Last updated October 12, 2020
Starting a Business in Arizona
There are 7 steps to starting a business in Arizona:
- Choose a name for your Arizona business
- Choose the right type of business entity
- Register your business with the Arizona Corporation Commission
- Get your EIN Number (Federal Tax ID Number)
- Open a business bank account
- Register with the Arizona Department of Revenue
- Get a business license or permit (if required)
We’ll show you how to complete each step below. We will also give you some tips to make starting your business in Arizona easier.
Step 1: Choose a name for your Arizona business
Choosing a name for your Arizona business is not something you want to rush. We recommend taking some time to choose a name people will remember and positively associate with your business.
To make sure your business is worth remembering, you should choose a name that:
- rhymes or contains alliteration (ex: Piggly Wiggly, Dunkin’ Donuts)
- speaks about the benefits of your business
- you can say it with pride
- is easy to pronounce
- has a positive connotation for your potential customers
- and ideally, is available as a “.com” domain name
By the way, the first bullet point above refers to the phonological loop. Your brain can better remember words that rhyme and sound similar.
For additional business name tips, check out how to choose a good business name.
After you’ve thought of a few business names, you should search them on the state’s website to make sure they are unique (referred to as being “distinguishable”) from existing businesses registered in the state.
Arizona Business Entity Search page:
Arizona Corporation Commission: eCorp Entity Search
How to find a good domain name:
Finding a good domain name nowadays is not always that easy. To help you out, we recommend using Lean Domain Search. Just enter one or two key terms relevant to your business, and the tool will come up with a list of domain names that are not only available, but are also easy to spell and remember.
(note: there are more tips on domain names and websites at the bottom of this guide)
Step 2: Choose your business structure
Next, you’ll need to decide the best type of legal structure for your Arizona business.
The most common are:
- Sole Proprietorship
- Limited Liability Company (LLC)
A Sole Proprietorship in Arizona happens when you operate your business as yourself. There is no separate legal entity created. The law treats you and your business as one person. You are responsible and personally liable for all business activities and any wrongdoing.
An Arizona Partnership is similar to a Sole Proprietorship, but just with 2 or more people. And like a Sole Proprietorship, a Partnership isn’t a separate legal entity and the partners are responsible and personally liable for any business activity and wrongdoing.
An Arizona Corporation is a more complex legal structure that requires a board of directors, corporate officers, and shareholders. And while a Corporation is a separate legal entity, they don’t usually work for most small business owners because they face double taxation. Corporations are most commonly used by companies that are looking to raise capital investment, take the company public, or have large healthcare expenses (for their employees). The most common types of companies that form Corporations are high-growth technology and startup companies.
An Arizona LLC is a “hybrid” legal entity that combines the benefits of a Corporation and a Sole Proprietorship/Partnership.
An Arizona LLC is a separate legal entity (like a Corporation) and it provides personal liability protection for the owners. If your LLC is sued, the owner’s personal assets — like their home, cars, and bank accounts — are protected. And like a Sole Proprietorship, an LLC has pass-through taxation (so there’s no double taxation).
An Arizona LLC is the most popular option and a good choice for people who want to run a business for two reasons:
- personal liability protection (your personal assets are kept safe)
- no double taxation
Unlike a Sole Proprietorship (and a Partnership), your Arizona LLC’s assets are separate and distinct from your personal assets. In the event your LLC gets sued, your personal assets are protected.
And unlike a Corporation, your Arizona LLC is not subject to double taxation. Instead, your LLC’s profits will “flow through” to your personal tax return.
For more pros and cons on the above business entities, please see LLC vs Sole Proprietorship vs Corporation.
If you want to form an LLC in Arizona, we have instructions here: Arizona LLC formation.
If you want to form a Corporation in Arizona, you can file the paperwork yourself or you can hire a filing company. We recommend Northwest Registered Agent.
Step 3: Register your business with the Arizona Corporation Commission
You may need to file business formation documents with the Arizona Corporation Commission.
All of the state’s forms and links to online filings can be found here: Arizona Corporation Commission: Corporations Forms.
The cost to form an Arizona LLC is $50.
The filing form is called the Articles of Organization (Form L010). It can be filed by mail or it can be filed online.
The cost to form an Arizona Corporation is $60.
The filing form is called the Articles of Incorporation (Form C010). It can also be filed by mail or it can be filed online.
