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Understanding the cost of forming an LLC in Arizona is essential for those interested in starting a business. People looking to set up a Limited Liability Company often ask, “how much does an LLC cost in Arizona?” or “What does the LLC cost in Arizona?” This exploration helps reveal elements that add to the total cost of setting up an LLC in the state.
In such a complex scenario, services like Tailor Brands become extremely useful, offering support to make the formation process smoother and more affordable. This article discusses the details of Arizona LLC costs, examines the influencing factors, and explains how Tailor Brands helps entrepreneurs with these tasks.
What Is the Cost of Forming an LLC in Arizona?
Starting an LLC in Arizona involves a basic fee of $50 for normal processing and $85 for fast processing of the Articles of Organization through the Arizona Corporation Commission.
New LLCs must follow a publication requirement, which mandates publishing a Notice of LLC Formation in an approved county newspaper for three weeks in a row within 60 days after forming; the price ranges from $60 to $300, depending on the county, except for businesses located in Maricopa or Pima counties.
Arizona Foreign LLC Formation Costs
If you own an LLC already registered in another state and want to expand your business to Arizona, you must register your LLC as a foreign entity in Arizona.
The cost to register a foreign LLC in Arizona is $150. To complete the Arizona business registration, you need to file a Foreign Registration Statement (Form L025).
Annual Cost for LLCs in Arizona
Setting up a Limited Liability Company (LLC) in Arizona requires consideration of both initial and ongoing costs associated with maintaining the LLC. Arizona doesn’t require LLCs to file annual or biennial reports, unlike many states. However, key ongoing expenses include the statutory agent fee, which varies between $100 and $300 per year, and a $10 renewal fee every five years for LLCs with trade names.
Account for these continuous costs in your LLC’s financial planning and understand state-specific regulations. For personalized financial advice, consult with a business or tax advisor.
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How Much Does It Cost to Start an LLC in Arizona With the Best LLC Service?
Tailor Brands LLC Formation Cost
The basic initial cost to start an LLC in Arizona is $85, but this can increase. Typically, processing takes 2 to 3 weeks. There’s an option to speed up the process to 4 to 6 days for an extra $50 or even faster to 1 to 2 days for $100.
The Lite LLC plan from Tailor Brands LLC includes basic LLC formation service at standard processing speeds, charging only the state filing fee. The Essential LLC plan, priced at $199 plus state fees, offers expedited LLC formation, annual compliance, and an operating agreement. Tailor Brands also requires a yearly maintenance fee of $199 for these services.
The Elite LLC plan is the most extensive, costing $249 plus state fees. It encompasses all features of the Essential plan, along with additional business tools and services such as a free business domain for one year, a do-it-yourself website builder, an online store, eight free logos, a digital business card, a business card tool, and a social media post creator. A yearly renewal fee of $249 is needed to retain these services.
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Additional Costs When Starting an LLC in Arizona
Arizona LLC Name Costs
You can name your Arizona Limited Liability Company for free, as the Arizona Corporation Commission (AZCC) does not require a fee for Name Reservation or similar processes. Include your preferred business name in the Articles of Organization.
After you submit this, the AZCC will review your choice and decide whether to approve or reject your chosen LLC name. This naming process costs nothing for your Arizona LLC.
Arizona Registered Agent Costs
According to state law, when forming an LLC in Arizona, you must appoint a Statutory Agent, also known as a “Registered Agent.” This person or entity will handle the receipt of legal documents, known as “Service of Process,” if your LLC faces legal action. If you or someone you know assumes this role, there are no additional costs.
However, if you choose to hire a Registered Agent Service, it typically charges an annual fee of about $125. Using a Commercial Registered Agent can be advantageous, especially if you don’t have a physical address in Arizona (as Arizona law requires a Statutory Agent to have an in-state address) or if you prefer to keep your address off public records for privacy reasons.
Arizona Operating Agreement Costs
The Arizona LLC Operating Agreement, which is free of charge, acts as a formal contract among LLC Members, detailing important aspects like ownership, management, and how profits are shared within the LLC. It’s recommended that both Single-Member and Multi-Member LLCs draft this agreement, keep it with their business records, and distribute copies to all Members.
Although many platforms usually charge between $50 and $200 for these documents, this template is provided at no cost.
Arizona EIN Cost
Securing an EIN (Employer Identification Number), also known as a Federal Tax ID Number (FEIN), is crucial for your Arizona LLC. Although many websites charge to help you get an EIN, you can obtain one directly from the IRS at no cost to your LLC.
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Arizona LLC Taxes
LLC owners in Arizona must pay several kinds of taxes for their LLCs, including:
Federal Income Taxes
For federal income taxes, how the IRS handles your LLC depends on its structure and who owns it. Single-member LLCs are seen as Disregarded Entities. This means the owner reports taxes on their federal income tax return. If an individual owns it, it’s taxed as a Sole Proprietorship; if a company owns it, it’s treated as a branch or division.
Multi-member LLCs are taxed as Partnerships. They must file a 1065 Partnership Return and provide Schedule K-1 to each member, who then reports their share of the profits on their personal tax returns.
Husband and Wife LLC Taxes
In community property states such as Arizona, a husband and wife who own an LLC can opt to be taxed as a Single-Member LLC (Qualified Joint Venture) rather than a Multi-Member LLC. They can choose this during the EIN Application or apply for it later with the IRS. If they don’t choose this option, they will automatically be taxed as a Partnership.
Electing Corporate Taxation
LLCs can be taxed as Corporations, either as an S-Corporation or a C-Corporation.
S-corporations can lower self-employment taxes for profit-making businesses, whereas C-corporations might be more helpful for larger businesses that provide healthcare benefits. Choosing this tax status is unusual, and it’s advisable to consult a professional before making this change.
Arizona State Income Tax for LLCs
Single-member LLCs rarely file a state-level return. The owner includes profits on their personal state tax return. They use different forms (140, 140A, 140EZ) depending on their income, adjustments, deductions, and credits. Multi-member LLCs may have to file an Arizona Partnership Return (Form 165) and provide K-1 forms to each member. They no longer need to attach federal partnership returns.
LLC Taxed as C-Corporation
LLCs taxed as C-Corporations must file Arizona Form 120 and pay income tax, regardless of income level. There’s no requirement to attach federal Form 1120.
LLC Taxed as S-Corporation
LLCs taxed as S-Corps must file Arizona Form 120S and pay income tax, similar to C-Corporations. They don’t need to attach Federal Form 1120S anymore.
Local Income Tax
LLCs and their owners may have to file local income taxes in their municipalities. It’s recommended to seek professional help.
Arizona Sales Tax
LLCs that sell to Arizona consumers may need a Transaction Privilege Tax (TPT) license, which allows them to collect sales tax. It’s important to know the TPT requirements, and considering expert help is advisable.
Arizona LLC Payroll Taxes
LLCs with employees must handle payroll taxes, which include federal and state income tax withholding, Social Security, Medicare, and unemployment taxes. Due to the complexities, seeking professional guidance is recommended.
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Arizona LLC Cost – FAQs
Conclusion
Filing an LLC in Arizona comes with various costs that potential business owners must consider. These expenses include filing fees, publication costs, and possibly legal or professional services fees. The total cost may differ depending on the business structure’s complexity and the level of help needed, but it’s essential to understand these potential costs to plan your budget and make smart choices.
Services like Tailor Brands provide extensive support, helping entrepreneurs navigate the LLC formation process while reducing mistakes and delays. It’s advisable to research the latest information and consult legal or financial experts to obtain an accurate estimate of costs and ensure a smooth LLC formation process in Arizona.
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