How to Move an LLC to Arizona

There are many reasons why a business owner may want to move an LLC to Arizona. This article discusses the use of domestication, known in some states as LLC conversion, to transfer an LLC to Arizona.

What is Arizona LLC Domestication?

Arizona domestication is a statutory process for moving an LLC from one state to another.¹ After domestication is complete, the LLC is treated as though it were formed in the new state and is no longer governed by the old state’s law. An out-of-state LLC that domesticates to Arizona becomes an Arizona LLC and is no longer a foreign entity in Arizona.²

An Arizona conversion is a legal process that changes a business from one type of entity to another (from a corporation to an LLC, for example).³ Some states combine conversion and domestication into a single procedure—which is usually called conversion. Arizona’s LLC domestication procedure is separate from the conversion procedure.

Why Transfer an LLC to Arizona?

Businesses change their home states for a variety of reasons. These are some of the more popular reasons why LLCs domesticate to Arizona:

• Owner convenience. Domestication can be convenient for business owners, particularly when moving to a new state. Arizona is one of the nation’s fastest-growing states. Business owners who move to Arizona may enjoy the convenience of having their businesses governed by the LLC laws of the owner’s new state of residence.
• Streamlined filing requirements. Domestication sometimes reduces a company’s paperwork and annual reporting burdens. A Colorado LLC that does most of its business in Arizona—for example—must file an annual report with the Colorado Secretary of State. Arizona does not require LLCs to file annual reports. So, a Colorado LLC that does not actually transact business in Colorado can cut down on paperwork by domesticating to Arizona.
• Tax savings. A state’s power to tax an LLC depends on the connection (nexus) between the company and the state. An LLC that goes through a domestication establishes a nexus with the new state and, in some cases, may end the nexus with the old state. An LLC that domesticates from a high-tax state like California or New Jersey to Arizona may save on taxes if it severs its connection with the old state. Relocating business owners might potentially save on personal income tax, too.
• Better legal climate. An Arizona LLC domestication can be good for business if Arizona’s legal climate is better for the LLC’s operations. An out-of-state LLC may benefit from Arizona laws designed to spur economic growth. Arizona’s legislature also recently revamped the state’s LLC law to allow more flexibility in operating agreements (among other things).⁴ Domestication could be a smart business move if a new operating agreement tailored to Arizona law promotes an LLC’s long-term plans.
• Professional networking. A business owner who moves to Arizona can more readily hire local lawyers and accountants if the LLC is chartered in Arizona. After all, professionals who live in Arizona know more about Arizona law than those outside the state. A true Arizona LLC might also enjoy marketing and networking advantages over an out-of-state LLC operating in Arizona.

What are the Benefits of Arizona LLC Domestication?

Domestication is almost always the easiest and cheapest way for an out-of-state LLC to change its charter state to Arizona. Practical benefits of domestication over other business-transfer methods include:

• Company identity consistency. An out-of-state LLC that completes an Arizona LLC domestication is the same entity before, during, and after domestication.⁵ The company’s EIN (Employer Identification Number) and tax identity are unchanged. Domestication does not affect pending legal proceedings. If the LLC’s name changes in connection with domestication, the new name simply replaces the old one.⁶
• Asset consistency. A domesticating LLC keeps all the same assets throughout a domestication.⁷ The company need not open new bank accounts or close existing ones unless it wants to. There is no need to sign deeds and other documents to transfer assets. An LLC can file its statement of domestication in county land records to avoid confusion about real estate ownership.⁸
• Preservation of contracts. An Arizona LLC domestication does not affect a company’s existing contracts. It has the same contractual rights and duties before and after domestication.⁹
• Business continuity. Domestication does not slow or stop the business’s everyday operations. The change occurs mostly on paper, and the company can remain open for business. Employment relationships are also unchanged, so there is no need to fire, hire, or transfer employees.
• Avoiding dissolution. Dissolution, winding up, and asset liquidation are not part of an Arizona LLC domestication.¹⁰ LLC termination proceedings like dissolution and winding-up are long, difficult, expensive processes, so avoiding them saves time and money.