Arizona Sole Proprietorship or Partnership:
Unlike an Arizona LLC and a Corporation, if you choose to operate your business as a Sole Proprietorship or a Partnership, you don’t have to file ant formation documents with the state.
Arizona Trade Name (DBA):
If you would like for your Sole Proprietorship or Partnership to operate under a name besides the name of the owner(s), you’ll need to register a DBA, which is called a Trade Name in Arizona.
Unlike the entity structures listed above which are filed with the Arizona Corporation Commission (AZCC), Trade Names are filed with the Arizona Secretary of State (SOS).
Note: Arizona LLCs and Corporations can also file Trade Names if they want to do business under a name besides their true legal name. However, this is not a requirement. For more information, please see do I need to file a DBA?
Arizona Corporation Commission (AZCC)
If you have any questions about registering a business entity in Arizona, you can contact the Arizona Corporation Commission (AZCC):
Arizona Secretary of State (SOS)
If you have any questions about registering a Trade Name, you’ll need to contact the Arizona Secretary of State:
Step 4: Get an EIN Number
An EIN Number is also known as an Employer Identification Number (EIN) or Federal Tax ID Number (FEIN). It is used by the IRS to identify your Arizona business for tax purposes.
Think of your EIN Number as the “social security number” for your Arizona business.
The EIN Number for your Arizona business will be used to open a bank account, file taxes, and handle employee payroll (if applicable).
You can get an EIN for your Arizona business by mail, fax, or online. Getting your EIN online is the fastest option, since it only takes about 15 minutes to complete the application.
You can access the IRS application here: IRS: Apply for an Employer Identification Number (EIN) Online.
For instructions on how to complete the online EIN application for an Arizona LLC, please see this page: Arizona LLC EIN Number.
Note: If you have an LLC or Corporation, make sure it is approved before applying for an EIN Number.
Step 5: Open a business bank account
A business bank account (and a business debit/credit card) for your Arizona business is important because:
- it keeps your personal assets separate from your business assets
- accounting and finances will be easier to manage
One of the main reasons courts are able to “pierce the corporate veil” is due to the commingling of assets. This is when business and personal finances are mixed together.
Keeping the assets of your Arizona business separate from your personal assets will make accounting and documenting expenses a lot easier as well.
If you are going to form an Arizona LLC, you can learn how to open a bank account here: LLC business bank account
Your bank will provide you with a debit card after the account is open. You can also get a business credit card and earn cash back or other rewards.
Step 6: Register with the Arizona Department of Revenue (ADOR)
After your Arizona business is formed — and before conducting any taxable activity — you’ll need to register your business with the Arizona Department of Revenue (ADOR).
You can find details here:
- Arizona Department of Revenue: Business
- Arizona Department of Revenue: A Guide to Taxes for Arizona Businesses (Pub 622)
Transaction Privilege Tax:
Transaction Privilege Tax (TPT) is a fee for the privilege of doing business in the state of Arizona. You’ll need to obtain a TPT License and file the appropriate forms. You can find more information on the state’s website: Arizona Department of Revenue: Transaction Privilege Tax.
Other taxes: The above is a general overview of tax registration in Arizona, however, there are far more details that go into taxes. Each person and each business is unique, operating in a different industry and in a different part of the state. We recommend speaking with an accountant to discuss the tax details of your Arizona company.
Our recommendation is to speak with an accountant:
We recommend working with an accountant to make sure you properly register your business for Arizona taxes, in addition to properly filing any federal, state, and local taxes.
Step 7: Business license and/or permits
After starting your Arizona business, you may need to obtain a business license and/or permit.
Business license and/or permit requirements are determined based on where you are doing business and the industry you’re in.
Note: As mentioned in the section above, you’ll need a Transaction Privilege Tax (TPT) license.
The Arizona Commerce Authority has a few helpful resources:
- Arizona Commerce Authority: County Offices
- Arizona Commerce Authority: City/Town Offices
- Arizona Commerce Authority: Business Licensing
- Arizona Commerce Authority: Arizona Entrepreneurs Edge
- Arizona Commerce Authority: Finding Professional Partners
- Arizona Commerce Authority: Welcome to the ACA Checklist Program
Business activities in Arizona that are regulated by federal, state, and/or a municipal government office may require a specific license, certification, or permit.
