How to Start an S-Corp in Arizona


Steve Goldstein
Steve Goldstein
Business Formation Expert
Steve Goldstein runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

All Posts by Steve Goldstein →
Business Formation Expert  |   Fact Checked by Editorial Staff
Last updated: 
LLCBuddy™ offers informative content for educational purposes only, not as a substitute for professional legal or tax advice. We may earn commissions if you use the services we recommend on this site.
At LLCBuddy, we don't just offer information; we provide a curated experience backed by extensive research and expertise. Led by Steve Goldstein, a seasoned expert in the LLC formation sector, our platform is built on years of hands-on experience and a deep understanding of the nuances involved in establishing and running an LLC. We've navigated the intricacies of the industry, sifted through the complexities, and packaged our knowledge into a comprehensive, user-friendly guide. Our commitment is to empower you with reliable, up-to-date, and actionable insights, ensuring you make informed decisions. With LLCBuddy, you're not just getting a tutorial; you're gaining a trustworthy partner for your entrepreneurial journey.
Start an S-corporation in Arizona

Arizona, popularly known as The Grand Canyon State, offers a bunch of benefits for business owners, especially the state capital Phoenix has a lot to offer to the rising entrepreneurs in the state. If you want to start a business in Arizona, you must choose an appropriate corporate structure. You can have a corporation or a sole proprietorship or set up an LLC in Arizona. There are a few guidelines that you should be aware of when it comes to starting an S-Corporation. In Arizona, S-Corporation is businesses’ most common corporate structure, especially start-ups. It was developed in order to give companies limited liability protection while preserving the advantages of being a distinct legal organization.

In this article, you will learn about how to start an s-corporation in Arizona. You will also learn whether an s-corporate business structure suits your business. Please read all the points carefully before starting your business in Arizona.

What is an S-Corp in Arizona?

An S corporation (S-corp) is not a type of corporate entity, unlike a limited liability company (LLC) or other business structures. It’s a tax classification that might result in significant financial savings for both corporations and LLCs but in different ways. S-corp is similar to LLC, except that the IRS treats it as a corporation for tax purposes.

If you want an S corp status for your business, you can always form an LLC to protect your personal assets from business debts. It takes some basic steps to have a successful s-corporation in Arizona. S-Corps do pay corporate income taxes, but they are still treated as disregarded companies for federal tax purposes.

S-corps pay corporate taxes that LLCs do not have to pay. If you want to have an S-corp status, then we would recommend you have an LLC instead. This will protect your personal assets from your business liabilities and you don’t have to pay any corporate taxes.

LLCBuddy Editorial Team

Limitation and Requirements of S-Corp in Arizona

As you have decided to have an S-Corp structure for your business, you must know the limitations and requirements to qualify for S-Corp status. We have listed some important points to consider following for your reference-

  • Be a domestic corporation.
  • Not be an ineligible corporation, such as specific financial institutions, insurance providers, or domestic corporations engaged in overseas sales.
  • Have just one type of stock.
  • Have a maximum of 100 shareholders or members.
  • Have only permitted individuals, certain trusts, and estates as stockholders or members.

If you are qualified for the limitations and requirements, you can apply for an S-Corp in Arizona.

How to Start an S-Corporation in Arizona?

To create S-Corp in Arizona, you must follow the below guidelines that include forming a business name, hiring a Statutory Agent, filing your Articles of Organization, creating an operating agreement in Arizona, requesting an EIN, filing a form 2553.

Step 1: Register a Business Name in Arizona

After you have decided on the idea to start an S-Corp in Arizona, deciding the name for your corporation is significant. Legal procedures should be taken into account when choosing your partnership name. Choose a business name that will enable you to develop a strong brand identity.

If you want to set up an LLC, there is a complete guide on Arizona LLC name guidelines for a proper LLC name. Here are some guidelines you must follow while naming your S-corp.

  • Avoid profanities
  • The name should be available, and no other entity should have the same name in Arizona.
  • Limit of restricted words that need a license in Arizona, for example, doctors, attorneys, etc.
  • Do not use a business name that sounds like a government agency or entity (like “police,” “county,” and “state”)

Step 2: Hiring the Arizona Statutory Agent

The next step in starting an S-corp in Arizona is hiring a Arizona Statutory Agent, a person that accepts legal paperwork on behalf of your business. This person or business will receive important tax forms, legal documents (such as subpoenas), all notices of lawsuits, and other official government correspondence in Arizona. Forming an LLC and an S-corp will be easier if you have Statutory Agent in Arizona.

