The mechanics involved with forming a corporation in Arizona go beyond the ministerial tasks of filling out a form.
Incorporating in Arizona
Arizona incorporation starts with registering Articles with the Arizona Corporation Commission followed by publication in an approved newspaper, but incorporating goes beyond these simple steps.
Filing documents is only the beginning when you incorporate in Arizona. This page explains what to know about incorporation procedure as well as ongoing formalities applicable to preserving the company’s structure. It is important to understand that corporate structure is dependent on following certain rules.
Choosing a Business Name
The first step to incorporate is choosing a name for your company and checking it for availability. The name cannot already be in use. A search for business name availability should be conducted before preparing your documents. This can be checked at the ACC Starpass database here. There is also information on how to search accurately.
Filing Articles of Incorporation
A minimum of one person forms a corporation by filing Articles and a Certificate of Disclosure at the ACC office. A cover sheet and fee will accompany the registration.
Arizona Articles provide very basic information including:
- the corporation’s name,
- its business purpose,
- the place of business,
- the number and value of authorized shares,
- the names and addresses of all board members, the incorporator, and statutory agent (aka registered agent).
The incorporator signs the Articles, and the statutory agent signs an acceptance of the appointment. Sample, albeit rudimentary Articles are found online at the ACC’s website.
A cover sheet is submitted with the documents. It’s a simple form used for administrative purposes by the ACC for routing purposes.
A Certificate of Disclosure is included with the application. The certificate is a one-page document that includes information as to if any officer, director or shareholder has been convicted of certain felonies.
Approval by Commission
The Commission will review the documents, and issue an approval or rejection notice. The approval is usually issued in three to seven business days (when the application is expedited). If the documents are rejected, written notice is given stating the reasons. Usually, this would be due to a clerical error or choosing a name that’s too similar to an existing company’s.
Publication of Notice
After receiving the approval, notice will need to be published in an accepted newspaper. Publication must occur within 60 days of incorporating, and an Affidavit of Publication is to be submitted to the ACC within 90 days of incorporation. Fees to publicize will obviously vary by newspaper, county, and the length of the document ($65 to $125 is the norm, if you incorporate in Maricopa County). Here is a list of newspapers where notice can appear.
Maintenance of the Corporation
Registering the corporation and obtaining approval of the articles creates the corporation. But even though it’s legally formed, corporations need maintenance. There is a difference between registering documents and forming an Arizona corporation.
Setting up a corporation so it complies with legal criteria includes adopting bylaws, appointing directors and officers, issuing stock, and adopting resolutions.
Preparing and Adopting Bylaws
Arizona bylaws normally include provisions patterned after the statutes, and set rules regarding voting rights, notice rights, and other operational issues. This document designates how many Directors will sit on the Board. In general, bylaws “may contain any provision for managing the business and regulating the affairs of a corporation that is not inconsistent with law or the articles of incorporation” (See ARS 10-206).
The bylaws should be prepared at this juncture in order that the directors can formally adopt them at their first meeting. We prepare this document for you so it can be approved at that time by the board.
Organizational Meeting of Directors
A Meeting of the Board of Directors is held to elect officers, authorize issuance of stock, adopt bylaws and other matters such as opening business bank accounts. Records of the organizational meeting should be prepared and kept in the records file.
The purpose of this is to “to complete the organization of the corporation by appointing officers, adopting bylaws and carrying on any other business brought before the meeting.” (See ARS 10-205.)
Arizona allows for “Consent Actions” to be used in lieu of holding an organizational meeting (not all jurisdictions do). Provided the entire board is in agreement to an action, it can be approved by each director signing a Consent Action or Resolution.
Consent actions are expressly authorized under Arizona law, but Articles can override this, and require meetings to be held.
Following Rules and Formalities
After incorporating, it is necessary in Arizona to follow certain formalities to “keep the entity legal”. Disregarding these rules can result in exposure of owners’ assets to claims aka “piercing the corporate veil”. Knowing how to comply with these formalities is crucial to preserving corporate structure.
Keeping Corporate Records
A Corporate Minute Book needs to be maintained on an ongoing basis. Certain records must be kept, which include:
- copies of approved articles and any amendments;
- a copy of the affidavit of publication;
- the current bylaws,
- minutes of directors’ and shareholders’ meetings;
- the names of current directors and officers, as well as their addresses;
- any shareholder’s agreements;
- a stock ledger;
- the most recent annual report filed;
- written communications to shareholders within the past three years.
Filing Annual Reports
Annual reports are submitted to the ACC to maintain good standing (See ARS 10-701). Annual reports disclose the names and addresses and any changes to the officers, directors and shareholders. Filing these reports on a timely basis is important to avoid administrative dissolution by the ACC (i.e., revocation of charter).
A Federal Tax Identification Number for the company (also called an EIN) is obtained from the IRS for taxation purposes by filing Form SS-4. Since Corporations are non-disregarded entities for tax purposes, they must file tax returns.
This concludes the overview of incorporating in Arizona. It covers the main steps to form a corporation. I strongly recommend you review the entire site if you want to learn about protecting assets from business liabilities.
You can learn about our services and the costs to incorporate here, or research the Arizona Corporations Code. To incorporate now, please go to our Arizona Incorporation Questionnaire where you get discounts for ordering online.