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Editorial 7 MIN READ

Arizona in March 2022: a $50 filing, no annual report, and a newspaper bill

What the Corporation Commission actually charges for an LLC, and what the county map does to the total

The Editors
Staff, Incorporator.org
7 min read Updated
Contents 6 sections
  1. What the fee table actually says
  2. The publication rule, which is the part people miss
  3. The statute that became the law of the land in 2020
  4. The tax context, because it is shifting
  5. Who Arizona makes sense for right now
  6. Sources

n Arizona LLC costs $50 to form, or $85 if you want the Corporation Commission to move you to the front of the queue. There is no annual report. There is, in every county except two, a newspaper bill.

Those are the numbers that matter. The rest of this piece is about what sits on top of them: a statute that finished replacing itself eighteen months ago, a tax code that is in the middle of a four-year phase-down, and a publication rule that is the state's one genuine friction against a clean filing experience.

What the fee table actually says

The Arizona Corporation Commission's published LLC fee schedule lists $50 for Articles of Organization under A.R.S. Title 29, Chapter 7 and $85 if you elect expedited processing. Expedited is an add-on of $35 to the underlying filing. Routine turnaround at the Commission in early 2022 runs between two and three weeks online, somewhat longer by paper; expedited brings that to a few business days.

Arizona does not bill an annual report for LLCs, and this is the unusual part of the numbers rather than the fee. Most states collect an annual or biennial fee in the $10 to $200 range regardless of what the entity is doing. Arizona collects nothing. The comparison to Delaware here is uncomplicated: Delaware's LLC annual tax is $300 every June 1, which is six years of Arizona filings paid in a single bill. Over a seven-year hold, the state-level overhead difference is roughly $2,100.

Corporations in Arizona still owe the annual report, at $45 for profit corporations plus the $35 expedite when used, on the anniversary of formation. The practical effect in 2022 is that Arizona is a low-maintenance state for LLCs and a normal-maintenance state for corporations.

The publication rule, which is the part people miss

A.R.S. § 29-3201(G) requires a newly formed LLC to publish a notice of its Articles of Organization in a newspaper of general circulation in the county of its statutory agent's street address, for three consecutive publications, within 60 days of the Commission's approval. The rule came across to the new LLC Act from the old one, largely unchanged. If you miss the 60-day window, the entity remains valid, but you create a vulnerability the Commission is not generally in the business of enforcing and that a plaintiff's lawyer may one day enjoy pointing at.

The rule has one exemption, and it is the exemption that matters for most founders. If the statutory agent's street address is in a county with a population exceeding 800,000, the Commission publishes the notice itself, in its own online database, at no charge. Under current census figures the exempt counties are Maricopa (Phoenix) and Pima (Tucson). If your statutory agent sits in one of those two, your publication cost is zero. If your agent sits anywhere else, you are buying column inches in a local paper.

Major rural papers run the notice for roughly $80 to $120 for the three-week spread; smaller weeklies run cheaper. The price is not the problem; the operational friction is. The founder has to arrange the publication, receive the affidavit of publication from the paper, and keep it in the entity records. The Commission does not collect the affidavit and does not check that the publication happened. The burden of proof sits on the LLC.

This is the reason most filings in the state route their statutory agent to a Maricopa or Pima address. A commercial registered agent in Phoenix handles the exemption by default. The thrifty founder who appoints herself as statutory agent at her home address in Yavapai County will, six weeks later, be on the phone with the Prescott Daily Courier.

Delaware has no publication requirement of any kind. New York has one that costs more than Arizona's and takes longer. Arizona sits in the middle: a rule that is cheap when you know about it and somewhere between irritating and expensive when you do not.

The statute that became the law of the land in 2020

The operative LLC statute in Arizona is the Arizona Limited Liability Company Act, or ALLCA, codified at A.R.S. Title 29, Chapter 7. It replaced the 1992 Arizona LLC Act in full and was enacted by Senate Bill 1353 of the 53rd Legislature, signed by Governor Ducey on April 10, 2018. The bill followed the 2013 Revised Uniform Limited Liability Company Act closely, with Arizona-specific tweaks on fiduciary duty defaults and manager-managed governance.

The rollout came in two phases. For LLCs formed on or after September 1, 2019, ALLCA applied from day one. For LLCs formed before that date, the old statute continued to apply until September 1, 2020, at which point ALLCA applied to everyone. That second date is the one that matters for anything you are reading in 2022. Every operating agreement on file in Arizona is now governed by ALLCA, whether or not the operating agreement was drafted with ALLCA in mind.

The switchover is subtle for most small LLCs and material for a few. Default fiduciary duties are now codified, the rules on member and manager liability for distributions are tightened, and the Act introduces a statutory right of members to information. Operating agreements drafted under the 1992 Act can still be enforced, but the gap-fillers behind any silence in the document have changed. If the document does not address a point, ALLCA now does, and the ALLCA answer is not always the pre-2019 answer.

For a single-member LLC, none of this affects day-to-day operations. For a multi-member LLC with active disputes about distributions or manager discretion, it is worth a half-hour with a lawyer.

The tax context, because it is shifting

Arizona's corporate income tax is a flat 4.9% of net income under A.R.S. § 43-1111, with a $50 minimum. That rate has held since tax year 2017 and is not on the current legislative move list. An Arizona C-corp with $1 million of Arizona-apportioned income pays $49,000 to the state and takes whatever federal consequences follow.

The individual income tax, which matters to pass-through owners, is what is moving. Senate Bill 1828, signed June 2021, started a phase-down toward a flat 2.5%. For tax year 2022, the rate structure is a two-tier schedule of 2.55% and 2.98%, depending on income and filing status. The full 2.5% flat rate is set to trigger in a later year, keyed to a General Fund revenue threshold of $12.976 billion; the statute contemplated TY 2024 as the earliest possible date, and revenue performance may accelerate it.

The other 2021 tax bill worth naming is House Bill 2838, which created an elective pass-through entity tax codified at A.R.S. § 43-1014. The PTE election lets a partnership or S-corp pay Arizona income tax at the entity level, with members receiving a credit for the tax paid. The point is the federal one: tax paid at the entity level is deductible at the entity level, and the $10,000 SALT cap on individual returns does not reach it. For owners whose SALT runway is already pinned, the election is a workaround Congress has not closed. For owners whose SALT is otherwise unused, it is neutral. The math is entity-by-entity.

Who Arizona makes sense for right now

For a business operating in Arizona, the state is a low-cost jurisdiction to form in and a low-maintenance one to keep. The $50 filing and the absence of an annual report put Arizona near the bottom of the state-level overhead table. The publication rule is real but solvable with a Maricopa or Pima address. The Act is modern. The tax code is flattening.

For a business not operating in Arizona, there is no particular reason to form here. The state does not offer the privacy positioning Wyoming and New Mexico use, and it does not offer the case-law depth Delaware uses. The cost-of-error is low, but so is the benefit.

The useful comparison in March 2022 is to New Mexico to the east and Nevada to the west, both of which collect an annual fee and skip the publication requirement. Arizona trades one for the other, and for founders who can put their statutory agent in Phoenix or Tucson, the trade is favorable. For founders who cannot, Arizona costs roughly $130 to $170 all-in for year one and nothing thereafter.

Sources

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