What LLCs Can Convert to Arizona LLCs?

The Arizona LLC domestication process is not possible for every company. An out-of-state business thinking of domesticating to Arizona must first determine whether its current state allows domestication. An LLC cannot domesticate to Arizona if its current state has no law authorizing domestication.¹¹ The current state might use a different term—like conversion. What matters is that the state has a legal process for an LLC to change its state of organization.

An out-of-state LLC should also confirm that Arizona allows LLCs to conduct the type of business the company does. Arizona does not allow LLCs to do banking or most insurance business.¹² A bank or insurer organized as an LLC in another state cannot successfully domesticate as an Arizona LLC.

Some states—including California—limit the power of LLCs to offer professional services that require a license. Arizona law authorizes professional limited liability companies (PLLCs) that provide professional services.¹³ An out-of-state professional company should make sure that Arizona PLLCs can provide the type of services the company offers. It is best to check before starting the LLC domestication process.

Arizona’s LLC domestication process is also available only to out-of-state businesses organized as LLCs. ¹⁴ An out-of-state corporation or partnership that wants to become an Arizona LLC can do so using the conversion process.

How Much Does Arizona LLC Domestication Cost?

The total cost to domesticate an out-of-state LLC to Arizona includes service-provider charges, filing fees, and sometimes charges from the LLC’s statutory agent.

Service-Provider Charges

Service-provider charges are the labor costs billed by the provider the LLC hires to manage the domestication. A service provider preparing an Arizona LLC domestication may charge a flat fee or bill hourly, depending on the provider. Work needed for a domestication typically includes:

• Gathering information needed for document preparation;
• Preparing documents such as the plan of domestication, statement of domestication, and articles of organization;
• Communicating with the business owners, including sending documents for review and signing; and
• Filing documents and communicating with the Arizona Corporation Commission.

Filing Fees

The Arizona Corporation Commission charges filing fees when an LLC submits its statement of domestication and articles of organization. The fee for each document is $50.00—resulting in total filing fees of $100.00 for the Arizona portion of the domestication.¹⁵ The LLC’s original state will also charge filing fees. The amount varies by state.

Statutory Agent Fees

An Arizona LLC must appoint and register a statutory agent (or registered agent) with the Arizona Corporation Commission. The statutory agent has legal power to accept official documents for the LLC.¹⁶ A statutory agent’s address is a public record readily available online, so companies often hire commercial statutory agents to promote privacy and stability. The cost to hire a statutory agent in Arizona is typically $100–$200 per year.

How Long Does Arizona LLC Domestication Take?

An Arizona LLC domestication—in general—is not a lengthy process. The total time needed for the transaction depends mostly on the parties involved. Factors include:

• How long it takes the owners to provide necessary information to the service provider;
• How long it takes the service provider to prepare documents;
• How long it takes to circulate documents for review and signing; and
• How long it takes the Arizona Corporation Commission to process the request.

The Corporation Commission estimates a turnaround time of between two and three weeks for processing new LLC filings. However, times can vary throughout the year. Quicker processing—which reduces turnaround time to around one week—costs an extra $35.00. The Corporation Commission offers same-day and next-day processing for $200.00 and $100.00 respectively.

What Laws Govern Arizona LLC Domestication?

Arizona LLC domestications must follow Arizona law and the law of the LLC’s current state. Arizona governs many of the steps and filing requirements. The current state’s laws control:

• Whether domestication to Arizona is possible;¹⁷
• What the plan of domestication must include;
• The basic standard for approving the plan of domestication (often a certain number of votes);
• Filing requirements for LLCs moving out of the state;
• Requirements for the LLC to continue doing business in the state as an out-of-state LLC (if applicable); and
• Any other requirements described in the current state’s LLC domestication law.

