intact. Every statute cited is linked so you can read the actual law rather than somebody's summary of it.

Table of Contents

• What an Arizona LLC Actually Gives You
• Six Decisions to Make Before You File Anything
• Step 1: Choose and Clear the LLC's Name
• Step 2: Appoint the Statutory Agent
• Step 3: Prepare and File the Articles of Organization
• Step 4: Publish the Notice — or Avoid Having To
• Step 5: Get the LLC's Federal Employer Identification Number
• Step 6: Adopt a Written Operating Agreement
• Step 7: Complete the Organizational Documents
• Step 8: Open the LLC's Bank Account
• Step 9: Get the Licenses Your Business Actually Needs
• Step 10: Choose How the IRS Will Tax Your LLC
• How Arizona Taxes Your LLC
• Ongoing Compliance: What Arizona Does and Does Not Require
• The Ten Most Common Arizona LLC Formation Mistakes
• Do It Yourself, or Hire an Arizona LLC Attorney?
• Frequently Asked Questions About Forming an Arizona LLC
• Hire Arizona LLC Attorneys Who Have Done This 10,000 Times

What an Arizona LLC Actually Gives You

An Arizona LLC is a creature of the Arizona Limited Liability Company Act, A.R.S. §29-3101 and following. When the Arizona Corporation Commission approves your Articles of Organization, the LLC becomes a legal person separate from you. That separation is the entire point, and it produces three benefits worth paying attention to.

Inside-out liability protection. Under A.R.S. §29-3304, the debts, obligations, and other liabilities of an Arizona LLC belong to the company alone. They do not become the debts of the members or managers simply because those people own or run the company. If your LLC gets sued and loses, the creditor collects from the LLC's assets, not from your house, your retirement accounts, or your children's college savings. This is the protection everybody thinks of when they hear "LLC," and it is real, but it is not automatic and it is not unbreakable. It depends on you respecting the separation between yourself and the company, which is what the operating agreement, the organizational documents, the separate bank account, and the recordkeeping habits described later in this article are all for.

Outside-in protection through the charging order. This is the benefit most people have never heard of, and for many owners it is the more valuable one. If a member of an Arizona LLC gets a personal judgment entered against him for something that has nothing to do with the company — a car wreck, a personal guaranty, a divorce judgment — the judgment creditor's exclusive remedy against the member's LLC interest is a charging order. A charging order is a lien on distributions. It does not make the creditor a member. It does not give the creditor a vote. It does not let the creditor force the LLC to make a distribution, sell company assets, or dissolve. The creditor simply waits, holding a lien, hoping money comes out. Compare that to what happens when a judgment creditor levies on stock you own in a corporation, and you will understand why so many Arizona real estate investors and business owners hold assets in LLCs rather than in their own names.

Tax flexibility. An LLC is not a tax entity at all. It is a state law entity that gets to pick how the IRS treats it. A single-member LLC can be a disregarded entity, an S corporation, or a C corporation. A multi-member LLC can be a partnership, an S corporation, or a C corporation. No other entity gives you that menu, and the ability to change your mind later is worth real money as a business grows.

What an LLC does not do is also worth stating plainly. It does not protect you from liability for your own negligence or your own wrongful acts. If you personally cause the harm, you are personally liable, LLC or no LLC. An LLC also does not create a plan for what happens when a member dies, divorces, becomes disabled, quits, or wants to sell. Only an operating agreement does that.

Six Decisions to Make Before You File Anything

Most of the mistakes I fix in existing LLCs trace back to a decision the owner made in thirty seconds while staring at an online form. Slow down on these six.

1. Who Will Be the Members, and What Will Each One Own?

Membership interests do not have to match capital contributions. Two people can contribute equally and split profits 60/40 if that is what they agree to. One person can contribute all of the money and another all of the labor. But whatever you agree to must be written down before the money moves, because memories diverge and friendships end. If a married couple in Arizona forms an LLC, there is an additional question: will the membership interest be community property, or will one spouse own it as sole and separate property? That answer has consequences in a divorce, in a creditor claim, and in the couple's estate plan.

2. Member-Managed or Manager-Managed?

Under A.R.S. §29-3407, an Arizona LLC is member-managed unless the operating agreement provides otherwise. In a member-managed LLC, every member is an agent of the company with authority to bind it. In a manager-managed LLC, only the managers have that authority, and members who are not managers are passive owners.

