How to Start a Business in Arizona:
The state of Arizona has a lot to offer entrepreneurs looking to start a business. With a business-friendly tax system, low cost of doing business, and a wide variety of established and growing markets, entrepreneurs will enjoy the general ease of starting a business in the Copper State.
Thanks to its streamlined and minimalistic regulatory system, you'll also be able to cut through red tape and skip strenuous business formation processes.
Form your business.
Review Arizona formation options.
Arizona offers four ways of forming your business. Review these closely and pick the one that fits your business best.
Name your business.
When you form your Arizona business, you must register your business name with the Secretary of State. It's best to obtain a name online because it will be given preference over paper name reservations submitted by mail, fax, or in person. Online applications can be granted immediately.
The fee to obtain an online name reservation is $45.00 and payment must be made with a credit card. Currently, the in-person name reservation process is suspended until further notice due to the ongoing Coronavirus pandemic.
The name reservation will be active for 120 days, which gives business owners enough time to submit documents to form an entity.
If you need help finding a business name, be sure to check out NameSnack's free business name generator.
Brainstorm name ideas and keywords that best describe your business.
Conduct a trademark search with the U.S. Patent and Trademark Office.
Conduct a name availability search with the state.
If your name is available, use the online portal to register your business name.
Get an employer identification number.
Nearly all businesses will need to register for federal taxes by applying for an employer identification number.
Register your business in Arizona.
After choosing the right legal entity for your business, you can register your business with the state. If you're starting a partnership, you can register your business with the Arizona Secretary of State. However, for those starting a Limited Liability Company (LLC) or a Corporation, you'll need to register with the Arizona Corporation Commission.
If you're registering an LLC, you must complete and file the Articles of Organization. Corporations, on the other hand, will need to complete and file the Articles of Incorporation.
To register your business in Arizona, create an account with the Arizona Corporation Commission and use their online filing system.
Obtain necessary permits and licenses.
In Arizona, there is no “generic” state business license available. However, any business that engages in activities that are regulated by one or more federal, state, or municipal government offices may be required to obtain special licenses, certifications, or permits.
For example, if you're planning on distributing liquor, you will need to pay for a liquor license from the Department of Liquor License Control (DLLC). In addition, most businesses in Arizona require a Transaction Privilege (Sales) Tax (TPT) License, which is issued by the Arizona Department of Revenue (ADOR).
Register your business for taxes.
Register for Transaction Privilege Tax (TPT).
If you plan on selling goods in Arizona, you must register with the Arizona Department of Revenue (DOR) to collect the transaction privilege tax.
For a quick registration, you can apply online. It's best to set up your AZTaxes.gov account before completing this option. If you are not able to apply online, you can apply via mail or in-person. The registration process takes two to three days.
When you register with the Arizona Department of Revenue you'll fill out a Joint Tax Application (JT-1). This application registers you for transaction privilege tax (TPT), use tax, Employer Withholding, and Unemployment Insurance.
Register for withholding tax.
In the state of Arizona, all employers are liable for withholding tax. This means that employers shall deduct and retain from employee salaries an amount determined by the Department of Revenue.
You can register for withholding tax by completing and filing the Arizona Joint Tax Application, (Arizona Form JT-1) with the department.
Register for corporate income tax.
Corporations in Arizona are required to pay income tax if they receive any income from business activity within or derived from the state. The amount due is measured by a business's taxable income.
To find out what forms you need to file for corporation income tax, visit the corporate income tax forms page on the Department of Revenue's website.
Corporations must pay their tax liability by electronic funds transfer (EFT) on the AZTaxes.gov portal.
Hire employees and comply with state requirements.
Report newly hired employees to the state.
As a business owner, you have a legal responsibility to report any new employees to the Arizona New Hire Reporting Center within 20 days of employment. Returning employees who have been separated from the business for 60 consecutive days must be reported as a new employee.
To report the new employees, you can visit the official website of the Reporting Center and register for an account.
Once you've set up your account, you can download the New Hire Form.
Complete the form and submit it.
Obtain workers' compensation insurance.
Arizona law requires that anyone who employs one or more employees, whether full or part-time, must have workers' compensation insurance. However, coverage is optional for domestic workers. For more information about workers' compensation and rates, visit the Industrial Commission of Arizona website.
Display state-mandated workplace posters.
Arizona law requires that all businesses display state-mandated posters throughout the workplace. The posters or "notices" should highlight information regarding employee wages, workers' compensation, and safety, among others.
State-mandated Workplace Posters:
Arizona Business Types:
1. Sole Proprietorship.
A sole proprietorship is a less formal structure, which is why there is no need to file articles of incorporation/organization. However, you may still need to file a DBA (doing business as) if you want to legally operate your business under a fictional name.
A partnership is typically made up of two or more individuals who share profits and managerial responsibilities. The most common type of partnership is the General Partnership (GP), which does not require any formal document filing with the state.
For partnerships like a Limited Partnership (LP), a Limited Liability Limited Partnership (LLLP), or a Limited Liability Partnership (LLP), you'll need to complete and file formation documents with the Secretary of State. The filing fee will depend on the type of partnership you choose.
3. Limited Liability Company (LLC).
A Limited Liability Company is a common legal structure whereby the members of the company are not liable for the company's debts or liabilities. To form an LLC in Arizona, you will need to complete and file a document called the Articles of Organization with the Arizona Corporation Commission. There is a minimum filing fee of $50.00.
This option is more formal than an LLC and includes a board of directors, corporate offices, and shareholders. Both the shareholders and the business itself are liable for paying taxes on the business profits. To form a corporation in Arizona, you'll need to complete and file the Articles of Incorporation with the Arizona Corporation Commission. There is a minimum filing fee of $60.00.
Arizona Registration and Business Fees:
Articles of Organization
$50.00 - $85.00
Articles of Incorporation
$60.00 - $95.00
Certificate of Limited Partnership
$10.00 + $3.00 /page.
Certificate of Limited Liability Partnership
$3.00 - $10.00 + $3.00 /page.
Certificate Limited Liability Limited Partnership
$6.00 - $13.00 + $3.00 /page.
How much does it cost to register a business in Arizona?
At a minimum, it will cost between $45.00 - $400.00 to start a business in Arizona. This includes $45.00 for registration, $50.00 for articles filing, and $30.00 - $300.00 for Notice of LLC Formation.
What permits do I need to start a business in Arizona?
The types of permits required to operate a business in Arizona will depend on the location and nature of your business. There are different regulatory bodies that issue permits and licenses for construction, food services, and health facilities. However, most Arizona businesses are required to obtain a Transaction Privilege (Sales) Tax (TPT) License from the Department of Revenue.
Is Arizona a good place to start a business?
Yes, Arizona offers plenty of benefits for entrepreneurs looking to start a business in the Copper State. These include a young and talented workforce, access to world markets, and a business-friendly tax system.
Do I need an Arizona business license?
No. Arizona does not have or require a statewide business license. However, depending on the type of business you have, you may need to obtain permits and licenses from state and city government offices.
Are there any specific rules for an LLC in Arizona?
In order to register your LLC, you are obligated to file the Articles of Organization with the State of Arizona. This process can be done online, by mail, or in-person.
In Arizona, any newly established LLCs are required to publish a Notice of LLC Formation for three consecutive weeks in a certified newspaper in the county of the LLC’s main office. This must be done within 60 days of formation.