If you are considering forming a corporation in Arizona, it is important to understand the process and steps required. The state of Arizona has an organized system for setting up corporations, so if you are hoping to form one, you should familiarize yourself with its requirements.
At our law firm, we understand how complex the process of creating a corporation in Arizona can be. Our experienced attorneys are here to help you get started and guide you during the entire process of completing the corporate documents, filing the articles of organization, and giving you legal advice throughout the entire incorporation process.
Call one of our experienced business formation attorneys in Glendale today at (623) 300-2727 to get more information about how we can help you achieve your business goals.
Arizona's Corporation Naming Process Guidelines
When creating a new corporation in Arizona, it is important to choose a name that adheres to the guidelines set by the Arizona Corporation Commission (ACC). The name must be memorable, distinguishable from other corporation names, and indicate what type of business activities the company will undertake.
When naming your corporation, use words or alpha-numeric characters that are not deceptively similar to an existing entity or trademark. Additionally, the name cannot be used if someone else has reserved it.
The ACC also requires an Entity Designator at the end of each corporate name. Common Entity Designators include “Incorporated” (Inc.), “Limited” (Ltd.), and "Corporation" (Corp.), depending on which type of entity you have chosen to register.
An exception to this requirement is if your precise corporate name contains any combination of words such as “Company”, “Association”, “Club”, or similar terms when followed by a number or letter. After these conditions have been met and approved by the ACC, businesses should perform a thorough search for any potential conflicts with other existing entities before approval of their selected corporate name can be obtained.
Choose the Right Corporate Structure
The decision of what type of business structure to use for a new venture is an important one that should not be taken lightly. Before committing to any particular form, it is necessary to gain a good understanding of the different legal and tax implications that different options can bring.
It is best to consult with qualified financial and legal advisors when making this decision, as they will be able to provide personalized advice to ensure you make the right choice for your business.
Learn More: How Your Business Type Affects Taxes
In Arizona, there are several possible business structures that owners may choose from when setting up their enterprise. These include Sole Proprietorships, Limited Liability Companies (LLCs), Corporations, Partnerships, and Limited Partnerships (LPs). Each of these has its own advantages and disadvantages depending on the specific needs of the individual or company in question.
Benefits of Creating a Corporation in Arizona
One of the major benefits of forming a corporation in Arizona is the legal protection it affords to its owners. A corporation is a separate entity within the law, meaning that any debts or liabilities incurred by the business will not fall directly on the members and corporation shareholders. This reduces the liability of individuals and can be a useful tool for businesses looking to grow and potentially expand into international markets.
In addition to providing legal protection, another benefit of starting a corporation in Arizona is its ability to issue stock. Selling stock for a company allows business owners to raise capital quickly and efficiently, which can be invaluable for start-ups or existing businesses looking for additional funds for expansion or other goals. Furthermore, issuing stock also gives companies access to venture capital markets, which can provide significant opportunities for growth.
Requirements for Creating a Corporation in Arizona
Launching a corporation in Arizona is a significant move for your company. It is important to be aware of the necessary steps for creating a corporation and the related filing process. Keep reading to find out the different steps in the process of creating a corporation in Arizona.
Choose a Name
The name must be distinguishable from other names on file with the state. This means that when choosing a name it is crucial to research any potential logos or words associated with other businesses in order to avoid potential legal trouble down the line.
Additionally, it is also important to check if another business has already chosen and registered the intended name with the federal trademark office before beginning the process of naming an Arizona Corporation.
Appoint a Statutory Agent
In Arizona, a statutory agent is an individual or entity appointed to represent a corporation and accept important legal documents and court summons on its behalf. This requirement is laid out in the state’s code of corporate law, ensuring that corporations meet their legal obligation to be properly served with any legal notices or claims issued against them.
The most common choice for statutory agents are individuals who work at the same business as the main contact for which notices will be mailed. They may also select a registered agent service that would act as an intermediary and receive court papers, process service requests, file corporate annual reports, renew licenses, and keep records of any notices or papers sent to their office.
When choosing an Arizona Statutory Agent, companies should ensure they have the right qualifications in place and that they are properly licensed by the state. Companies must also make sure their chosen statuary agent remains in good standing throughout all business transactions stated in the legal documents it holds.
File Articles of Incorporation and Pay the Fee
Filing the Articles of Incorporation with the Arizona Corporation Commission (ACC) marks an important milestone in the corporation's formation. It makes the business official and begins the process of creating a legal entity that can protect its owners from personal liabilities.
The Articles of Incorporation outlines basic information about the company such as its name and address, its registered agent, the number of authorized shares of stock, and names and address of corporate officers or directors.
This document will be available to anyone through a public records search, so it's important to list only true information that is relevant to your business activities. Any falsified or misrepresented information could cause significant legal problems for you down the road.
The submitting of articles of incorporation to the ACC requires more than just the documents themselves; it also calls for paying a filing fee that is not too expensive. In addition, you have the option to pay an extra $35 for expedited review service. Doing so will speed up the process and give you a greater chance of having your documents approved within the shortest time possible.
