How to Form an S Corporation in Arizona

Introduction

If you’re thinking of starting your own business and want to incorporate, you might be wondering if an S corporation is the right option for you. An S corporation is a limited liability company that offers many of the same tax advantages as a C corporation. It also gives owners some liability protection against lawsuits (but not criminal charges). Here’s how to form an S corp in Arizona:

Determine the Name of your Corporation

In Arizona, your company name must contain the following:

• The word “Corporation” or “Company” (or be an abbreviation of one of these words).
• A designator such as “Limited Liability Company” (or an abbreviation thereof), or “Inc.,” “Ltd.,” or any other appropriate designator.

Choose a Registered Agent

A registered agent is a person or business that agrees to accept legal papers on behalf of a corporation. Registered agents provide several important services, including:

• Accepting service of process when the company is sued or other legal papers are delivered to the business
• Receiving and keeping track of annual reports (Form 1120S) and income tax returns (Form 1120S) that need to be filed with the IRS
• Providing access to annual meeting notices, minutes, resolutions and bylaws should you need them later as part of an audit or investigation

Draft and File your Articles of Incorporation

The Articles of Incorporation are filed with the Arizona Corporation Commission (ACC). Make sure to include all of the information outlined in Section 5(a) above, and make sure your articles are clear, concise and accurate. Once you have completed these steps, you can submit them to the ACC via mail or email.

After your S Corporation has been created, it is time to choose an operating agreement that will govern how your business operates. This should be done by all partners involved in an S Corporation so they understand their roles and responsibilities within their company

Create bylaws

• Create bylaws.
• Bylaws are guidelines that go into more detail about how your company will operate, such as how meetings and votes will be conducted, who can vote, what happens if a director resigns or is removed from office, etc. While not technically required in Arizona (except for corporations that have directors), having them is considered good practice and a strong indicator of professionalism. However, like many things in life, you don’t need to go overboard; simpler is often better when it comes to drafting the Constitution of your new company.
• Hire an attorney if you aren’t sure how much detail to include in your bylaws—or if you have other questions related to forming an S Corp or LLC structure.

Hold a Meeting of Shareholders and Directors

To form an S corporation, the shareholders and directors must hold a meeting where they vote to adopt the Articles of Incorporation and Bylaws. The Articles of Incorporation is a document that lists important information about your company, such as:

• its name
• address
• purpose and duration
• number of authorized shares (the maximum number of shares that can be issued)

Adopt an Employee Agreement

• Adopt an Employee Agreement.
• The employee agreement should be in writing and signed by both the employer and employee.
• It should be kept up to date, and include a job description, working hours and conditions, and pay structure.

Recruit Employees and Obtain Business Licenses

As you begin to recruit employees for your S corporation, you will also want to obtain a business license. A business license is required by the state and local government in which you are operating your S corporation. The type of license depends on the nature of your business operations and needs.

A business license typically includes information about an organization’s name, address, tax identification number (TIN), and annual gross receipts. Other information may include:

• When the business was established or operated in Arizona
• Whether it is currently active or inactive
• If it has had any violations during its operation

To form an S corp you need to make multiple decisions, one after another.

To form an S corp you need to make multiple decisions, one after another. The first decision is whether or not you want to form an S corp in the first place. A C corporation is a separate legal entity that can be taxed twice: once when it earns money and again when it distributes profits to shareholders via dividends, which are taxed at ordinary rates rather than qualified dividend rates (which max out at 15%). However, if you elect to have your corporation taxed under Subchapter S of the Internal Revenue Code and file as a pass-through entity—like partnerships do—you avoid double taxation by only being taxed on what remains after subtracting salaries and other expenses from gross income earned by the business.

Conclusion

Now that you have your S corp in place, you are ready to begin operating. The next step is to select the correct business structure for you and your needs. If you would like help with this process, please contact us today!