Choose manager-managed when you have investors who put in money but should not be signing contracts, when you want a single decision-maker, or when you want the option of hiring a professional manager later. Choose member-managed when there are one or two owners who both run the business. If you are the sole owner, either works, but manager-managed makes it clearer to banks and counterparties who has signing authority, and it makes it easier to add passive investors later without restructuring.

3. Single-Member or Multi-Member?

Arizona permits single-member LLCs, and they are extremely common. Understand two things about them. First, a single-member LLC is a disregarded entity for federal income tax purposes by default, which means it files no separate federal income tax return; the owner reports the activity on Schedule C, Schedule E, or Schedule F of the owner's Form 1040. Second, the charging order protection described above is strongest in multi-member LLCs, because the policy behind the charging order is to protect the innocent non-debtor members. Courts in some states have been less generous to single-member LLCs on that point. Arizona's statute does not distinguish between the two, but if asset protection is a primary goal, this is a conversation worth having before you form.

4. Who Will Be the Statutory Agent, and at What Address?

Every Arizona LLC must continuously maintain a statutory agent under A.R.S. §29-3115. The statutory agent is the person or company designated to receive service of process and official notices. The agent must have a physical Arizona street address — not a post office box — and must sign a statutory agent acceptance form that gets filed with the Arizona Corporation Commission.

You may serve as your own statutory agent. I recommend against it, for three reasons. The agent's street address becomes a permanent public record searchable by anyone, which means using your home address publishes your home address forever. The agent must be available at that address during business hours, which is a problem if you travel or work from job sites. And being personally served with a lawsuit at your kitchen table in front of your family is an experience most people would rather skip.

The statutory agent address also determines whether you must publish a newspaper notice, which is discussed in Step 4 below. This single choice can cost you a few hundred dollars and a good deal of aggravation if you get it wrong.

If you hire KEYTLaw to form your new Arizona LLC we will act as the LLC's statutory agent for one year then bill you $99/year if you want us to continue after the first year.

5. What Will the Company's Known Place of Business Be?

The Articles of Organization ask for the LLC's known place of business. The LLC's address can be a P.O. box, a UPS mailbox, a business address or an address anywhere in the world. Like the statutory agent address, this becomes public. If you run the business from home and you would rather not broadcast where you sleep, address this before filing, not after. The Arizona Corporation Commission's records are permanent; amending an address later does not erase the original filing from the public record.

6. When Do You Want the LLC to Exist?

Under A.R.S. §29-3201, the LLC's existence relates back to the date the Articles were delivered to the Commission for filing, unless the Articles specify a later effective date. If you are forming in November or December and do not want to file a tax return for a two-month stub year, you can specify a January 1 effective date. If you need the entity to exist today because a closing is tomorrow, you file expedited and it exists as of today.

Step 1: Choose and Clear the LLC's Name

A.R.S. §29-3112 governs permitted names. The rules that matter in practice:

• The name must contain "limited liability company," "limited company," or one of the abbreviations L.L.C., LLC, L.C., or LC.
• The name must be distinguishable on the Commission's records from every other entity name and every reserved or registered name in Arizona.
• The name may not contain "association," "corporation," "incorporated," or their abbreviations. An LLC is not a corporation and may not hold itself out as one.
• Certain words — "bank," "credit union," "trust," "trust company," and similar terms — are prohibited unless the LLC is actually authorized to conduct that business.
• Entity-type designators such as "Inc.," "Corp.," and "L.P." are disregarded when the Commission decides whether two names are distinguishable, so adding "LLC" to a name somebody else already uses does not make your name available.

"Distinguishable" is a narrow standard, and it is not the same as "not confusingly similar." The Commission may approve Desert Sun Roofing LLC even though Desert Sun Roofing Company Inc. already exists, because the names are technically distinguishable on its records. That approval tells you nothing about whether you are about to be sued for trademark infringement. Search the Commission's database, then search the U.S. Patent and Trademark Office's database, then search the internet, then buy the domain name. Do all four before you file, because the cost of changing a name after you have printed signs, wrapped a truck, and built a website is not $50.

If you find a name you want but are not ready to file, you can reserve it with the Commission for 120 days. If you want to operate under a name different from the LLC's legal name, you register a trade name with the Arizona Secretary of State. A trade name is a marketing convenience; it is not an entity and it provides no liability protection.

