Steps to Create a CorporationHere is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Arizona. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the Arizona Corporation Commission website, which has useful information and resources.
1. Choose a business name for the corporation and check for availability.
- Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.
- Arizona law requires that a corporation name contain the word "association", "bank", "company", "corporation", "limited" or "incorporated" or an abbreviation of one of these words or words or "abbreviations of like import in another language." A.R.S. § 10‑401. Additionally, your corporation name must be distinguishable from the names of other Arizona corporations and certain other entities. Id.
You can check the availability of a corporate name or reserve a corporate name for up to 120 days at the Arizona Corporation Commission website, at http://www.azcc.gov/divisions/corporations/filings/namingpolicy.asp
- Although you are not required to do so, consider registering your business name as a federal and/or state trademark.
2. Recruit and/or appoint a director or directors for the corporation.
- Arizona does not set a minimum age requirement for directors.
- Directors need not be residents of Arizona or shareholders of the corporation, unless the articles of incorporation or bylaws so require. A.R.S. § 10‑802.
3. Prepare and file articles of incorporation with the Arizona Corporation Commission.
- The Arizona Corporation Commission website provides simple, fill-in-the-blank forms for articles of incorporation, with instructions.
- Note that the form may ask you to list the name(s) and address(es) of the individual or individuals who will serve as the corporation's initial board of directors.
- The filing fee varies depending upon the type of corporation you create, but is $60 for a domestic, for‑profit corporation. A full schedule of fees can be found at http://www.azcc.gov/divisions/corporations/filings/forms/feesch.pdf.
- For general information on corporate articles of incorporation, please see the Articles of Incorporation page.
4. Create the corporation's bylaws.
- There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the state, but the corporation should keep a copy at its principal place a business. For general information on corporate bylaws, please see the Corporate Bylaws page.
- The bylaws should indicate the number of directors that will constitute the corporation's permanent board of directors, if that number is different from the number indicated in the articles of incorporation.
5. Hold an organizational meeting.
- See the general section on forming a corporation for details. You can find the Arizona statute relating to the organizational meeting at A.R.S. § 10-205.
6. Issue stock certificates to the initial owners of the corporation.
- See the general section on forming a corporation for details. The Arizona statutes relating to issuance of stock certificates are located in A.R.S. § 10‑625 and ‑626.
- The board of directors must authorize any issuance of shares, unless this power is reserved to the shareholders in the articles of incorporation. A.R.S. § 10‑621. Shares may be issued for "consideration consisting of any tangible or intangible property or benefit to the corporation including cash, services performed or other securities of the corporation, except that neither promissory notes nor future services constitute valid consideration." Id.
7. Obtain any required local licenses.
- See the general section on forming a corporation for details.
8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.
- Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.
- As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.
- If you have an employee or employees to whom you page wages for services performed in Arizona, you must register complete the Joint Tax Application for employer withholding and unemployment insurance. You can do this via the Arizona Department of Revenue website (click on "License a New Business"), which you can also use to register for other business taxes (if applicable).
- Arizona current income tax rate for corporations is 6.968% of Arizona taxable income. For more information, see the Arizona Department of Revenue website, including Business Basics: A Guide to Taxes for Arizona Businesses.
- Whenever you hire an employee in Arizona, you must inform both the IRS and the State of Arizona. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information about reporting new hires at the Arizona New Hire Reporting website.
- All employers who regularly hire workers in their customary business must carry workers' compensation insurance. A.R.S. § 23-902. The Industrial Commission of Arizona administers the Arizona workers' compensation program. For more information, see their Employers' Frequently Asked Questions.
- Arizona law requires employers in Arizona to use the "E-Verify" system (a free Web-based service offered by the federal Department of Homeland Security) to verify the employment authorization of all new employees hired after December 31, 2007. A.R.S. § 23-214.
- For more information on starting a small business in Arizona, including a checklist of requirements, see the Arizona Commerce Authority's Small Business Services website.
9. Open a bank account for your business.
- It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.
- Arizona corporations must file an annual report each year. A.R.S. § 10-1622. Many corporations can file their annual report online at the Arizona Corporation Commission's website. For profit corporations must pay a $45 filing fee; non profit corporations must pay a $10 filing fee.
- Arizona requires certain documents to be kept at a corporation's principal place of business. The required documents are described in A.R.S. § 10-1601.
- A.R.S. § 10-1602 requires Arizona corporations to make certain documents available to shareholders of the corporation upon request.
- An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.
- To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Arizona. There is no additional paperwork that must be filed with Arizona to obtain "S" status.