Some examples are construction contracting, transportation for hire, ,massage, adult home care, child care, home inspection, pest control, and tobacco or liquor sales.
The Arizona Department of Revenue offers a helpful program:
Arizona Department of Revenue: License Compliance Program
If you need help making sure you obtain the proper licenses and/or permits for your Arizona LLC, we recommend using IncFile.
After Your Arizona Business is Started…
1. Meet with a Local AZ Business Expert for Free Counseling
Getting advice from others who’ve been there can be helpful in your entrepreneurial journey.
Here are some great organizations in Arizona:
- Arizona Small Business Development Center
- Arizona District of the SBA
- EAC Small Business Development Center
- Arizona Small Business Association
- Arizona Commerce Authority
- Arizona Corporation Commission: 10 Steps to Starting a Business in Arizona
2. Start a Website
Having a website these days is very helpful for an Arizona small business. It gives your company a professional feel and allows people to learn about your products and services.
Building a website can seem like a complicated process. And it will be if you don’t have the right information.
However, I’ve built over 130 websites and used to teach people how to use WordPress to build their website. WordPress (which is free) is the tool I use and recommend. It can be used to build simple websites or it can be used to build more complicated websites, like eCommerce websites.
There are 4 components to starting a website:
- Domain registrar
- Website hosting
- WordPress theme
Let’s use the “housing analogy”:
The domain registrar is where you purchase your domain name. Think of this as the label on the mailbox or your street address.
A website hosting company is where all the code, images, graphics, and text are stored that gets provided to the world. Think of this as the foundation of your home. It gives you the ability to build on top of it and display information to others.
WordPress is a CMS (content management system) which makes it easier to build a website. Rather than constructing your home from scratch, think of WordPress as a prefabricated home where you can easily resize rooms, move walls, and have complete flexibility in design and customization. WordPress – or the prefabricated home – “sits on top of” your foundation (the website hosting).
A WordPress theme is a “design skin” that sits on top of the WordPress CMS. If the WordPress CMS is the prefabricated home, think of the theme as all the interior decorations and painting. There are free WordPress themes, but I recommend against them for various technical reasons. Instead, I recommend using a premium WordPress theme. The difference between a free WordPress theme and a premium one is the difference between an amateur designer and a world-class professional designer.
Here are some links and prices to get you started:
Domain registrar: I recommend NameSilo.com which is $10 per year (per domain name). This is the service we use as it includes domain privacy for free to keep your address and phone number off those public record websites. It’ll also help prevent those annoying telemarketing phone calls!
Website hosting: SiteGround.com ($10 per month)
WordPress: This is automatically included (again, for free) with nearly every hosting company these days. After you sign up with SiteGround, just call them to help you install it. They’ll walk you through the steps.
WordPress theme: ThemeForest.net (one-time fee of $40 to $60 for a WordPress theme)
Note 1: Make sure you’re using the “wordpress.org” self-hosted version. Not the “wordpress.com” version, which is stripped down and comes with limitations on how much you can customize your website.
Note 2: If you need help selecting a theme from ThemeForest, here is an explanatory video I made:
3. Design a Logo and Get Business Cards
Designing a logo doesn’t have to be too complicated.
We recommend starting off with a “words only” logo to keep things simple (no need for any fancy graphics). You can choose the font family and color yourself, or get help from 99 Designs. A cheaper option is to use Fiverr.
For some great tips on using a tagline with your logo, check out Neville Medhora’s article, however, we recommend not even using a tagline (to start) in order to keep things simple. Besides, most people don’t really pay too much attention to a company’s tagline anyway.
And for business cards, I like using Moo.com.
4. Get a Business Phone Number
Instead of giving out/publishing your actual cell phone number (or home telephone number), it might be a good idea to get a “virtual business number” for your Arizona business. You’ll be able to customize the number so it forwards to your cell phone.
Our favorite company is Phone.com. They have the cheapest plans and the best customer support.
You can get a local Arizona telephone number or you can get a 1-800 number for your business. Phone.com lets you easily setup call forwarding to any number you like, create pre-recorded messages, and you can get your voicemails delivered to your email.
Getting a separate phone number for your Arizona business is a good idea if you’d like to keep your actual phone number off of those annoying “public record” websites (and stop the spam phone calls).
I hope this guide has been helpful for you.