Qualify to do Business, Domesticate or Spin Off Business in AZ

Qualify to do Business, Domesticate or Spin Off Business in Arizona?

If you are the owner of a corporation or limited liability company formed in another state and wish to move the entity to Arizona, what is the best course of action to accomplish that goal? Initially, you will want to confer with your accountant and attorney to determine any legal and tax ramifications. Here are some guidelines to keep in mind.

       1. The simplest procedure to implement is to apply to Arizona to do business here as a foreign entity. A properly filled-in Application from Arizona and a certificate of            good standing from the domestic state are generally all that are required to be filed in Arizona. The entity is then considered a foreign entity in Arizona entitled to              do business here.  However, you may have to pay annual fees in the domestic state and, if a corporation is the entity, also in Arizona.

  1. A second procedure is the domestication of the foreign state entity in Arizona, pursuant to the Arizona Entity Restructuring Act, and provided the domestic state offers reciprocal terms. It is particularly important to sit down with your counsel to discuss this course of action. If, however, the entity will no longer be doing business or owning assets in the domestic state, it may be wisest to consider this action and be done with the domestic state’s fees and required annual filings. Unlike operating as a foreign entity (above), you are not faced with annual fees and requirements of two (or possibly more) states going forward. You will need to file required documents in both the domestic state and Arizona to start the process.
  1. Finally, there is the spin-off variation. It is worth considering in the event a corporation was domesticated in another state, conducted business there and subsequently started another business in Arizona. This could be a situation in which you may want to consider spinning off the Arizona business into a separate company domesticated here.

These are some good options available to you as the owner of an entity, but ones which should be considered carefully with your attorney and accountant. Our firm has assisted clients in all three of these scenarios. Our attorneys would be happy to sit down with you and your accountant to discuss the matter.

Darlene Lundy
Certified Paralegal


Disclaimer: This blog is for information purposes only. Legal advice is provided only through a formal, written attorney/client agreement.