See our article called Free Arizona LLC Name Search.

Step 2: Appoint the Statutory Agent

Having decided who the agent will be, get the signed statutory agent acceptance form ready. The Commission requires it with the Articles. If the agent is an individual, the individual signs. If the agent is a company, an authorized officer signs.

When KEYTLaw forms a new LLC or PLLC we name our firm as the entity's statutory agent. The address our firm uses for clients is 24 W. Camelback Road, Suite 467, Phoenix, AZ 85013. Two things follow from that address. It sits in Maricopa County, so it eliminates the newspaper publication requirement no matter where in Arizona the client actually operates. And it is the address that goes into the Commission's permanent public database instead of the client's home. You are never locked in either — an LLC may change its statutory agent at any time.

Step 3: Prepare and File the Articles of Organization

The Articles of Organization are what create the LLC. A.R.S. §29-3201 requires the Articles to state the LLC's name, the street address of its known place of business in Arizona, the name and street address of its statutory agent, whether the company is member-managed or manager-managed, and the name and address of each member (in a member-managed LLC) or each manager and each member owning 20% or more (in a manager-managed LLC).

To file Articles of Organization online go to the Arizona Corporation Commission's website and create an account. Next go to the ACC's online LLC formation page and create your LLC or PLLC online.

Filing Fees and Processing Times

Filing method	Fee	Typical processing time
eCorp online, expedited	$85	Approximately one business day — often same day
eCorp online, regular	$50	Roughly 14 to 16 business days
Paper filing, expedited	$85	Roughly 3 to 5 business days, plus mail time
Paper filing, regular	$50	Roughly 14 to 16 business days, plus mail time

Processing times are published by the Commission and fluctuate with volume, so check the current times before you promise anybody a closing date. The $35 difference between regular and expedited is the cheapest insurance in Arizona business law. Pay it.

Two points about approval. First, approval relates back to the delivery date, so an LLC filed on March 3 and approved on March 24 legally existed as of March 3 unless you asked for a later date. Second, an approval notice is not a complete set of company records. It is one page. Everything that governs how the company actually works still has to be created.

Step 4: Publish the Notice — or Avoid Having To

This is the step that surprises people. A.R.S. §29-3201(G) requires that, within 60 days after the Commission approves the Articles, a notice of the filing be published in a newspaper of general circulation in the county of the statutory agent's street address, for three consecutive publications. The statute contains an exception: if the statutory agent's street address is in a county with a population of more than 800,000, the Commission enters the information into its database and no newspaper publication is required.

Only two Arizona counties exceed 800,000 people: Maricopa and Pima. So the rule in practice is simple. If your statutory agent's street address is in Maricopa County or Pima County, you publish nothing. If your statutory agent's street address is in any of the other thirteen Arizona counties — Apache, Cochise, Coconino, Gila, Graham, Greenlee, La Paz, Mohave, Navajo, Pinal, Santa Cruz, Yavapai, or Yuma — you must publish, and it will cost somewhere in the neighborhood of $60 to $300 depending on which approved newspaper you use.

Notice what controls: the statutory agent's address, not where you live and not where the business operates. A Flagstaff business whose statutory agent is a Phoenix firm does not publish. A Scottsdale business that named a Prescott relative as statutory agent does. If you are outside the two large counties, appointing a statutory agent in Maricopa or Pima County is the simplest way to eliminate the publication requirement, the cost, and the 60-day deadline. If KEYTLaw forms your LLC or PLLC it will be the entity's statutory agent with an address in Maricopa County so the new entity does not have to publish a notice in a newspaper.

What Happens If You Do Not Publish?

The statute imposes the requirement but is silent on the penalty. In more than three decades and 10,000-plus LLCs, I am not aware of the Arizona Corporation Commission or any Arizona court holding that an LLC was never validly formed, or imposing a fine, because the notice was not published. That is an observation about the absence of enforcement, not legal advice to ignore a statute. If you are required to publish, publish, and file the affidavit. It is cheap, and it removes an argument an opposing lawyer would otherwise get to make about you.

Step 5: Get the LLC's Federal Employer Identification Number

The EIN is the company's federal tax identification number. You need one to open a bank account, to hire employees, to file partnership or corporate returns, and to apply for most licenses. Apply online through the IRS website. The EIN is free, it issues immediately, and the online assistant is available during posted weekday hours.

