If you want to start an S-corp in Arizona, it’s important to know the specific steps you’ll need to take. You’ll need to follow state and federal laws, obtain a business license, and choose the right corporate structure to ensure the success of your S-corp. This guide will provide you with everything you need to start your own S-corp in Arizona.
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What is an S-corp?
Before we dive in, let’s review what an S-corp actually is. An S-corp is a type of corporation that gives small business owners the advantage of limited liability and the choices for partnership-like or corporate tax treatment. Unlike other types of corporations, S-corps are not subject to corporate taxes. Rather profits flow through to shareholders paying taxes based on their individual tax rates.
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Steps to Start an S-corp in Arizona
1. Choose a name for your S-corp
The name of your S-corp must be unique and not already in use by another corporation. You’ll need to check with the Arizona Secretary of State’s office to ensure your name is available. Once you’ve confirmed your business name is available start the filing process.
2. File Articles of Incorporation with the Arizona Secretary of State
The Arizona Secretary of State requires private corporations like an S-corp, to file Articles of Incorporation, which includes a legal and accurate legal name, article language describing corporate purpose, stock information, officer and Director names and addresses, Registered Agent name and contact information. It is important that when filing documents with the Secretary of State make sure you have all the information available to avoid incomplete forms which could lead to processing delays.
3. Appoint a statutory agent
A statutory agent is the point of contact for your S-corp with state and federal agencies. This person must be a resident of Arizona and have a physical address in the state. A statutory agent may be an individual member of the company, or an attorney operating a law practice in Arizona.
4. Obtain a business license From the Arizona Secretary of State
Arizona S-corps, along with a host of other businesses, are required to have a business license in the State. Business licensing requirements vary by industry, so its important that you stay in compliance with each of the requirements.
5. Establish a corporate structure
Choosing a corporate structure is important for managing and operating your S-corp while accounting for ongoing tax obligations. Consult your accountant to determine which corporate structure best suits your goals and operations. Remember, an S-corp is a pass-through entity that allows income and losses to be allocated to its shareholders, not paying federal income tax at the corporate level.
Taxation
As an Arizona S-corp, shareholders are taxed on their allocated share for gains realized while subscribed to the corporation. Since many states follow federal tax guidelines the shareholders taxable income allocation at the state tax level under Passive Activity Loss Limitations applies.
Conclusion
Starting an S-corp in Arizona is a smart move for small business owners seeking to enjoy the benefits of incorporation, while avoiding corporate tax liabilities. Follow the steps outlined above to start your own S-corp in Arizona. It’s best to consult with a reputable tax attorney, or accountant to ensure compliance with state and federal regulations.
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