Start Your Own Business in Arizona: Seven Steps You Need to Take

From licenses and permits to taxes and insurance, learn what you need to do to start a business in Arizona.



Here’s an overview of the key steps you’ll need to take to start your own business in Arizona.

Step 1. Decide on a Legal Structure

The most common legal structures for a small business are:

  • sole proprietorship
  • partnership
  • limited liability company (LLC), and
  • corporation.

There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Check  Choose Your Business Structure  on Nolo’s website for more information on how to choose the best ownership structure for your business.

Step 2. Choose a Name

For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Arizona Corporation Commission (AZCC). You can check for available names by doing a  business entity search  on the AZCC website. You can reserve an available name for 120 days by filing an application to reserve an entity name. You can file  online  at the AZCC website. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See  How to Form an LLC in Arizona  and  How to Form a Corporation in Arizona  for more information.

Is your business a sole proprietorship or partnership that uses a business name that is different from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership)? If so, you have the option to register a trade name for your business with the Arizona Secretary of State (SOS). To register, use the  Trade Names Registration Application  available on the SOS website.

If you plan on doing business online, you may want to register your business name as a domain name. See  Choose and Register a Domain Name  for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See  How to Do a Trademark Search  for more information.

Step 3. Create Your Business Entity

  • Sole proprietorship:  To establish a sole proprietorship in Arizona, you don’t need to file any organizational documents with the state. For more information, see  How to Establish a Sole Proprietorship in Arizona.
  • Partnership:  To create a general partnership in Arizona, you don’t need to file any organizational documents with the state. Although not legally required, all partnerships should have a written partnership agreement. The partnership agreement can be very helpful if there is ever a dispute among the partners. For more information, see  How to Form a Partnership in Arizona.  To form a  limited liability partnership(often used by professionals), you must file a Statement of Qualification with the AZCC. For more information, see  How to Form a Limited Liability Partnership in Arizona.
  • LLCs:  To create an LLC in Arizona, you must file  Articles of Organization  online with the AZCC. Arizona also requires you to publish the Articles of Organization. You will also need to appoint a statutory agent in Arizona for service of process (in most other states, this is known as a  registered agent). In addition, while not required by law, you also should prepare an  operating agreement  to establish the basic rules about how your LLC will operate. The operating agreement is not filed with the state. For more information, see  How to Form an LLC in Arizona  and  How to Form a Professional LLC in Arizona  (for professionals).
  • Corporations:  To create a corporation in Arizona, you must file  Articles of Incorporation  online with the AZCC. Arizona also requires you to publish the Articles of Incorporation. You will also need to appoint a statutory agent in Arizona for service of process (in most other states, this is known as a  registered agent). Although not legally required, you also should prepare  bylaws  to establish your corporation’s internal operating rules. Bylaws are not filed with the state.  S Corporations  must also file IRS Form 2553,  Election by a Small Business Corporation,  with the IRS. For more information, see  How to Form a Corporation in Arizona.

Step 4. Licenses and Permits

Tax Registration.  If you will be selling goods in Arizona, you must register with the Arizona Department of Revenue (DOR) to collect the transaction privilege tax (in most other states, this is known as sales tax). If your business will have employees, you must register with the DOR for employer withholding taxes. You can register for both types of tax, as well as other business taxes and licenses, online via the DOR’s  AZTaxes website.

EIN.  If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.

Regulatory licenses and permits.  These cover areas such as:

  • health and safety
  • the environment
  • building and construction; and
  • specific industries or services.

The  Licensing Guide  section of the DOR website includes basic information about several important Arizona business licenses and a link to a guide to Arizona business taxes. Other important regulatory licenses and permits are issued by other state agencies, such as the  Arizona Department of Evironmental Quality  and the  Arizona Department of Health Services. For information about local licenses and permits, check the websites for any cities or counties where you will do business.

Step 5. Business Location and Zoning

You’ll need to pick a location for your business and check local zoning regulations. That includes if you work from home. You may be able to find zoning regulations for your town or city by checking  municode.com.

Step 6. Taxes and Reporting

Arizona taxes every kind of business. See  Arizona State Business Income Tax  for more information on state business taxes in Arizona.

Sole proprietorships.  Pay state taxes on business income as part of their personal state income tax returns (Form 140).

Partnerships.  Partners pay state taxes on partnership income on personal tax returns. In addition, Arizona partnerships also must file  Form 165,  Arizona Partnership Income Tax Return.

LLCs.  Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an  additional state tax form. The specific form used will depend on how the LLC is classified for federal tax purposes. See  Arizona LLC Annual Filing Requirements  for more information.

Corporations.  Shareholders must pay states taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Arizona  corporation taxes. And, finally, corporations must file an  annual report  with the Arizona SCC.

If you have employees, you must also deal with state  employer taxes.

And, apart from Arizona taxes, there are always federal income and employer taxes. Check IRS Publications 334,Tax Guide for Small Business, and 583,  Taxpayers Starting a Business, available at irs.gov.

Step 7. Insurance

Insurance is a good idea for most kinds of business. While insurance often is regulated at the state level, the types of business insurance available are usually similar across the fifty states. Check  Obtaining Business Insurance  for more information.

Talk to a Lawyer

Need help? Start here.

How it Works

  1. Briefly tell us about your case
  2. Provide your contact information
  3. Choose attorneys to contact you
FEATURED LISTINGS FROM NOLO
Swipe to view more
NEED PROFESSIONAL HELP ?

Talk to a Business Law attorney.

How It Works

  1. Briefly tell us about your case
  2. Provide your contact information
  3. Choose attorneys to contact you