Start a Business in Arizona

Entrepreneur’s guide to forming a business in Arizona

You have a brilliant idea and want to now transform that idea into a business. Since you are starting a company for the first time, your perspective would be different from those managing multiple startups. The first and foremost aspect to consider is the location. The state of Arizona provides just the right infrastructure, support and resources to small businesses and large corporations. If you register a business in Arizona then you can leverage the state’s favorable business climate.

Why do companies prefer to register a business in Arizona?

There are several key factors that are driving startups and entrepreneurs to start a business in Arizona. One of the key areas is the state’s thriving economy with a Real Gross Domestic Product (GDP) of $414.27 billion. Today, the state is home to over 650 thousand small businesses. It is also home to several Fortune 500 companies like Avnet and Freeport-McMoRan. This is due to the several advantages the state offers. If you incorporate in Arizona then some of the top benefits will be:

• Tax Incentives – When you start a small business in Arizona, you can leverage the low tax rates. Apart from this, the state offers a wide variety of tax incentive programs to support business growth and expansion. Some of the top programs include the Quality jobs tax credit and the R&D tax credit. Tax incentive programs in the state have been designed to help offset your overall tax liability.
• Skilled Workforce – One of the important elements of business success is recruiting the right talent. The state of Arizona boasts of a diverse and talented workforce. The state emphasizes strongly on innovation through education. It is home to several renowned universities and institutions offering specialized training and education.

Thinking of how to start your company in Arizona?

Steps to start a business in Arizona

In order to register a business in Arizona there are several steps and processes to follow. There are key areas to focus on right from finances to meeting state requirements. It is never an easy task to make your business operational. So, let’s take a look at the various components of your Arizona business checklist.

1. Prepare Arizona Business Plan

One of the important things that will help you start a business in Arizona is creating a business plan. It is like a strategic roadmap or a blueprint of the path intended for a new company. The plan may vary from one business to another but there are some common areas it will focus on. It will outline how you can achieve your short-term and long-term business objectives while including information pertaining to your product, finances, and marketing strategy. A strategic plan will include the following components:

• Executive summary
• Business Overview
• Market analysis
• Products and services
• Competitive analysis
• Marketing and sales strategy
• Operational strategy
• Financial plans and projection

2. Choose Business Structure for Arizona Business

If you are planning to register a business in Arizona then there are several aspects that you need to consider. One important aspect is that of choosing the right business structure. This selection will often determine long-term sustainability and growth of a company. It should be in your Arizona business checklist as different entity structures have different legal and tax considerations. Each entity structure has its own advantages as well as disadvantages.

• Limited Liability Company (LLC) – A popular form of business also known as a pass through entity. This type of company offers liability protection.
• Corporations (INC) – This is another popular form of entity which has several advantages like access to capital through issuance of shares.
• Sole Proprietorship (SP) – One of the simplest forms of business and is easy to form. Owners are not required to file any annual report although licenses will be required.

• Limited Partnership
• Limited Liability Partnership
• Professional Limited Liability Companies
• Nonprofit Corporations
• Close Corporations
• Professional Corporations

3. Naming Your Arizona Business

One of the important requirements prior to registering a company in Arizona is choosing a business name. The name of your company will also be the brand name. You may also need to use this name to obtain business licenses, file taxes, open a bank account and apply for loans among others. Hence, when choosing a name before you start a business in Arizona is important. Here are some aspects to consider:

• It is important to follow the state naming requirements and guidelines. These are governed by 2022 Arizona Revised Statutes, Title 10 and 29.
• Your company name should be distinguishable from the name of any other company in Arizona.
• There are certain restricted words like “bank”, “credit union”, or “trust”.
• You should not use words that have similarities with government agencies.
• Once you have chosen a name, it is time to conduct a State Entity Search also known as name availability search.
• It is important to reserve the name before you register an Arizona business online.
• You will need to file the name reservation form for an LLC or corporation depending on the legal structure chosen. If you don’t want to use your legal name then you will need to register a trade name. This name also known as DBA (Doing Business As) will be registered pursuant to A.R.S. § 44-1460.

4. Choose Your Location for Arizona Business

One of the things to keep in mind before you start a business in Arizona is the location. There are certain cities or locations that may offer you numerous benefits like increasing brand visibility. A location is important as a bad location can hamper business growth. Here are some key factors to consider:

• Commercial Space Costs – If you incorporate in Arizona in a location with higher real estate costs then it will have a negative impact on business finances.
• Ease of Access – One of the key factors driving success is customers. You need to search for a location that can be easily accessed by your customers, employees, vendors, and partners among others.
• Nature of business – You can choose a location according to your business activity. If you start a small business in Arizona in the export or import industry then the best location would be a foreign-trade zone (FTZ). Certain distressed areas known as Opportunity Zones offer businesses incentives. You can even choose from 168 opportunity zones within the state.
• Infrastructure – When it comes to choosing the right location, transportation and other business related infrastructure should be taken into consideration.
• Zoning Ordinances – It is not only important to choose a pro-business location but you should also check the zoning regulations in that jurisdiction. There are some places where businesses cannot operate and this can be identified through a zoning map.

