How to form a Corporation in Arizona

Arizona Corporation

If you are planning to form a corporation in Arizona then it’s one of the best business structures. This type of structure has its own advantages. Apart from that, as a corporation, you will be able to leverage a robust state infrastructure, strong logistics platform, and even apply for a wide variety of business incentives. The entrepreneurial community in the state is driven by technology and innovation and hence is considered one of the best states for testing and launching new ideas and startups. One of the benefits of incorporating in Arizona is that you will have access to a highly-skilled and educated employee pool.

What is an Arizona Corporation?

One of the most popular forms of business is the C Corporation. There is also an S corporation but that is considered by the Internal Revenue Service (IRS) as a special tax status. You can register a corporation in Arizona and just like in any other state, there are different types of corporations to choose from. A C-corp shares certain similarities with limited liability companies (LLCs) but is a separate legal structure with distinct advantages. A corporation undergoes a different tax treatment and limits the overall liability of firm owners and shareholders or investors. You can register an Arizona Corporation online or offline. The different types of corporations to choose from are:

• Domestic and foreign C Corporations (C-Corp)
• S Corporation (S-Corp)
• Domestic and foreign nonprofit corporations
• Professional Corporations
• Business Development corporations
• Benefit Corporations
• Statutory Close Corporations

What are the benefits of incorporating in Arizona?

Entrepreneurs prefer to incorporate in Arizona as a traditional C Corporation has several advantages over other types of entities. Some of the advantages are:

• Securing your assets – One of the benefits of incorporating in Arizona is that owners will be able to enjoy limited liability protection. This simply means that they will not be personally responsible for any debts of their corporation. As a result, creditors will not be able to claim your car or home for payment of business debts.
• Tax breaks – When you form a corporation in Arizona, you will be able to acquire tax advantages. Certain components like life insurance, savings on self-employment taxes, and health insurance premiums can be written off.
• Establishes credibility – One of the important benefits of incorporating in Arizona is that it may help your company to establish a certain degree of credibility in the market and with vendors, employees, partners, and potential customers.
• Easily transfer ownership – If you register a corporation in Arizona today and want to transfer ownership in the near future then it will be possible. In fact, transferability of ownership can take place easily as compared to other entity structures.

Starting an Arizona Corporation

Arizona does not only provide a competitive environment to a new business owner but also provides support in the form of infrastructure, and tax credit programs. The state has a vibrant economy driven by highly advanced multi-faceted industries and these play a key role in driving overall growth. The question is how can you form a corporation in Arizona? There are several processes involved and different types of documentation will be required. Let’s take a leap into the different and important aspects of new business formation.

1. Name Arizona Corporation

If you are planning to incorporate in Arizona then one of the first things to do is identify a business name. A business name is important as it helps in creating first impressions, communicating business strategy to end users, provides legal protection, and ultimately shapes your brand. In order to finalize a corporate name, you will need to ensure compliance with state naming guidelines as provided in AZ Rev Stat § 10-401 (2019). It states that a corporation should use words like “corporation”, ” association”, “incorporated”, ” limited”, or abbreviations like “corp.”, or “inc.”

2. Appoint Arizona registered agent

One of the important aspects of forming a new business in Arizona is hiring a registered agent. Most states have made this a mandatory requirement. This is because, a statutory agent is responsible for handling service of process, which entails accepting all legal mail or documentation on behalf of your corporation pursuant to AZ Rev Stat § 10-504 (2019). You can form a corporation in Arizona only if you hire and maintain a registered agent in the state pursuant to 2019 Arizona Revised Statutes, Title 10 – Corporations and Associations, Chapter 5 – Office and Agent.

3. File Articles of Incorporation with the Arizona Corporation Commission

The most important part of the process of forming a corporation in Arizona is submitting the documents needed for incorporation. You will be required to prepare and submit the Articles of Incorporation pursuant to AZ Rev Stat § 10-202 (2019). You will be required to provide information in the Articles pertaining to the total number of shares of each class that your corporation is authorized to issue. You will also be required to submit a Certificate of Disclosure ((Form C003) and this is mandatory.

Are you thinking of starting an Arizona Corporation?

4. Prepare bylaws for Arizona Corporation

If you have decided to incorporate then there are certain requirements specific to this type of structure that need to be fulfilled. One such requirement is that of corporate bylaws. Whether you register an Arizona Corporation online or offline, you need to prepare company bylaws. This is an internal document and is not required to be shared with the state. According to the 2019 Arizona Revised Statutes, AZ Rev Stat § 10-206 (2019), the board of directors will have to adopt bylaws.

• Statement of Purpose
• Shareholders owning stock in the company
• When and where shareholders and directors meetings will be held
• Issuance and transfer of stock certificates
• Titles of the officers of the corporation
• Procedures for retaining profit and issuing dividends
• Committee and committee members
• Powers of director or officer
• Corporate book and information entailed in it
• Amendment to the Bylaws
• Conflict of interest

5. Appoint initial directors & hold an organizational meeting

Once you have decided to form a corporation in Arizona, one of the important steps in the incorporating process is appointing a board of directors. It is a requirement by law for a corporation to appoint an initial board of directors as they will represent the company. They will also be responsible for making decisions on behalf of shareholders. They will be required to make decisions regarding issuance of shares, strategic growth, and adding new products.

