If you own a business that was created in a state other than Arizona, you will need to qualify or register that business in Arizona if you want to do business there. Here is an overview of the rules on how to qualify your foreign (non-Arizona) limited liability company (LLC) to do business in Arizona.
For Arizona purposes, if your LLC is formed in another state, then it is known as a foreign LLC in Arizona. In other words, foreign doesn’t mean from another country. Instead, it means your business was organized under the laws of another state. A domestic LLC, on the other hand, is one that is formed in the state where it is doing business. This is common usage throughout the United States. For example, an LLC formed in Massachusetts is a foreign LLC in Rhode Island.
According to Arizona’s LLC Act, you are required to register your foreign company with the state of Arizona if you are “transacting business” in Arizona. What does this mean? Well, like most states, Arizona’s LLC Act does not specifically define the phrase “transacting business” in relation to foreign registrations.
However, state laws governing when foreign companies must collect state sales tax in their state provide some guidance on the issue. Under these laws, a business must have a physical presence in—or nexus with—the state in order to be required to collect state sales tax on sales to that state’s residents. Generally speaking, physical presence and nexus are synonymous, and mean having:
Certain exceptions may apply and the rules can get more complicated with things like Internet sales. Nevertheless, in general, if you have an office, a store, a warehouse, or employees in another state, you will need to qualify your LLC as a foreign company in that state. For more details, including some possible distinctions between physical presence and nexus, check Nolo’s articles on Internet Sales Tax: A 50-State Guide to State Laws.
Like most states, Arizona’s LLC Act specifies certain activities that do not constitute transacting business in the state. The items listed include:
The LLC also specifically states that other activities beyond those listed are not necessarily excluded; in other words, other activities also may be exempt. For the full, legal description of each of the listed items, check Section 29-809 of the Arizona Revised Statutes.
If your LLC’s only activity in Arizona is one or more of the listed items, you should not need to register with the state.
To register your business in Arizona, you must file an Application for Registration of Foreign Limited Liability Companywith the Arizona Corporation Commission (ACC). You can download a copy of the application form from the ACC website.
To complete the application, you must provide more or less the same information that you need to create an LLC in your home state. More specifically, for an Arizona application for registration, you need to provide:
You can download the required statutory agent acceptance form and manager and member structure statement forms from the ACC website.
You also must include an certificate of existence or certificate of good standing with your application. The certificate usually will be issued by the secretary of state (or equivalent official) in the state where your LLC is organized. The certificate must be no more than 60 days old. The filing fee is $150.
If your LLC transacts business in Arizona without authority, it cannot bring a lawsuit in any of the state’s courts. In addition, the Arizona attorney general may bring an action to stop your LLC from transacting business in the state. However, not being registered does not invalidate your LLC’s contracts or prevent it from defending a lawsuit in Arizona. Also, a member of the LLC is not liable for any of the LLC’s debts, obligations, or liabilities solely because the company transacted business in Arizona without authority.
If your business is organized as a corporation rather than an LLC, the rules and requirements for foreign qualification in Arizona are similar. You will, however, have to use a different application form. See the Arizona Corporation Commission website for forms, information, and filing instructions for registering a foreign corporation in Arizona.