5. Register Your Arizona Business

Whether you want to start a home-based company in Arizona or form a large enterprise, there is a process that you need to undergo. This is also known as new business registration or incorporation. You will be required to fill and submit documentation depending on the entity structure chosen. The documents have to be filed with the Arizona Secretary of State. Let’s look at an example to understand this.

Do you want to form a new business in Arizona?

6. Get Your EIN

One of the key responsibilities for any new business is obtaining an Employer Identification Number (EIN) from the IRS. This should be there on your Arizona business checklist although this is not mandatory for all types of businesses. An EIN number also considered as a tax ID number has several benefits. It will help you in filing your taxes and may also be required for opening a business bank account. This number plays an important role in branding as it will help in boosting the credibility of your company.

7. Open a Business Bank Account for Arizona Business

Once you start a business in Arizona, it is important to focus on the financial aspect of the business. The best way to ensure proper financial accounting and budgeting is by opening a business bank account. Some businesses may want to use their personal savings account but this will make tax preparation confusing and challenging. This is where having a separate business bank account can be extremely useful. It is also known as a checking account and can help in making your personal assets less vulnerable. A business bank account is also a legal requirement for specific business structures like corporations.

8. Obtain Business License and Permits

Once you have taken a decision to register a business in Arizona then there are several steps to follow to make your company operational. One such important aspect is obtaining necessary business licenses and permits. Unlike many other states, Arizona doesn’t have the requirement of statewide general licenses. Although, general licenses may be required in different cities or counties. The licensing requirements of the state of Arizona are as under:

• General Business license – Some states in the USA have a requirement for general business licenses. However, if you start a small business in Arizona then there you will not be required to apply for any general statewide licenses.
• Professional or Occupational License – If you start a business in Arizona then a business license is mandatory. If your business activity refers to a specific profession or occupation then you will be required to apply for an occupational or professional license. This type of licensing is governed by 2022 Arizona Revised Statutes, Title 32 – Professions and Occupations. The issuing authority of these types of licenses will vary according to the profession or occupation. If you are planning to become an insurance producer then you will need to apply with the Department of Insurance and Financial Institutions (DIFI) for a license.
• Arizona Transaction Privilege Tax License – This is a type of sales tax license or certificate. If you incorporate in Arizona and start selling a product or engage in providing specialized services then an Arizona Transaction Privilege Tax License (TPT) will be required. You can obtain this license from the Arizona Department of Revenue (ADOR).
• Local licenses – This type of business license and permits are also known as city or county licenses. Each state in the USA has its own county and city legislatures and laws. Some of these laws govern local licenses and permits as well. The requirements and laws for local licenses will vary from county to county. For example – If you register a business in Arizona and operate within the City of Mesa then you will need to obtain a general business license.
• Local Zoning and Permits – When you register an Arizona business online in any city or county, you will need to check the local zoning laws. In certain cities, specific zones have been created for businesses to operate from.

9. Register for Taxes

Once you have formed a business in Arizona, there are certain state requirements that your company needs to be compliant with. One such requirement is that of taxes. After you start a business in Arizona, you will need to register for annual taxes. Depending on the type of business activity, you may need to register for sales tax. Most tax payments take place online and hence you will need to open an account on AZTaxes. It is important to understand that different entity structures will be taxed differently.

10. Obtain Business Insurances

When you start a small business in Arizona, you will not only reap the benefits but you may also be faced with different risks. The risk to a business can come from nature and also from employees, vendors, and customers. You can protect your business from different types of risks through business insurance. You can apply for insurance before or after you register an Arizona business online. The highlight of obtaining insurance is that it will save you time and money while ensuring protection to your business from known damages. The different forms of business insurance that you can choose from are:

• Business Owner’s Policy (BOP)
• General liability insurance
• Employment practices liability insurance
• Professional liability insurance
• Business interruption insurance
• Product liability insurance
• Workers’ compensation insurance
• Home-based business insurance

11. Annual and Ongoing Requirements

Once you register a business in Arizona, you will have to be compliant with state annual requirements. This will ensure your company enjoys a good standing in the state. One of the most important annual requirements is that of an annual report. This is required by new and existing businesses in most states in the USA. In Arizona however, a Limited Liability Company and professional LLC’s don’t require to submit this report. Corporations are supposed to submit it with the Arizona Corporation Commission – Corporations Division. A top Arizona registered agent can assist you with filing this report.