Two cautions. There are commercial websites that charge $150 or more to obtain a number the IRS gives away for nothing; do not pay them. And be careful with the "responsible party" question and the entity classification questions on the application, because a wrong answer there can cause the IRS to expect a return the LLC is not supposed to file, which generates notices that take months to unwind.

If you buy our Silver or Gold LLC formation package we get the entity's EIN. To learn more about the EIN and how to get it read "How to Get a Free EIN Online (Step-by-Step Guide)".

Step 6: Adopt a Written Operating Agreement

Arizona law does not require an LLC to have an operating agreement. A.R.S. §29-3105 and A.R.S. §29-3106 simply define what an operating agreement may and may not do. But "not required" and "not important" are very different things, and this is the single largest gap between a do-it-yourself LLC and a properly formed one.

Here is why it matters. The Arizona LLC Act supplies default rules for everything the members do not agree on in writing. Those defaults were written by a legislature that has never met you, does not know your business, and does not know what you and your partner actually agreed to. If you have no operating agreement, the default rules are your deal, whether you like them or not.

A well-drafted Arizona operating agreement addresses questions the statute either answers badly or does not answer at all:

• How are profits, losses, and cash distributions allocated, and are they the same percentages?
• Who decides what? Which decisions need unanimous consent, which need a majority, and which can a manager make alone?
• What happens when a member dies? Does the interest pass to the heirs as a full member, or only as an economic interest, and does the company have the right to buy it?
• What happens in a member's divorce, so that a soon-to-be-ex-spouse does not become your business partner?
• What happens when a member becomes disabled, wants out, stops contributing, or files bankruptcy?
• How is a departing member's interest valued, and how is the purchase price paid — lump sum, or over time with interest?
• Can a member sell to an outsider? Is there a right of first refusal? A drag-along or tag-along right?
• Are members required to contribute more capital later, and what happens to a member who will not or cannot?
• How are deadlocks broken in a 50/50 company?
• What non-compete, confidentiality, and non-solicitation obligations do members owe?
• How is the company dissolved, and who winds it up under A.R.S. §29-3702?

Read our article called "19 Reasons Your Arizona LLC Needs an Operating Agreement." When we form an LLC or a PLLC we prepare a custom Operating Agreement for the member(s) and Manager(s) to sign digitally using DocuSign.

Single-member LLCs need operating agreements too, for a different reason. The operating agreement is one of the primary pieces of evidence that the LLC is a real entity separate from its owner. When a creditor argues that your single-member LLC is your alter ego and asks a court to disregard it, the absence of any governing document is exhibit A against you.

Do not use a free template you found online. Most were written for another state, most ignore Arizona's community property rules, and none of them know your deal.

Step 7: Complete the Organizational Documents

An approved Articles of Organization plus an operating agreement still leaves the company's books incomplete. A properly organized Arizona LLC also has:

• Organizational resolutions or consent of the members adopting the operating agreement, ratifying the filing of the Articles, appointing managers or officers, authorizing the bank account, and designating who may sign on the company's behalf. When we form a Silver or Gold LLC we prepare resolutions of the members to sign that authorize issuing the membership interests, naming the manager(s) and stating that a married member owns his or her interest as separate property or community property with right of survivorship.
• A record of each member's capital contribution — how much cash, what property, what services, and what each member received in exchange. Without this, the company's tax basis records and the members' capital accounts are guesswork.
• Membership certificates evidencing each member's interest, along with a membership ledger. When we are hired to form a Silver or a Gold LLC we prepare a membership certificate for each member.
• Assignments or bills of sale transferring into the LLC any property the business will use — vehicles, equipment, real estate, intellectual property, contracts. An asset you never actually transferred is not protected by the LLC, no matter what you intended.
• A company records book where all of this lives, so that when a bank, a buyer, a lender, or a court asks for the company's records, they exist.

If you form a Silver or Gold LLC through our firm, we give you a three ring portfolio that has all the LLC documents organized behind tabs and you get access to our 170-plus page Arizona LLC Operations Manual. This eBook has the answers to the common questions people ask us after we form the company.

Step 8: Open the LLC's Bank Account

Open a bank account in the LLC's exact legal name, using the LLC's EIN, and run every dollar of the business through it. Then never, ever use it to pay a personal expense.

