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Form The Entity

Form The Entity

If you have decided that an LLC or a corporation is the best form of entity for your business, the next step is to form the entity.  In Arizona, the Corporation Commission is the agency that governs the formation of LLC’s and corporations.  To form an LLC, the Articles of Organization need to be completed and filed with the AZ Corporation Commission (ACC).   To form a corporation, Articles of Incorporation need to be completed and filed with the ACC.

It is advisable to file the Articles on an expedited basis.  It is an extra $35 in addition to the $50 regular filing fee.  Upon approval of the Articles, the ACC will either mail or fax the articles back to the designated recipient together with a letter from the ACC advising the recipient that the Articles were approved.   Once the Articles are approved, the ACC stamps the top of the Articles with the file date and the ACC’s File Number associated with the newly formed company.  Once you have obtained the approved Articles, you can open the company’s bank account.  The bank will require the approved Articles and the Federal Employer Identification Number (EIN).  

It is important to form the company as soon as you can so you can start doing business.  In Arizona, the date of the company’s existence begins on the date the Articles are filed with the ACC.  As long as the Articles are approved upon the initial filing, the company may start engaging in its business operations upon filing the Articles.  However, the danger does exist if the ACC does not approve the Articles and returns them for corrections or additional information.  If they are returned, they will receive a new file date when the Articles are corrected and re-submitted to the ACC.  This new file date will be the date of the company’s existence.  

The safe recommendation is to wait until the ACC approves the Articles to begin business operations.   It is strongly recommended that the owners should wait until the Articles are approved before any real property is transferred to the LLC or before entering any contracts or paying or incurring any expenses that are related to the name of the company, such as business cards and marketing material.   Obviously, the owners do not want to incur any personal liability if the company is not yet formed and they do not want to incur additional expenses if they have to re-record the deed or re-print their marketing material.  Fortunately, the ACC generally approves the Articles within 2 weeks for an expedited filing.  The time will vary based on the number of filings being processed, and you can check with the ACC to obtain the current processing timeframe.