Some Important Quick Resources for an Arizona Business

Whether you are planning to start a small business in Arizona or simply moving an existing business, the right resources and information will be the key to growth and success. Information and resources will assist you in better decision making related to every business process. Let us look at some of the important resources.

Arizona Corporation Commission

The office of the Arizona Corporation Commission provides important resources and information to those who want to start a business in Arizona. This includes information related to filing of Articles of Organization or incorporation, business registration and Compliance, schedule of fees, business tax, annual report, and trademark among others.

• Arizona Corporation Commission
  1300 W. Washington Street
  Phoenix, AZ 85007-2996
  Phone – (602) 542-3026
  Fax – (602) 542-4100
  Email: answers@azcc.gov
  Website – http://www.azcc.gov/

Arizona Secretary of State

The office of the Arizona Secretary of State is responsible for registering a wide variety of duties. The Business Services Division of the Arizona SOS provides information and resources pertaining to different aspects of registering and operating a company. This includes registering trade names, trademarks, and liens pursuant to the Uniform Commercial Code. This division is also responsible for issuing apostilles and filing of intergovernmental agreements. The Business Services Division is also responsible for chartering corporations and partnerships.

• Arizona Secretary of State
  1700 W Washington St, Fl 7
  Phoenix AZ 85007
  Phone – 602-542-4285
  Website – https://azsos.gov/

Arizona Department of Revenue

The Arizona Department of Revenue as the name suggests provides information, assistance, and resources related to individual and business taxes in the state. Once you register a business in Arizona, you can download various tax forms. You can even download their Booklet X, which provides detailed information pertaining to various taxes in Arizona. The website of the Arizona Department of Revenue is also used for filing tax returns.

• Arizona Department of Revenue
  1600 West Monroe Street
  Phoenix, AZ 85007
  Phone – (602) 255-3381
  Website – https://azdor.gov/

Industrial Commission of Arizona

The Industrial Commission of Arizona (ICA) is a type of regulatory agency that focuses on employment in the state. You will find important information and useful resources pertaining to Workers’ Compensation, Arizona Division of Occupational Safety and Health (ADOSH) training, Small Business Bill of Rights, and a variety of online services.

• Industrial Commission of Arizona
  800 W. Washington Street
  Phoenix, AZ 85007
  Phone – (602) 542-4661
  Website – https://www.azica.gov/

Arizona Commerce Authority

The Arizona Commerce Authority provides valuable resources to new and existing businesses. It provides an insight into the top and thriving industries in the state. If you are incorporated in Arizona, this website will help you identify statewide resources, amenities, and assets across 27 different categories including education, infrastructure, land ownership, and startup resources.

• Arizona Commerce Authority
  100 North 7th Ave., Suite 400
  Phoenix, AZ 85007
  Phone – (602) 845-1200
  Website – https://www.azcommerce.com/

Arizona Small Business Administration Office

The Arizona Small Business Administration Office also known as SBA plays a key role in supporting small businesses. You can find resources and assistance in various areas of starting a company to achieve business goals. You can find information on planning your business, managing and operating your company, buying assets and equipment, and applying for licenses and permits among others. Arizona SBA also provides business counseling and loan or funding programs.

• Arizona Small Business Administration Office
  2828 North Central Ave
  Phoenix, AZ 85004
  Phone – (602) 745-7200
  Website – https://www.sba.gov/offices/district/az/phoenix

Arizona Chambers of Commerce

The primary objective of the Arizona Chambers of Commerce is to promote statewide business advocacy. They provide valuable news and resources on labor, infrastructure, jobs, and taxes. They also publish a Business Agenda each year, which provides an insight into some of the important public policy issues that are faced by all Arizona employers.

• Arizona Chambers of Commerce

  100 N 7th Ave #120
  Phoenix, AZ 85007
  Phone – (602) 248-4430
  Website – https://www.officialusa.com/stateguides/chambers/arizona.html

Arizona Small Business Development Center

Once you start a business in Arizona, the Small Business Development Center (SBDC) can provide important resources towards business operation and growth. AZSBDC provides guidance programs by experienced business advisors and can also help you to identify your funding requirements. You can even participate in their training webinars and workshops that are customized based on specific business requirements.

• Arizona Small Business Development Center
  2411 W 14th St
  Tempe AZ, United States
  Phone – 480-731-8200
  Email – AZSBDC@domail.maricopa.edu
  Website – https://azsbdc.net/

Ready to Start a Business in Arizona

Arizona has an extremely pro-business environment that offers a myriad of opportunities in a diverse industrial landscape. When you register a business in Arizona, you will also be able to benefit from a wide range of state programs including small business incentives and grant programs. The new company registration process will require you to submit several documents and who better to assist you in this process than IncParadise, one of the top Arizona registered agents.