Incorporating in or Registering an Existing Foreign Company in Arizona
If you are thinking of setting up an Arizona Corporation either because you are starting a new business or you’ve been conducting business as an individual and realize that you need to incorporate, the following may prove helpful in how to get started. If you have a business that is incorporated elsewhere, but are conducting business in Arizona, then you need to register as a foreign company doing business in Arizona.
Arizona Domestic Corporation
First, let’s assume that you need to set up a new company in Arizona. The Arizona Corporation Commission has made the process to set up your company accessible and online. Below we list the relevant forms and filing fees to give you an idea on the process and cost. There are exceptions, but generally this is what you will need to do:
1. File a Statement of Domestication form and ensure your name is available. The fee for filing is $100;
2. Next file an Article of Incorporation form, along with your Articles of Incorporation. Fee is dependent upon if you are a profit ($60) or non-profit corporation ($40).
3. Once filed, it takes usually 14-16 business days to receive a reply from the corporation commission. You can do expedited filing for $35 dollars per document and should hear back in 7-10 business days. For even faster expedited processing take the forms to their office. It is possible to get them back the same day when filing in person and being extra nice; and
4. Publish your Notice of Incorporation in one of the approved publications.
You can access the forms through the following link: https://www.azcc.gov/corporations/forms. They do provide a helpful start-up guide, which you can access by following this link: https://www.azcc.gov/corporations/ten-steps-to-starting-a-business-in-az
If you are “transacting business” in Arizona, but are incorporated elsewhere, you must register your business in Arizona by filing an Application for Authority to Transact Business or Conduct Affairs in Arizona with the Corporation Commission. https://www.azcc.gov/docs/default-source/corps-files/forms/c018-application-for-authority.pdf?sfvrsn=c3a659b2_2 In general terms “transacting business” occurs when you have an office, store, warehouse or employees in the state. Looking at the requirements for collecting sales tax will help you determine if you should be collecting sales tax on your transactions in Arizona and correspondingly if you are transacting business in Arizona.
You will need to file an Annual Statement and have an agent in Arizona for Service of Process.
After incorporating or registering in Arizona, the Annual Statement is filed. The fee for either a foreign or domestic corporation is $45. The corporate income tax rate is 4.9%. Compare that to the California rate of 9% in our Q2 Newsletter article on Important Tax & Estate Planning Considerations for AZ & CA.
In Arizona you are not required to have an Operating Agreement. But it is a good idea to have one if you are operating on your own and really important to have one, if you have more than one shareholder. This should be created with your attorney. Depending on the kind of business you are operating, a Founder’s Agreement, Intellectual Property Agreement and/or Financing Agreement may all be necessary. A little planning at the outset saves a lot of headache, arguments and puts you on the strongest financial footing to achieve your business goals.