State domestication laws are sometimes similar but can—and often do—have different requirements for LLCs leaving the state. Domesticating LLCs must make sure the domestication satisfies both states’ laws and any rules in the company’s governing documents.

What is the Arizona LLC Domestication Process?

The Arizona LLC domestication process consists of two components: document preparation and administrative tasks.

Document Preparation

An out-of-state LLC domesticating to Arizona prepares a series of documents that detail how the domestication will be carried out and that govern the company after the domestication. All documents must be carefully drafted to ensure a smooth, successful domestication that complies with both states’ laws.

• Plan of Domestication. A Plan of Domestication that is designed to comply with the requirements of both Arizona law and the law of the state that the LLC is moving from.
• Arizona Statement of Domestication. The Arizona Statement of Domestication with all information and any related documents needed for filing with the Business Services Division of the Secretary of State.
• Domestication Document for Filing in Prior State. Depending on state law, this document may be called articles of domestication, statement of domestication, articles of conversion, certificate of conversion, statement of conversion, certificate of conversion, or a similar term.¹⁸
• Arizona Articles of Organization. The Arizona Articles of Organization for filing with the Business Services Division of the Secretary of State.
• Arizona Operating Agreement. A state-specific Operating Agreement to properly structure the LLC as an Arizona LLC, provide rules for profit distributions and decision-making, clarify the federal income tax classification, and help provide maximum liability protection.
• Resolution Authorizing Domestication. A resolution approving the transaction and adopting the Arizona organizational documents as the LLC’s governing documents.

Administrative Tasks

An LLC that has carefully prepared and reviewed the necessary paperwork must complete several administrative tasks to formally adopt the documents and implement the domestication. The domestication to Arizona takes effect—and the company is officially an Arizona LLC—upon successful completion of the administrative tasks.

Some LLCs must take the additional step of notifying a government agency or securing its approval before undertaking a domestication. This additional requirement applies only if the LLC is legally required to give the agency notice or secure its approval if the company participates in a merger.¹⁹

• Conduct preliminary name search. Check the official records of Business Services Division of the Secretary of State to determine whether the LLC’s name is available in Arizona. (If the name is unavailable, a slight name change may be required to complete the domestication.)
• Obtain signatures on the Statement of Domestication. The Statement of Domestication must be signed by the required parties. The Business Services Division of the Secretary of State allows the Statement of Domestication to be e-signed.
• Obtain signatures on the Articles of Organization. The Articles of Organization must be signed by the required parties. The Business Services Division of the Secretary of State allows the Articles of Organization to be e-signed.
• File the Statement of Domestication. File the Statement of Domestication with the Business Services Division of the Secretary of State. The Business Services Division of the Secretary of State allows the Articles of Organization to be e-filed.
• File the Articles of Organization. File the Articles of Organization with the Business Services Division of the Secretary of State. The Business Services Division of the Secretary of State allows the Statement of Domestication to be e-filed.
• Publish notice. After the Arizona Corporation Commission accepts a new LLC’s articles of organization for filing, the LLC must publish notice of filing. Upon accepting a filing, the commission sends a letter to the filer with information about the publication requirement. A published notice of filing must include the names and addresses of the LLC and its registered agent. The notice must also state whether the LLC is member-managed or manager-managed and must list the members’ names and addresses (if member-managed) or the names and address of each manager and member with a 20 percent or greater interest in the LLC (if manager-managed).The Corporation Commission itself publishes the notice of filing if the LLC’s registered agent address is in Maricopa or Pima Counties. An LLC that is not in Maricopa County or Pima County must arrange for publication in a newspaper of general circulation in the county where its registered agent is located. The notice must run for three consecutive publications. The newspaper provides an affidavit of publication after running the notice for the required period. The LLC may file the affidavit of publication with the Arizona Corporation Commission to verify completion of the requirement, but filing of the affidavit is not mandatory.
• File domestication documents with prior state. File the domestication documents with the Secretary of State or equivalent agency for the state that the LLC is moving from.

