As I talk more about freelancing and connect with more fellow freelancers, I’ve realized a lot of my peers haven’t properly set up their LLC or haven’t applied for a business bank account!
I honestly get why people avoid it – legalities and taxes are terrifying and confusing haha. But in the state of Arizona (and I’m sure in other states) it’s really quite simple to file for an LLC and a bank account.
So, this blog post will cover 3 steps to set your small business up properly:
- Filing for an LLC (in Arizona specifically)
- Creating an Employer Identification Number (EIN… it’s kinda like an SSN but for a business)
- Opening a Business Bank Account
I am NOT a lawyer or accountant… but these are the steps I took to legitimize my business (both for tax purposes and for business-operating purposes!). Having these steps done will come with a multitude of benefits, including:
- Tax write-offs and savings
- In the off chance that someone or a business were to sue you, they could only sue the value of your business, not you personally
- When you freelance for another company, you only have to give them your EIN, not your SSN (it’s just safer)
- Your business transactions and personal transactions will be easily separated for tax purposes
So basically, it’s both dumb and risky to not complete these steps. See below for a full break down!
1. File For An LLC In Arizona
- Go To the Arizona Corporation Commission website here
- Go to Business > Ecorp
- Click Search and search for your potential business name to double-check it’s not taken
- Click File in the top right
- Create an account and file to create a limited liability company (LLC) – it’s $50
- Choose Efile
- *for most of you who are self-employed, as you apply your answers will be…
- Statutory Agent? “yes”
- Keep Arizona Place of Business as
- Member-Managed LLC
2. Create An Employer Identification Number (EIN)
- Hit “Apply Online Now” on IRS website here
- Complete & submit the form with your LLC information
- You’ll probably want to file as an LLC and sole proprietor, but may want to file as an S-Corp
3. Open a Business Bank Account
- Once you get your EIN, take that and the articles of incorporation from filing your LLC and open a business bank account
- You can pick any bank (I’d recommend sticking with the same bank you personally bank with, that way it’s easier to transfer money to yourself)
- Apply for a checking account, savings account, and a credit card
- Talk with your accountant and set aside between 20-30% of your income into your savings account for paying your taxes
I got my business bank account through Azlo – it can all be done online and has no minimums or fees.
good to know, thank!
good to know, thanks!
Great post and lucky for those of you in Arizona as an annual LLC tax is not imposed. In California, you must pay $800 shortly after forming an LLC and again at tax time every year. Which is why I recommend at least chatting with an accountant to understand the implications of changing your business entity. Timing is everything! It is wise though to offer yourself and business some protection by becoming an LLC.
Hey there! Yes, definitely. As a California native I was very aware of this! So as an LLC in AZ we save a bit. Thanks for the feedback!
Thanks Becca- this really helped me file for my LLC!
Hi Jillian! Of course, happy to help!
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