Starting an Arizona business usually starts with your type of incorporation. Limited Liability Corporations (LLCs) offer a lot of the benefits of C Corp without the requirement to file a separate tax return for the business.

What Is an LLC?

An LLC is a combination between a sole proprietorship and a separate business incorporation. You get the tax pass through benefits and the protection of your personal assets, making it ideal for some types of small businesses.

Why Should You Form an LLC?

If you're starting a business, you'll need to separate personal and business assets. You don't want a business debt to reflect on your personal credit. You also don't want to have a business bankruptcy include personal assets. Sure, you hope to succeed, but failing to plan for the worst could leave you overextended and at risk. Incorporating your business helps minimize the risks to you.

Why Not Choose a Different Incorporation?

You have several options when starting a business. Arizona makes things fairly easy by only offering corporation, nonprofit corporation or limited liability company as options. The IRS uses designations like S Corp and C Corp, not the state of Arizona. If you intend to open a traditional retail business, a corporation might be the better option. Ultimately, be sure to talk over the options with your accountant and financial adviser before making a decision.

What Makes LLC Incorporation a Good Idea?

Establishing your business as an LLC comes with a few built-in benefits.

  • Avoid double taxation. Because you can file a single tax return in some circumstances, you don't pay business taxes and personal taxes on the same income.

  • Low maintenance. Once you have your LLC set up, you don't need to do much to maintain it. In most cases, all you need to do is pay the annual fee for the state in which you incorporate.

  • Easily add partners. You can sell part of the business or add new owners without all of the administrative requirements of a C Corp structure.

  • Change incorporation as needed. If you need to switch to a different incorporation, you can.

4 Steps to Form an Arizona LLC

Getting your Arizona LLC set up is fairly simple and inexpensive.

  1. Choose a name. To form an LLC, you need a unique name on file for your business. Check with the Arizona Corporation Commission to see if the name you want is available. Remember, you'll need to include LLC or another approved abbreviation as part of the name.

  2. Select a statutory agent. You will need to name someone to send and receive official documents. Your statutory agent must live or be incorporated in Arizona. Your agent can be a person (including yourself) or company hired to act on your behalf.

  3. File Articles of Organization. This document details the ownership and structure of your new LLC. Articles of Organization also provide the name and contact information for your agent. You can also fill out the application online and pay the $50 filing fee and the $35 fee for expedited processing, if needed.

  4. Publish notifications. You are required to publish a notification of organization in the county where your business is located. The Arizona Corporation Commission has a list of approved newspapers for you to use. You'll have 60 days to publish the notification, and it must appear for at least three weeks.

After you've completed all four steps, your LLC is up and running. You'll need to continue with some other normal business practices, like opening up a separate bank account, obtaining an EIN if you have employees, registering to pay sales tax, and drafting operating procedures, depending on your business type. If you need help with this process, UpCounsel offers a marketplace full of top legal providers with an average of 14 years of experience.