What Is the Legal Effect of Arizona LLC Domestication?

Arizona law defines the following legal effects of an LLC domestication to Arizona.

• Same entity. An out-of-state LLC that domesticates to Arizona remains “the same entity without interruption.”²⁰ Domestication does not create a new LLC. The same company continues its same operations—just with a new jurisdiction of organization.
• Governing law. Arizona law and the company’s new articles of organization and operating agreement (if applicable) govern the LLC.²¹ The LLC is now organized under and must comply with the Arizona Limited Liability Company Act.²²
• Ownership interests. Ownership rights in the out-of-state LLC become ownership rights in the Arizona LLC after domestication. The process does not affect members’ rights in the company unless the plan of domestication describes changes to those rights.²³
• Assets and liabilities. The LLC owns all of the same assets and has all of the same contractual rights before and after domestication.²⁴ It still owes the same debts and contractual obligations that were in place before the change.²⁵
• Property transfer. Domestication does not require an LLC to transfer property to the new Arizona entity.²⁶ An LLC that owns Arizona real estate need not record a deed or other transfer document, but it can record a certified copy of its statement of domestication to provide formal notice of the domestication.²⁷

1. Ariz. Rev. Stat. § 29-2501(B).
2. Ariz. Rev. Stat. § 29-2506; Ariz. Rev. Stat. § 29-2102(19).
3. Ariz. Rev. Stat. § 29-2401.
4. See Ariz. Rev. Stat. § 29-3105(A).
5. Ariz. Rev. Stat. § 29-2506(A)(1).
6. Ariz. Rev. Stat. § 29-2506(A)(5).
7. Ariz. Rev. Stat. § 29-2506(A)(2).
8. Ariz. Rev. Stat. § 29-2110.
9. Ariz. Rev. Stat. § 29-2506(A)(3).
10. Ariz. Rev. Stat. § 29-2506(B).
11. Ariz. Rev. Stat. § 29-2501(A).
12. Ariz. Rev. Stat. §§ 29-3108(C) and (D).
13. See Ariz. Rev. Stat. §§ 29-4101, et seq.
14. Ariz. Rev. Stat. § 29-2401(B).
15. Ariz. Rev. Stat. § 29-3213(1) and (6).
16. Ariz. Rev. Stat. § 29-3115.
17. Ariz. Rev. Stat. § 29-2501(B).
18. Fourteen states use the term articles of domestication to refer to the document that must be filed with the state to approve the domestication: Iowa, Massachusetts, Minnesota, Nebraska, New Hampshire, New Jersey, North Dakota, South Dakota, Utah, Vermont, Virginia, Wisconsin, Wyoming, and Indiana. The corresponding document may be called a statement of domestication (Alaska, Arizona, Connecticut, Idaho, Illinois, Mississippi, and Pennsylvania); articles of conversion (Florida, Nevada, North Carolina, Oregon, and Washington) or certificate of conversion (California, Delaware, Georgia, Michigan, Ohio, and Texas). It may also be called a statement of conversion (Colorado, Maine), certificate of domestication (Kansas), request for conversion (Louisiana), or statement/plan of domestication (District of Columbia).
19. See Ariz. Rev. Stat. § 29-2104(A).
20. Ariz. Rev. Stat. § 29-2506(A)(1).
21. Ariz. Rev. Stat. §§ 29-2506(A)(6) and (A)(9).
22. See Ariz. Rev. Stat. §§ 29-3101, et seq.
23. Ariz. Rev. Stat. § 29-2506(A)(10).
24. Ariz. Rev. Stat. § 29-2506(A)(2).
25. Ariz. Rev. Stat. § 29-2506(A)(3).
26. Ariz. Rev. Stat. § 29-2506(A)(2).
27. Ariz. Rev. Stat. § 29-2110.