Arizona LLCs cost $50 to form with $0 annual report fee - one of the cheapest states in US. However, Arizona requires annual filing even though it's free. Arizona Corporation Commission (ACC) processes online filings in 3-5 business days. Low formation cost and no annual fee make Arizona attractive for entrepreneurs and real estate investors.
Arizona LLC Formation
Arizona Corporation Commission (ACC) processes LLC formations. $50 filing fee (one of lowest in US).
Standard processing: 3-5 business days. Expedited processing: +$35 (24-hour). Same-day: Not available.
Name Requirements
Must include "Limited Liability Company", "L.L.C.", or "LLC". Not case-sensitive.
Restricted words: Bank, Trust, Insurance, Corporation. Arizona ACC rejects 12% of names for similarity to existing entities.
Name Availability Search
Search Arizona Corporation Commission database at ecorp.azcc.gov. Free.
Name reservation: $10, holds 120 days. Cheapest name reservation in US. Can extend once for additional $10.
Formation Process
File Articles of Organization with Arizona Corporation Commission. Online filing at ecorp.azcc.gov or mail to Phoenix office.
Required: LLC name, statutory agent with AZ address, members/managers, management structure, organizer information.
Statutory Agent Requirement
Arizona uses "statutory agent" (same as registered agent). Must have AZ physical address (no PO boxes).
Can use yourself if you have AZ address. Professional statutory agent: $100-200/year.
Annual Report
Due every year but $0 fee. Must file even though it's free. Deadline varies by business type but most LLCs file by anniversary month.
Example: LLC formed May 2024 should file annual report by May 2025. Free online filing.
Why Free Annual Report
Arizona wants to encourage business formation. $0 annual report keeps compliance burden low.
Compare to other states: California $800/year, Massachusetts $500/year, North Carolina $200/year. Arizona $0/year.
AZ vs Other States
Arizona $50 + $0/year vs California $70 + $800/year: AZ saves $820/year.
Arizona $50 + $0/year vs Nevada $425 + $350/year: AZ saves $725/year (Nevada is expensive despite reputation).
Arizona Privacy
Arizona doesn't require member names in public filing (unlike many states). Only statutory agent and managers listed publicly.
Good privacy protection while maintaining low cost. Compare to Nevada (expensive but offers similar privacy).
Tax Considerations
Arizona income tax: 2.5% flat rate (lowest in US). Pass-through taxation like all LLCs.
No state franchise tax. No gross receipts tax. Very business-friendly tax environment.
Transaction Privilege Tax (TPT)
Arizona has TPT instead of sales tax. Applies to business gross receipts in certain categories (retail, contracting, restaurants).
Rates vary by city: Phoenix 2.3%, Tucson 2%, Scottsdale 1.75%. Plus state rate 5.6%. Total 7.6-8.6% depending on location.
Operating Agreement
Not required by AZ law but HIGHLY RECOMMENDED for all LLCs.
Arizona courts enforce Operating Agreement terms. Critical for multi-member LLCs to avoid disputes.
Foreign LLC
Out-of-state LLCs doing business in Arizona must register as foreign LLC. $150 filing fee (higher than $50 domestic).
Annual report still required: $0/year (free but must file).
When Foreign Registration Required
Maintaining office in AZ, employing AZ workers, owning AZ real estate, regularly conducting business in state.
Online sales to AZ customers typically don't require foreign registration (no physical presence).
Common Mistakes
Not filing free annual report: Many assume "free means optional." Arizona requires filing even though $0 cost. Non-filing leads to dissolution.
Choosing Nevada for privacy: Nevada charges $425 formation + $350/year. Arizona offers similar privacy for $50 + $0/year. Nevada is overpriced.
Not understanding TPT: Transaction Privilege Tax catches many businesses by surprise. Calculate TPT liability before choosing Arizona.
When AZ Makes Sense
Choose Arizona LLC if: Cost-sensitive entrepreneur, want privacy without Nevada prices, operating in Southwest, real estate investor (low ongoing cost), side business.
Best for: Small businesses, passive income, rentals, businesses with under $250K revenue (low 2.5% income tax is minimal).
Real Estate Investors
Arizona LLC extremely popular for rental properties. $50 one-time + $0/year = cheapest long-term holding structure in US.
Many investors create LLC per property: "123 Main Street LLC". Arizona's $0 annual cost makes this very affordable.
Out-of-State Investors
Many California investors form Arizona LLC for AZ properties to save money. CA foreign LLC costs $800/year. AZ domestic LLC costs $0/year.
Savings: $800/year per property by using AZ LLC instead of CA LLC.
Trademark Lens verifies Arizona LLC name availability before $50-60 formation costs.