See our article called "Arizona LLC Bank Account Rules: Avoid Commingling Funds".

Arizona law is more forgiving here than most states, and it is worth knowing exactly how far that forgiveness goes. A.R.S. §29-3304(B) provides that an LLC's failure to observe formalities relating to the exercise of its powers or the management of its activities is not a ground for imposing personal liability on a member or manager. So skipping an annual meeting, by itself, will not cost you the liability shield in Arizona.

That statute does not protect commingling, and it does not protect fraud. Arizona courts will still disregard an entity where the owner used it as an alter ego and observing the separate identity would sanction a fraud or promote injustice. When a plaintiff's lawyer goes after you personally, the first thing he requests is your bank statements. If the company account paid your mortgage, your car payment, and your kids' tuition, he will argue that there was never a real company at all, only you with a name attached. If you need money out of the company, take a documented distribution or a documented salary. Take it deliberately, and write it down.

Most banks will want the Articles of Organization approval, the EIN confirmation letter, the operating agreement, and identification for the signers. This is another reason to have the documents finished before you walk in.

Step 9: Get the Licenses Your Business Actually Needs

Arizona does not issue a general statewide business license. Instead there are three categories, and which ones apply depends entirely on what you do and where you do it.

Transaction Privilege Tax (TPT) License

Arizona's TPT is often called a sales tax, but technically it is a tax on the privilege of doing business in the state, imposed on the seller rather than the buyer. If your business falls under a taxable classification you must obtain a TPT license from the Arizona Department of Revenue, collect the tax, and file returns. Common taxable classifications include retail sales, restaurants and bars, hotel and short-term lodging, commercial leasing, residential rentals in some jurisdictions, amusements, personal property rentals, contracting, job printing, publishing, mining, transporting, utilities, telecommunications, and private car lines.

You apply using the Arizona Joint Tax Application (Form JT-1/UC-001) through the Arizona Department of Revenue or online at AZTaxes.gov. The state license fee is $12 per location, and multiple locations under common ownership can be consolidated under one license number. TPT licenses must be renewed annually, and many Arizona cities impose their own license fee on top of the state's.

Regulatory and Professional Licenses

If your business affects health, safety, or the environment, a state agency probably regulates it. Contractors need a license from the Registrar of Contractors. Real estate brokers and salespersons need licenses from the Department of Real Estate. Restaurants, salons, childcare facilities, and medical practices answer to the Department of Health Services. Businesses that handle regulated substances or discharges answer to the Department of Environmental Quality. Insurance producers, mortgage brokers, and financial services firms have their own regulators.

Professionals whose services require an Arizona license — physicians, dentists, lawyers, accountants, architects, engineers — should also determine whether they must form a professional limited liability company (PLLC) rather than a standard LLC.

City and County Licenses

Phoenix, Tucson, Mesa, Scottsdale, Chandler, Glendale, Tempe, Gilbert, and most other Arizona municipalities require their own business license or TPT registration, sometimes both. If you operate in several cities, you may need several. Zoning and home-occupation rules apply too, and a home-based business in an HOA should read the CC&Rs before hanging out a shingle. The Arizona Commerce Authority publishes a small business checklist that walks through the state-level requirements.

Step 10: Choose How the IRS Will Tax Your LLC

An LLC has no tax classification of its own. Under the federal check-the-box regulations, it defaults to one classification and may elect another. There are four possibilities.

Default: Disregarded Entity (Single-Member LLCs)

A single-member LLC owned by an individual is disregarded for federal income tax purposes. The company files no federal income tax return. The owner reports business income and expenses on Schedule C, rental activity on Schedule E, or farm activity on Schedule F, all attached to the owner's Form 1040. Net earnings from a trade or business are subject to self-employment tax at 15.3% up to the Social Security wage base and 2.9% (plus the 0.9% additional Medicare tax at higher incomes) above it.

Default: Partnership (Multi-Member LLCs)

A multi-member LLC is a partnership for federal tax purposes by default. It files Form 1065 and issues each member a Schedule K-1 reporting that member's allocable share of income, deductions, credits, and other items. The LLC itself pays no federal income tax; the members report their K-1 items on their personal returns and pay the tax. Partnership taxation is the most flexible of the four options, because it permits special allocations that do not track ownership percentages, and it allows appreciated property to come in and go out without triggering gain in most cases.