Step 3: File Your Arizona Articles of Organization

The Articles of Organization is an important document to start your limited liability company (LLC). Arizona Articles of Organization is a simple document that contains the business name and address as well as the name and address of the person who received lawsuits on behalf of the organization. In order for the “Articles of Organization” to be filed, you need to pay a filing fee to the state. In Arizona, the filing fee is $50.

In California, along with the Articles of Organization, you must send the Statement of Information to file your company. The statement of information is a mandatory document in California, but other states do not have this document.

Step 4: Creating an Operating Agreement in Arizona

After you have filed your Articles of Organization in Arizona, the next step is to create an LLC operating agreement in Arizona. The Arizona LLC operating agreement is essential and necessary since it will cover your corporation’s important documentation and rules. The operating agreements usually include the following-

  • Article I: Organization
  • Article II: Management and Voting
  • Article III: Capital Contributions
  • Article IV: Distributions
  • Article V: Membership Changes
  • Article VI: Dissolution

After creating the LLC operating agreement, you can benefit in several ways since it will discuss how decisions for the business will be made, including management and member voting structure. For more details about how an operating agreement works, please check Operating Agreement.

Step 5: Request for EIN in Arizona

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your general partnership. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Arizona can be through the following:

  • Apply Online- You can apply for EIN online, the most desirable and fastest method for users.
  • Apply by Fax- Another method of obtaining EIN is to fax Form SS-4 (PDF) after entering all the correct information to (855) 641-6935.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is 4 weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

If you would like to be assisted in getting an EIN in the Internal Revenue Service, we can get your EIN for you. Our EIN service is quick and hassle-free. For more details about EIN for your business, check why you need EIN.

Step 6: File Form 2553 for Your S-Corp Business in Arizona

Once you have obtained your EIN and Articles of Organization to form an S-Corp, you must file Form 2553, Election by a Small Business Corporation, to apply for S-corp status. Filing a form 2553 should be done 75 days after the formation of your S-Corp, or not more than 75 days after the beginning of the tax year in which the election is to take effect.

If your LLS-Corp has passed the deadline of 75 days, you must also file Form 8832, Entity Classification Election, in order to opt to be taxed as a corporation. Then you would send Form 2553 and Form 8832 jointly by certified mail from the USPS. In Arizona, you can send your form 2553 to the Department of the Treasury Internal Revenue Service Center – Ogden, UT 84201 Fax: 855-214-7520 .

Advantages of Starting an S-Corporation in Arizona

Filing an S-Corp in Arizona has numerous benefits and advantages.

  • Writing Off Losses: With S-corp, owners can deduct business losses from their individual income statements. If the company loses money in the first few years, it may balance its other sources of revenue. Even so, understand the shareholder loss limitations set by the IRS.
  • Pass-Through Taxation: Starting an S-Corp is the widely known advantage in forming this kind of business structure since an s-corp uses a pass-through taxation structure. The company does not pay twice the tax in this kind of taxation. Because of this structure, most start-ups and entrepreneurs in Arizona apply for an S-Corp LLC.
  • Qualified Business Income Deduction: A qualified business income, or QBI, is the total of all qualified items of income, gain, deduction, and loss from any qualified trade or business, including S-Corp. With this, S corp owners may deduct up to 20% of their eligible earnings under the Tax Cuts and Jobs Act.