Apply for an Employer Identification Number (EIN)
Having an Employer Identification Number is essential for any Arizona corporation. An EIN is a nine-digit number that is assigned by the Internal Revenue Service (IRS) to a business, and it’s required for all federal tax purposes. Without an EIN, you won't be able to file taxes and may even be subject to fines and penalties if caught operating without one.
In addition to filing taxes, your EIN can also come in handy for other important things like opening a bank account or securing a loan or credit line. You may even need an EIN when applying for permits and licenses from local government agencies in Arizona.
Applying for an EIN for your corporation is a straightforward process, and the forms are already laid out for you. First, you can apply directly from the Internal Revenue Service (IRS). It's free, and most businesses can do it online in just a few minutes.
If you don't have a social security number, however, then you'll need to fill out and submit a paper application. If all of this paperwork has you cringing and dreading yet another form to fill out, an experienced business startup attorney can help you complete the process.
Hold an Organizational Meeting
The initial board of directors meeting is one of the most important meetings for a newly incorporated business because it helps to solidify certain practices within the corporation and officially recognize certain members of the team.
At this meeting, the board of directors must appoint officers and establish initial bylaws and rules. Don't forget to take meeting minutes and keep permanent records of minutes to have documentation of all actions taken by the board of directors.
Before coming together for the board's first organizational meeting, all participants should understand their responsibilities in regard to selecting officers and additional directors, adopting corporate bylaws, establishing protocols, writing manuals and codes of conduct, assessing current operations, and analyzing potential improvements. The mission statement developed during the initial meeting should serve as a guiding compass throughout these steps to ensure that everyone involved is working towards a common goal.
Once all issues have been addressed and resolved by unanimous agreement among board members, operations can move forward with confidence knowing that expectations have been established and agreed upon across the entire professional corporation. Make sure to keep track of all your formation documents, incorporation documents, and organizational documents.
Obtain Any Necessary Licenses or Permits
When starting a business, it is important to make sure all necessary permits and licenses are obtained to be compliant with local and state requirements. This may include regulatory or professional licenses or permits associated with the services provided, as well as any local permits or licenses from county or city offices including alarm permits, building permits, health permits, occupational permits, signage, or zoning permits.
Depending on the type of business and location, additional special licensing may also be necessary so research ahead of time to ensure everything is in place. Arizona does not have a statewide general business license but some cities and counties require them so check to see if yours needs one.
To stay compliant with regulations and to ensure that your business operates in legal standing from day one, make sure you understand which certificates and documents should be acquired for your business. Keep in mind that depending on how a company operates, there could be more necessary credentials that need to be obtained. The Arizona Department of Revenue provides an extensive list of what documents would need to be obtained depending on your particular industry and the professional services offered.
Open Bank Accounts
When establishing a business in Arizona, one of the most important steps a business owner should take is to open a separate bank account for their corporation. It is critical to keep corporate and personal finances separate in order to effectively manage your finances and also protect your assets in case of litigation.
Separating individual and business funds protects against numerous liabilities. Furthermore, it helps to build a credit record for the company with financial institutions, which is important for any future loan applications.
Establish a Business Credit Score
Having a good business credit score is important for improving the viability and long-term success of any business. It opens up options for businesses, such as credit cards issued in the business name, better interest rates on loans, higher lines of credit, and more. With a strong business credit score, businesses can secure prime financing terms, obtaining loans with lower interest rates to help maintain security and sustainability.
To establish a good business credit score, it's essential to create findability by submitting accurate information about all your business finances to the primary financial reporting agencies. This information includes payment history from Business-to-Business (B2B) deals and Business-to-Consumer (B2C) dealings with suppliers or services that report your payment habits.
Apply for Tax IDs
Getting Arizona State Tax Identification Number can be a complicated process, as the state does not offer a consolidated state tax registration application. In order to obtain each individual tax account needed, applicants must complete and submit the Arizona Joint Tax Application (Form JT-1). This form is used to apply for Transaction Privilege Tax, Use Tax, and Employer Withholding and Unemployment Insurance.
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Upon submission, there is a cost of $12 associated with each license. The state also offers additional guidance in the form of ‘A Guide to Taxes for Arizona Businesses’. This comprehensive guide covers topics like registering for business taxes in Arizona, filing requirements for domestic corporations, paying the federal income tax, and corporate income tax returns, as well as information on deductions and credits available to businesses. The guide provides information on both federal and state tax matters related to doing business in the state of Arizona.
Do You Need Help Forming a Corporation?
Establishing a corporation in Arizona can be a beneficial step to advance your business, but there are several measures that need to be taken in order to do so efficiently. It starts with selecting a name for the new entity, appointing a statuary agent, followed by filing articles of incorporation with the Arizona Corporation Commission.
The corporation must also submit an application for an Employer Identification Number (EIN) and obtain any necessary permits or licenses. Finally, the company should create corporate bylaws, open bank accounts, establish a good credit score, and apply for a tax ID.
This process can be long, so hiring a business law attorney who is experienced and familiar with the entire process can save you time and many headaches. Call Monahan Law Firm today at (623) 300-2727 to get more information about how we can help you start your corporation in Glendale, Arizona.