Election: S Corporation

An eligible LLC may elect to be taxed as an S corporation by filing IRS Form 2553. Eligibility is governed by IRC §1361: no more than 100 shareholders, only permitted shareholders (generally U.S. individuals and certain trusts and estates — not partnerships, not corporations, not nonresident aliens), and only one class of ownership interest. Under IRC §1362, the election is generally due no later than two months and fifteen days after the beginning of the tax year it is to take effect, though the IRS grants late election relief in many cases.

The S election exists for one reason: to reduce self-employment tax. An owner who works in the business becomes an employee, takes reasonable compensation subject to payroll taxes, and receives the rest of the profit as a distribution that is not subject to self-employment tax. The savings can be substantial once profits are well into six figures. The costs are real too: you must run payroll, file Forms 941 and 940 and W-2s, pay for a separate Form 1120-S return, keep compensation "reasonable" enough to survive IRS scrutiny, and give up the special allocations and basis flexibility that partnership taxation provides. Run the numbers with a CPA before electing. An S election that saves $4,000 in self-employment tax and costs $3,500 in payroll and accounting fees is not a win.

Election: C Corporation

An LLC may elect corporate taxation by filing IRS Form 8832. The company then files Form 1120 and pays federal income tax at the corporate rate on its own income, and distributions to members are taxed again as dividends. That double taxation makes the C election rare for small operating businesses, but it can make sense for companies that intend to retain and reinvest earnings, for businesses planning to raise venture capital, or in specific situations involving fringe benefits or qualified small business stock planning.

How Arizona Taxes Your LLC

Arizona follows the federal classification. Whatever the LLC is for federal purposes, it generally is for Arizona purposes.

• Disregarded entity: no separate Arizona return. The activity flows onto the owner's Arizona Form 140 (or 140NR/140PY).
• Partnership: files Arizona Form 165, due the 15th day of the fourth month after the close of the tax year, and provides members with Arizona Schedule K-1 or K-1(NR).
• S corporation: files Arizona Form 120S, same due date, and issues Arizona K-1s to the members.
• C corporation: files Arizona Form 120 and pays Arizona corporate income tax.

Arizona also offers a pass-through entity (PTE) election that lets a partnership- or S-corporation-classified LLC pay Arizona income tax at the entity level, with a corresponding credit to the owners. For owners who itemize and are limited by the federal state and local tax deduction cap, the PTE election can convert a non-deductible personal state tax payment into a deductible business expense. It is not automatic and it is not right for everyone, so ask your CPA whether it fits.

The Arizona Department of Revenue publishes all forms and instructions and can be reached at 602-255-3381 or 800-352-4090 from the 520 and 928 area codes.

Ongoing Compliance: What Arizona Does and Does Not Require

Arizona is refreshingly light on ongoing entity paperwork. There is no annual report for an Arizona LLC and no annual franchise tax. Arizona corporations must file an annual report; LLCs do not. That is one of the reasons Arizona is an attractive state in which to form an LLC.

What you must keep doing:

• Maintain a statutory agent continuously. If your agent resigns or moves and you do not replace or update, the Commission can administratively dissolve the LLC.
• Keep the Commission's records current. Changes to the statutory agent, known place of business, members, or managers require an amendment under A.R.S. §29-3202 or a statement of change.
• Renew licenses. TPT licenses renew annually, as do most city licenses and professional licenses.
• File tax returns on time. Partnership and S corporation returns carry per-member, per-month late filing penalties that add up shockingly fast.
• Respect the entity. Sign contracts in the company's name, identify your title, keep the money separate, document distributions, hold and record the meetings your operating agreement calls for, and update the operating agreement when the deal changes.

Members and managers also owe each other duties. A.R.S. §29-3409 sets out the standards of conduct, including the duties of loyalty and care, and the operating agreement can modify some of them within limits. Members of a family business or a partnership among friends should read that section together, because most partner disputes I see began when one member did something he believed was fine and the other member believed was a breach.

The Ten Most Common Arizona LLC Formation Mistakes

1. Skipping the operating agreement. The company then runs on statutory defaults nobody read and nobody agreed to.

2. Publishing your home address. Using your residence as the known place of business and as the statutory agent address puts it into a permanent, searchable public database.

3. Choosing a statutory agent outside Maricopa or Pima County without realizing it triggers newspaper publication.

4. Never funding the LLC. Members who contribute nothing and document nothing leave the company with no capital accounts and a weak claim to being a real entity.