FAQs

What is an S-Corp in Arizona?
An S-Corp in Arizona is a type of business that is considered a separate entity from its owners for tax purposes. It is formed by filing articles of incorporation with the Arizona Corporation Commission and is subject to certain rules and regulations.
How do I form an S-Corp in Arizona?
The process to form an S-Corp in Arizona is similar to forming any other type of business in the state. You must file articles of incorporation with the Arizona Corporation Commission, obtain any necessary licenses and permits, and obtain an Employer Identification Number (EIN) from the IRS.
What are the advantages of forming an S-Corp in Arizona?
Forming an S-Corp in Arizona offers several advantages, including limited liability protection, flexible ownership and management structures, and potential tax savings.
What documents must I file to form an S-Corp in Arizona?
To form an S-Corp in Arizona, you must file articles of incorporation with the Arizona Corporation Commission. Additionally, you will need to obtain any necessary licenses or permits and obtain an Employer Identification Number (EIN) from the IRS.
What information is required in the articles of incorporation for an S-Corp in Arizona?
The articles of incorporation must include the name of the business, its purpose, the address of its principal office, the name and address of its registered agent, the names and addresses of its incorporators, and the amount of its issued stock.
How much does it cost to form an S-Corp in Arizona?
The cost of forming an S-Corp in Arizona depends on the fees associated with filing the articles of incorporation and obtaining any necessary licenses or permits. Generally, the filing fee is $60, the license fee is $50, and the permit fee is $25.
Are there any special requirements for forming an S-Corp in Arizona?
Yes, there are several special requirements for forming an S-Corp in Arizona. For example, you must have a minimum of two shareholders, no more than 100 shareholders, and the shareholders must be U.S. citizens or permanent residents. In addition, you must issue stock according to the company’s articles of incorporation, maintain corporate records, and comply with all applicable laws and regulations.
What is the process for electing S-Corp status in Arizona?
To elect S-Corp status in Arizona, you must file Form 2553 with the IRS. This form must be signed and dated by all shareholders, and it must be filed within 75 days of the company’s formation.
Are there any restrictions on who can be a shareholder in an S-Corp in Arizona?
Yes, there are restrictions on who can be a shareholder in an S-Corp in Arizona. All shareholders must be U.S. citizens or permanent residents, and the company must have a minimum of two and no more than 100 shareholders.
What are the tax benefits of forming an S-Corp in Arizona?
Forming an S-Corp in Arizona can provide significant tax benefits. An S-Corp can elect to be taxed as a C-Corp, which means that the income is only taxed once at the corporate level. Additionally, the shareholders can deduct losses from the business on their personal taxes, and they can avoid the double taxation of dividends.
Are there any other benefits to forming an S-Corp in Arizona?
Yes, there are several other potential benefits to forming an S-Corp in Arizona. These include limited liability protection, flexible ownership and management structures, and potential tax savings. Additionally, it may be easier to obtain financing and attract investors.
What is the process for dissolving an S-Corp in Arizona?
To dissolve an S-Corp in Arizona, you must file articles of dissolution with the Arizona Corporation Commission, notify all creditors and notify the Internal Revenue Service (IRS). Additionally, you must pay any outstanding debts and file Form 966 with the IRS.
How long does it take to form an S-Corp in Arizona?
The process of forming an S-Corp in Arizona typically takes between 7 and 10 days, depending on the complexity of the company’s structure.
What are the ongoing requirements for an S-Corp in Arizona?
The ongoing requirements for an S-Corp in Arizona include maintaining corporate records, filing annual reports with the Arizona Corporation Commission, complying with all applicable laws and regulations, and paying any necessary taxes.
What is the Arizona Corporation Commission?
The Arizona Corporation Commission is the state agency responsible for regulating corporations, limited liability companies, limited partnerships, and other entities doing business in Arizona.
Are there any restrictions on the types of activities an S-Corp in Arizona can engage in?
Yes, there are restrictions on the types of activities an S-Corp in Arizona can engage in. The company must avoid activities that are illegal, involve significant risk, involve the sale of securities, or are outside the scope of the company’s stated purpose.
Do I need to obtain a business license to form an S-Corp in Arizona?
Yes, you need to obtain a business license to form an S-Corp in Arizona. The process for obtaining a business license varies by county, but it typically involves submitting an application, providing Proof of Identity and providing proof of business insurance.
Do I need to obtain an Employer Identification Number (EIN) to form an S-Corp in Arizona?
Yes, you need to obtain an Employer Identification Number (EIN) to form an S-Corp in Arizona. The EIN is used to identify the company for tax purposes, and it is obtained by filing Form SS-4 with the IRS.
What is the difference between an S-Corp and a C-Corp in Arizona?
The main difference between an S-Corp and a C-Corp in Arizona is how they are taxed. An S-Corp can elect to be taxed as a C-Corp, which means that the income is only taxed once at the corporate level. A C-Corp, on the other hand, is subject to double taxation at the corporate and individual level.
Is an S-Corp in Arizona required to hold annual meetings?
Yes, an S-Corp in Arizona is required to hold annual meetings. These meetings must be documented in the company’s corporate records, and they must include the election of officers and the approval of the company’s financial statements.
What is the process for amending the articles of incorporation for an S-Corp in Arizona?
To amend the articles of incorporation for an S-Corp in Arizona, you must file a Certificate of Amendment with the Arizona Corporation Commission. This document must include the changes being made and must be signed by the company’s officers.
What are the reporting requirements for an S-Corp in Arizona?
The reporting requirements for an S-Corp in Arizona include filing annual reports with the Arizona Corporation Commission, filing Form 990 with the IRS, and filing any other necessary reports or forms with the state or federal government.
Do I need to obtain a federal tax ID number for an S-Corp in Arizona?
Yes, you need to obtain a federal tax ID number for an S-Corp in Arizona. This number is also known as an Employer Identification Number (EIN), and it is obtained by filing Form SS-4 with the IRS.
What is the process for changing the name of an S-Corp in Arizona?
To change the name of an S-Corp in Arizona, you must file articles of amendment with the Arizona Corporation Commission. This document must include the company’s current name, the proposed new name, and must be signed by the company’s officers.
What are the penalties for failing to comply with the filing requirements for an S-Corp in Arizona?
The penalties for failing to comply with the filing requirements for an S-Corp in Arizona vary, but they may include fines, legal fees, or even dissolution of the company.
Are there any restrictions on the types of investments an S-Corp in Arizona can make?
Yes, there are restrictions on the types of investments an S-Corp in Arizona can make. The company must avoid activities that are illegal, involve significant risk, involve the sale of securities, or are outside the scope of the company’s stated purpose.
Can I form an S-Corp in Arizona online?
Yes, you can form an S-Corp in Arizona online. The process is similar to forming an S-Corp in any other state, and it involves filing articles of incorporation with the Arizona Corporation Commission, obtaining any necessary licenses or permits, and obtaining an Employer Identification Number (EIN) from the IRS.
What is required to start an S-Corp in Arizona?
To start an S-Corp in Arizona, you must file articles of incorporation with the Arizona Corporation Commission. You will also need to obtain an Employer Identification Number from the Internal Revenue Service and register with the Arizona Department of Revenue.
How much does it cost to form an Arizona S-Corp?
The cost to form an Arizona S-Corp will vary depending on the services you choose. Generally, the filing fee for the articles of incorporation is $60.
How long does it take to form an Arizona S-Corp?
It typically takes several weeks to form an Arizona S-Corp, depending on the services you choose and the complexity of the paperwork.
What are the tax benefits of an S-Corp in Arizona?
An S-Corp in Arizona provides many tax benefits, including limited liability protection, pass-through taxation, and the ability to deduct certain business expenses.
What are the filing requirements for an Arizona S-Corp?
The filing requirements for an Arizona S-Corp include filing articles of incorporation with the Arizona Corporation Commission, obtaining an Employer Identification Number from the Internal Revenue Service, registering with the Arizona Department of Revenue, and filing a state income tax return each year.
What are the ongoing requirements for an Arizona S-Corp?
The ongoing requirements for an Arizona S-Corp include filing an annual report with the Arizona Corporation Commission, maintaining corporate records, and filing a state income tax return each year.
What are the advantages and disadvantages of an Arizona S-Corp?
The advantages of an Arizona S-Corp include limited liability protection, pass-through taxation, and the ability to deduct certain business expenses. The disadvantages of an Arizona S-Corp include the need to follow complex filing requirements and the potential for double taxation.