• Establishing a corporate structure of the company
• Election of officers
• Presenting stocks of certificates
• Authorize issuance of shares
• Establish principal place of business
• Approve business banking account
• Approving the corporate seal
• Special resolutions if any

6. Get an EIN

There are several aspects of new business formation and one such aspect is obtaining an Employer Identification Number (EIN). When you register a corporation in Arizona, you will need to be compliant with the state annual requirements and this includes filing of business taxes. According to the Internal Revenue Service (IRS), a C corporation may be liable to file employment taxes, corporate taxes and excise taxes. The type of tax may differ from one state to another. Hence, it is important to apply for and obtain the unique 9-digit Employer Identification Number (EIN). It is also known as the Federal Employer Identification Number (FEIN) and will allow corporations to open business bank accounts.

7. Open a bank account

A corporate account is a type of business bank account that can be opened by an individual in the name of a company. This type of banking account is used for facilitating different types of transactions including for receiving income, making payments, and saving funds. Once you incorporate in Arizona, you will have to make both personal and business transactions. This is where a corporate bank account can be quite beneficial. It will ensure your personal expenses and gains are kept separate from business expenses and gains. A business bank account also has several benefits and comes with numerous features like credit and loans, ease of filing taxes, and automated payments among others.

8. Comply with other tax and regulatory requirements

Once you form a corporation in Arizona, you will have to comply with various annual maintenance requirements of this state. One of the important requirements is that of an annual report. According to Arizona Revised Statutes, AZ Rev Stat § 10-1622 (2019), each domestic and foreign corporation authorized to transact business in this state will be required to file an annual report. It has to be filed with the Arizona Corporation Commission – Corporations Division, along with a fee of $45. Failure to file this report can lead to penalties.

Know more about starting an Arizona Corporation

If you have decided to register an Arizona Corporation online but are faced with several queries then this section will help address such queries. The section deals with queries specific to various aspects of incorporation like S Corporation, starting costs, foreign corporation, and dissolution among others.

How do I form a “C” corporation and an “S” corporation in Arizona?

If you are puzzled by the query of how to form a corporation in Arizona, especially a C and S Corporation then it is important to understand the difference first. A Corporation is a traditional corporation that can be formed by submitting the Articles of Incorporation pursuant to AZ Rev Stat § 10-202 (2019). Once you have formed a C Corp, you can elect for S Corporation status. An S Corporation is not a business entity but a tax status. You will have to submit a completed IRS Form 2553 (Election by a Small Business Corporation).

How much does it cost to start a corporation in Arizona?

If you want to incorporate in Arizona then you will be required to submit Articles of Incorporation for a domestic entity. The initial cost to register an Arizona C Corporation is $60. If you want to expedite the process then there will be an additional fee depending on the expedited service chosen. Apart from this initial incorporation cost, there will be other costs like cost for publishing notice of incorporation, reservation of corporate name, Articles of Amendment, application for business licenses and permits, and filing of annual report among others.

How do I look up a corporation in Arizona?

You will need to first reserve a business name and then apply for incorporation of your business. This starts with identifying a name that is compliant with state naming guidelines. The next step would be to conduct an Arizona Corporation search also known as name availability search. This process will ensure that your chosen name is available for reservation.

Do I need a business license for my Arizona Corporation?

Yes. You may require single or multiple business licenses depending on the industry, the location of your company, and the primary business activity.

Can I register a foreign Corporation in Arizona?

Yes. You can incorporate in Arizona as a foreign company and this process is known as foreign qualification. You will need to submit a Foreign Registration Statement pursuant to AZ Rev Stat § 10-1501 (2019). This application is also known as the Application for Authority to Transact Business in Arizona. The application has to be submitted with the Arizona Corporation Commission – Examination Section along with a fee of $150. You will also be required to officially publish a notice in top local newspapers within 60 days of incorporation verification.

How do I dissolve a corporation in Arizona?

Once you register an Arizona Corporation online, it becomes operational. If you want to dissolve this company then you will have to file the Articles of Dissolution pursuant to AZ Rev Stat § 10-1401 (2019). This is also known as the Application for Withdrawal and you will need to submit a Tax Clearance Certificate (Certificate of Compliance) along with it. There is a filing fee of $25.

Ready to Start an Arizona Corporation?

There are different types of business structures that you can choose to form in the state of Arizona. One of the most favored is a C Corporation. If you form a corporation in Arizona then you can leverage the many benefits of this type of entity as well as assistance and resources offered by the state. If you want to incorporate in this state as a domestic or foreign entity then IncParadise can assist you with the process of incorporation.