Starting a business in Arizona is relatively straightforward and cost-friendly. Ultimately, registering a new business in Arizona takes eight steps:
- Start with a business plan.
- Select a business entity.
- Choose a business name.
- Choose your statutory agent.
- Form your business.
- Apply for an employer identification number (EIN).
- Register your business with the Arizona Department of Revenue.
- Apply for business licenses.
- Open a business bank and other financial accounts.
9 steps to register your business in Arizona
1. Start with a business plan
A business plan is an essential starting point for creating a successful business. The Small Business Administration (SBA) provides a number of resources for creating a business plan that will be useful to you on your business journey. While your business plan can legally follow any format that works for you, there are two main types of business plans: traditional and lean.
A traditional business plan takes longer to write but is more detailed and organized, addressing how you’ll handle your business at every stage. As a result, many creditors and investors require this more detailed business plan. So, it’s worth considering starting with the traditional business plan. However, if you don’t have enough information to complete this type of plan, at least start with a lean one.
As you write your business plan, you’ll see that the SBA recommends conducting market research. It also offers a list of online resources to help you do so successfully. Market research can feel like an extra step as you file your paperwork but is a key component to setting your business up to succeed.
In addition to understanding your competitors, market research can offer a better understanding of what you should charge for your products or services and who your ideal customers are. This can save you time and effort, allowing you to hone who you target based on their likelihood to buy.
2. Select a business entity
Like many states, Arizona recognizes several business types, though it recognizes fewer options than some other states. The types of entities Arizona recognizes include:
Most businesses in Arizona will not be nonprofit corporations, as those are typically reserved for entities that are not looking to generate a profit.
A limited liability company (LLC) is often used by businesses looking to keep ownership among a limited number of members who do not plan to take the business public. On the other hand, corporations are more readily able to raise capital, go public and expand nationally or globally because they can issue shares to shareholders.
3. Choose a business name
Your business name should be unique to your business within the state of Arizona and not infringe on national trademarks. The state of Arizona recommends googling your preferred business name to determine if it is in use by other businesses and if the website URL you’d prefer is available. It also recommends using the Arizona business name search tool before choosing your business name to ensure it’s unique and available in the state of Arizona.
Once you’ve chosen an available and marketable name, you can reserve it for 120 days or submit your business formation documents to officially register your name. If you choose to reserve your business name, it will cost you $45 for either an LLC or a corporation. You can reserve the name online on the Arizona Corporations Division website.
To learn more about how to ensure your name is available for use, not nationally protected and is marketable, read our business naming guide.
4. Choose your statutory agent
Businesses in Arizona are required to have a named statutory agent. A statutory agent, commonly known as a registered agent, is the primary person or entity responsible for receiving and managing legal and tax documents on your business’s behalf. A statutory agent must be available to receive mail at a physical address in the state of Arizona during all regular business hours.
Due to the demands and strict requirements for fulfilling this role in-house, many businesses opt to hire a registered agent service provider. Read our list of best registered agent services to find the best provider for your business needs.
5. Form your business
You are now ready to submit your business formation application. To start, you’ll register with AZCC and submit an articles of organization form if you are forming an LLC or an articles of incorporation form if you are starting a corporation. You must submit a $50 filing fee for an LLC and a $60 filing fee for a corporation, plus a $35 online (expedited) filing fee for each. If your business is approved, you’ll receive a letter with additional instructions.
6. Apply for an EIN
To operate your business in Arizona, you’ll need an employer identification number (EIN). This is a tax identification number issued to businesses by the IRS.
An EIN is required to file taxes at the federal, state and local levels. It is also required for payroll processing, by most banks when opening business accounts and for obtaining a credit card or opening a line of credit.
Businesses organized in any state can request an EIN through the IRS website for free between 7 a.m. and 10 p.m. Monday through Friday. You will receive your EIN immediately upon submission of the application.
7. Register your business with the Arizona Department of Revenue
The Arizona transaction privilege tax (TPT) is a tax on vendors for the privilege of doing business in the state. Most businesses have to register their businesses with the Arizona Department of Revenue to pay this tax. Any number of business activities require you to fill out a TPT application in Arizona, including:
- Hosting events.
- Paying unemployment insurance for workers.
- Collecting and remitting transaction privilege tax (commonly known as a sales tax).
- Paying use taxes.
8. Apply for business licenses
In addition to the TPT application, you’ll need to determine if your business needs a license based on its activities and industry. In Arizona, not all businesses are required to have a license. However, some may require more than one. For instance, if your business activities involve liquor, tobacco or bingo, it will need a license. If it involves any combination of the three, it may require multiple licenses.
Additionally, businesses that engage in activities that are supervised or regulated by government agencies may require additional business licenses. These business activities include but are not limited to:
- Construction contracting.
- Massage therapy.
- Adult home care or childcare.
- Home inspections.
- Pest control.
If you are unsure if your business requires licenses, contact the Arizona Licensing Compliance Program to ensure your business is able to operate legally.
9. Open a business bank and other financial accounts
Opening a separate bank account for your business allows you to:
- Keep your business revenue and liabilities separate from your personal assets.
- Enhance your limited liability protection.
- File end-of-year taxes (both for your business and personally).
- Demonstrate the level of professionalism your clients expect.
Similarly, having a separate business credit card for your business provides you with the same benefits.
While each bank is different, in general, to open a business bank account in Arizona, you’ll need to have:
- Your business name.
- Your entity’s EIN.
- Your business formation documents.
- Any business ownership agreements.
- Relevant business licenses.
Find the best company formation services for Arizona: Best LLC services of 2023
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Frequently asked questions (FAQs)
In the state of Arizona, you’ll pay $50 to start an LLC and $60 to start a corporation. If filing online, you’ll need to cover a $35 expedited filing fee as well. If you reserve your business’ name in advance of filing your formation paperwork, you’ll pay another $10 for either LLCs or corporations. Other costs to start your business include fees to hire a registered agent, business licensing fees, initial deposit fees for opening a business bank account and legal consultation fees.
Starting a business in Arizona takes roughly one week for expedited services and three weeks for non-expedited services. If you’d like more details, Arizona maintains a full list of document processing times.
Arizona requires all businesses organized in the state of Arizona to have a statutory agent who can receive business legal and tax documents on the business’s behalf. This requires a set physical location where they can receive the documentation in Arizona. If you do not have a physical location for your Arizona business, you can hire a registered agent service provider that will provide a physical location for you.
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