Also Read

Why Arizona S Corporation is So Important

One of the primary reasons why the Arizona S Corporation is so important is its tax advantages. Unlike a traditional C Corporation, which faces double taxation on profits, an S Corporation allows income to flow directly to shareholders without being taxed at the corporate level. This can lead to significant tax savings for both the corporation and its shareholders, making it an attractive option for many small businesses.

Additionally, the Arizona S Corporation offers liability protection for its shareholders. By forming a corporation, owners are able to separate their personal assets from the business’s liabilities. This can help protect individual shareholders from being personally liable for any debts or legal obligations of the corporation, which can provide peace of mind and financial security.

Furthermore, the S Corporation structure allows for flexibility in terms of ownership and management. Unlike other entity types, S Corporations do not have restrictions on the number or types of shareholders they can have, making it easier to bring on new investors or partners. Additionally, management of an S Corporation can be structured in a way that best suits the needs of the business, providing the autonomy and control that many business owners desire.

Another key benefit of the Arizona S Corporation is its potential for growth and expansion. The structure of an S Corporation makes it easier to raise capital and attract investment, which can fuel business growth and allow for expansion into new markets. This can lead to increased profitability and long-term success for the business.

Overall, the Arizona S Corporation offers a wealth of benefits for small business owners, from tax advantages to liability protection to flexibility in ownership and management. By choosing this entity type, entrepreneurs can set themselves up for success and position their businesses for growth and prosperity.

In conclusion, the Arizona S Corporation is an important entity type for small businesses due to its tax advantages, liability protection, flexibility, and growth potential. Business owners should carefully consider this option when starting or growing their businesses in order to take advantage of these key benefits.

Conclusion

In conclusion, starting an S-corp in Arizona is a strategic choice for entrepreneurs seeking the benefits of limited liability and favorable tax treatment. One can successfully establish an S-corp by following the outlined steps, including selecting a unique name, filing the Articles of Incorporation, obtaining necessary licenses, and adhering to state-specific regulations. Ultimately, this corporate structure offers a strong foundation for business growth and protection, making it a worthwhile consideration for those looking to launch a venture in Arizona.

Leave a Comment