5. Failing to transfer the assets. The rental house is still in your name. The truck is still in your name. The LLC protects neither.

6. Commingling funds. Personal expenses paid from the business account, business income deposited into a personal account.

7. Signing personally. Signing a contract "John Smith" rather than "Desert Sun Roofing LLC, by John Smith, Manager" can make John Smith a party to the contract.

8. Electing S corporation status without doing the math — or, just as often, failing to elect it years after it would have started saving real money.

9. Using a form operating agreement written for another state, which ignores Arizona's LLC Act and Arizona's community property law.

10. Treating formation as the finish line. Formation is the first day of the company's life, not the last day of the project.

Do It Yourself, or Hire an Arizona LLC Attorney?

You can absolutely form an Arizona LLC yourself. It takes ten to fifteen minutes in eCorp and costs $50 or $85. I have written extensively about how to do it, and if your situation is simple, your budget is tight, and you are willing to handle the operating agreement, the EIN, the organizational documents, and the tax elections on your own, that is a legitimate choice.

Understand exactly what you get for your $50: a one-page approved Articles of Organization. You do not get an operating agreement. You do not get an EIN. You do not get organizational resolutions, capital contribution records, membership certificates, a records book, privacy protection, a statutory agent, or anybody to call in February when the IRS sends a notice about a return your LLC was never supposed to file. You also do not get a lawyer's judgment about whether an LLC is even the right entity for what you are doing, whether you should be member-managed or manager-managed, whether your spouse should be a member, or whether the asset you are about to put into the company belongs there.

What you are really deciding is not "attorney versus no attorney." It is whether you want the entity or the entire structure.

Frequently Asked Questions About Forming an Arizona LLC

How do I start an LLC in Arizona?

You have three practical paths. You can form it yourself through the Arizona Corporation Commission's eCorp system, which takes ten to fifteen minutes and produces a one-page Articles of Organization. You can hire our firm, which handles the name check, the filing, the EIN, the custom operating agreement, the full set of organizational documents, first-year statutory agent service, and privacy protection. Or you can hire another attorney or a document preparation service — in which case compare, item by item, what is actually included.

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

The Arizona Corporation Commission charges $50 for regular processing or $85 for expedited processing. If your statutory agent's street address is outside Maricopa and Pima Counties, add roughly $60 to $300 for the required newspaper publication. There is no Arizona annual report fee and no annual franchise tax. Our flat fees are $497 for the Bronze package, $897 for Silver, and $1,397 for Gold. See the contents of our three LLC formation pages. To hire us to form an LLC or PLLC submit our online questionnaire.

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

Filed online with the $85 expedited fee, approval typically comes within about one business day and often the same day. Filed online with the $50 regular fee, expect roughly 14 to 16 business days. Paper filings take longer and add mail time. Whenever approval arrives, the LLC's existence relates back to the date the Articles were delivered to the Commission, unless the Articles specify a later effective date.

We form LLCs and PLLCs and get them approved by the Arizona Corporation Commission the same day you approve your formation questionnaire and pay the fee, but if that happens too late in the day we will form it the next day.

Do I have to publish my LLC in a newspaper in Arizona?

Only if your statutory agent's street address is outside Maricopa County and Pima County. Under A.R.S. §29-3201(G), a notice must be published for three consecutive publications in a newspaper of general circulation in the statutory agent's county within 60 days after approval, unless that county has more than 800,000 residents — which describes only Maricopa and Pima. Choosing a statutory agent in either of those counties eliminates the requirement. When we form a company we are its statutory agent whose address is in Maricopa County, which means the company does not have to publish a notice in a newspaper.

What happens if I do not publish my LLC?

The statute requires publication but does not state a penalty for failing to publish. Having formed more than 10,000 Arizona LLCs since 1992, I am not aware of the Arizona Corporation Commission or an Arizona court ever holding that an LLC was not validly formed, or imposing a fine, solely because the notice was not published. That said, if the law requires you to publish, publish.

Can I form an Arizona LLC by myself?

Yes. Arizona does not require you to use an attorney. The eCorp system walks you through the Articles of Organization in about ten to fifteen minutes. Just remember that filing the Articles is one step out of ten, and the other nine are the ones that determine whether the LLC actually protects you.

Do I need a lawyer to set up an LLC?

No, you are not required to have one. The question is whether you want a one-page state filing or a complete, documented, funded company with an operating agreement that reflects your actual deal. Most of the expensive problems we are hired to fix — partner disputes, missing operating agreements, assets never transferred, LLCs whose members died without any succession plan — would have cost a fraction to prevent.

Is an operating agreement required for an Arizona LLC?

Arizona law does not require one. Every Arizona LLC should have one anyway. Without a written operating agreement, the default rules in the Arizona LLC Act govern your company, and those defaults will not match what you and your co-owners actually agreed to. Single-member LLCs need one too, because it is key evidence that the company is genuinely separate from its owner. We prepare a custom Arizona operating agreement for every LLC we form, and we prepare them for existing LLCs as well.

Does an Arizona LLC have to file an annual report?

No. Arizona is one of a small number of states that does not require LLCs to file an annual report or pay an annual franchise tax. Arizona corporations must file annual reports; LLCs do not. You do have to continuously maintain a statutory agent and keep the Commission's records accurate.

Do I need an Arizona business license?

It depends on what you do. Arizona has three license categories: transaction privilege tax (TPT) licenses for businesses making taxable sales or providing taxable services, regulatory or professional licenses for regulated activities, and city or county business licenses. A TPT license costs $12 per location from the Arizona Department of Revenue. Many businesses need more than one type, and some need none.

How is an LLC taxed?

An LLC picks its federal tax classification. A single-member LLC is a disregarded entity by default and reports on the owner's Schedule C, E, or F. A multi-member LLC is a partnership by default and files Form 1065 with Schedule K-1s to members. Either can elect S corporation treatment on Form 2553 or C corporation treatment on Form 8832. Arizona follows the federal classification: partnerships file Form 165, S corporations file Form 120S, and C corporations file Form 120, each due the 15th day of the fourth month after year end.

Should my LLC elect to be taxed as an S corporation?

Sometimes. The S election can reduce self-employment tax once the business generates meaningful profit beyond a reasonable salary for the owner's work. It also adds payroll processing, additional tax returns, additional accounting fees, and constraints on ownership and allocations. Run the numbers with a CPA before you elect, and re-run them as the business grows.

Can a non-Arizona resident own an Arizona LLC?

Yes. There is no Arizona residency requirement for members or managers. The LLC must have an Arizona street address for its known place of business and an Arizona statutory agent, which is one of the reasons out-of-state and foreign owners hire an Arizona firm to serve as statutory agent.

Can my Arizona LLC own real estate?

Yes, and it is one of the most common uses. If the property is already in your name, it must be deeded to the LLC to get the protection, and you should confirm with your lender that the transfer will not trigger a due-on-sale clause and with your insurer that the policy names the LLC. Owners of multiple properties often use a separate LLC per property so that a claim against one property cannot reach the others.

What is the difference between a member-managed and manager-managed LLC?

In a member-managed LLC, every member has authority to act for the company. In a manager-managed LLC, only the designated managers do, and other members are passive. Arizona LLCs are member-managed by default under A.R.S. §29-3407 unless the operating agreement provides otherwise. Manager-managed is usually the better structure when there are passive investors or when you want a single, clear decision-maker.

Hire Arizona LLC Attorneys Who Have Done This 10,000 Times

Arizona LLC attorneys Richard Keyt and his son, attorney and former CPA Richard C. Keyt, have formed 10,000+ Arizona LLCs. We do not treat forming an LLC as a filing errand. We treat it as building a structure that has to hold up years from now, when somebody sues, somebody dies, somebody divorces, or somebody wants out.

See a detailed description of the 8 Bronze LLC services, 16 Silver LLC services & 23 Gold LLC services we provide.

To hire us to form an LLC submit our online questionnaire at keytlaw.com/llcq. If you have questions before you start, call Richard Keyt at 480-664-7478 or Richard C. Keyt at 480-664-7472, or email rk@keytlaw.com. Go to our online calendar to book a free office, phone or Zoom video consultation with one of our LLC attorneys to find out if an LLC is right for what you are doing.

For more Arizona LLC articles, checklists, and resources, visit the Arizona LLC Center.

© 2026 KEYTLaw, LLC. This article is general information about Arizona law, not legal advice, and reading it does not create an attorney-client relationship. Filing fees, processing times, and tax rules change; verify current figures before you rely on them.