When you're ready to open an Arizona business, a detailed plan can help the process go smoothly. After all, you have a long checklist of to-dos, from filing your business registration to getting local licenses and figuring out how to accept customer payments. Fortunately, you don't have to let the paperwork get in the way of running your business and getting noticed by your target audience.
In this guide, we've documented the steps to start an Arizona business. Referring to this process whenever you get stuck can shorten the time it takes to get your new company up and running.
6 Steps to Start a Business in Arizona
The Arizona Corporation Commission (ACC) provides resources and forms for state business owners. You can use the Secretary of State's official portal, Arizona Business One Stop, to find and submit the required documents and fees.
1. Register the Right Arizona Business Entity
You can create a partnership, limited liability company (LLC) or corporation in Arizona if you want a separate legal entity for your business. If you operate alone, you're automatically a sole proprietor.
When you select your business structure and fill out the necessary forms, you'll receive either an approval letter with next steps or a rejection letter that tells you why your application wasn't accepted and how to resubmit. The turnaround time is typically two or three weeks.
Trade Name Registration for Sole Proprietors
The Secretary of State manages trade name registration for sole proprietors. For example, if your name is Sadie Smith and you want to sell seashell jewelry, you could register the trade name "Sadie's Shells."
Trade name registration is an easy and affordable process in Arizona. You can submit the necessary forms and pay the $10 filing fee through the Arizona Business One Stop Portal.
The state recognizes three types of partnerships, all with at least one general partner and one limited partner:
- Limited partnerships (LP)
- Limited liability partnerships (LLP)
- Limited liability limited partnerships (LLLP)
Starting this type of business can limit your personal liability for business debts and legal judgments. Otherwise, the court can take assets such as your home and vehicle if someone sues your business and wins. Corporations and LLCs also offer limited liability, but sole proprietorships do not.
You can start a partnership through the Secretary of State for a filing fee of $10. The Certificate of Limited Partnership asks for:
- The name and address of your business
- The names and addresses of all general and limited partners
- The name and address of an agent to accept service of process for the partnership
Corporate and LLC Registration
You can start a corporation in Arizona if you want limited liability and plan to offer shares of the business to partial owners. Directors and officers manage this type of business entity. You can have unlimited shareholders with no restrictions in Arizona.
An LLC also provides limited liability but doesn't have shareholders. Instead, owners are called members. You can start a member-managed LLC if you plan to run the business with your partners or a manager-managed LLC if you'll hire managers for day-to-day operations. Although LLCs and corporations have similar structures, they have different tax treatment.
The ACC eCorp portal provides all the necessary forms online for corporate and LLC registration. After you create an account, you can log back in to see the status of your registration. If you prefer, you can print and mail paper forms instead.
A new LLC requires Articles of Organization, while corporations are created with Articles of Incorporation. Both forms ask for:
- The type of entity you want to form
- The name of the entity
- The types of professional services you'll provide if applicable
- The principal business address
- The name and address of your statutory agent
- The name, address and signature of every incorporator (corporation) or member (LLC)
Articles of Organization also require information about whether members (owners) will manage the LLC or hire professional managers to run the business. For Articles of Incorporation, you'll also need to state:
- The character of your business
- The number and class of authorized shares
- The name and business address of each corporate director
The filing fee is $50 for an LLC and $60 for a corporation, payable by credit card, check or money order. You can also apply in person at the Phoenix ACC office and pay the filing fee in cash.
2. Select a Unique Name for Your Arizona Business
You need to choose a business name that isn't already taken in Arizona. If you have an idea for a name in mind, search for it on the ACC database. You'll be able to see similar LLC, corporations and trade names registered in the state.
The U.S. Patent and Trademark Office provides federal trademark searches. You can take this extra step to make sure your new business name doesn't infringe on an existing trademark. It's especially important to check federal trademarks if you plan to do business online.
Once you're sure you have the right name, you can reserve it for 120 days with ACC if you plan to start an LLC, partnership or corporation. That secures the name while you complete your entity registration documents. You can also register your trade name with the Secretary of State instead of making a name reservation.
After you find a unique name, you may also want to check to make sure the domain name is also available. Let's say you planned to register Sadie's Shells, but sadiesshells.com is taken. However, since sadiesseashells.com is available, you also decide to slightly change the name of your new business. It's important to know about that small hurdle before you submit your paperwork to the state.
3. Select a Statutory Agent
If you form an Arizona LLC or corporation, you'll need to assign a statutory agent. This person, who agrees to accept legal documents for your company, must live in the state and be at least 18 years old. You can also select a business with a physical Arizona address and valid state license. The state can dissolve your business if you don't keep the current name and address of your statutory agent on file.
4. Set Up Your Tax Accounts
To pay federal taxes as an Arizona business, you can use your Social Security number. You can also get a free Employer Identification Number (EIN) from the IRS if you establish a legal business entity.
For state-level taxes, most Arizona companies have to obtain at least one type of tax license from the Department of Revenue:
- Transaction privilege tax license, required for all businesses that provide products and services in the state. It's also called a vendor, wholesale, resale or sales tax license.
- Withholding tax registration, required if you have employees. It allows you to withhold the necessary employment taxes from worker paychecks. You need an EIN to get this type of registration in Arizona.
- Special permits, required for certain professions and industries.
5. Prepare to Accept Online Payments
If your company has any kind of ecommerce component, you'll need a way to accept payments for your products and services.
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6. Get Your Business License, Registration and Permit
Arizona doesn't require a state-level business license. However, you'll need to visit the city or county municipal office to register your company at the local level. You can also find out about occupational licenses and permits you might need depending on the type of business.
For example, contractors need a license from the Registrar of Contractors while selling liquor mandates a license from the Department of Liquor License and Control.
7. Find the Right Location
The Arizona Commerce Authority offers resources for business owners who want to locate in the state. When you contact this federal agency, they'll assign an Arizona location project manager to help you find the ideal spot for your endeavor.
The program includes confidential assistance with site selection, transportation, and local meeting coordination. You can access personalized research to help you make a smart location decision, including information about wage, transportation, utilities, real estate and taxes in your preferred Arizona cities.
The Bottom Line: Starting a Business in Arizona
Arizona provides an organized online framework for new business registration. By following these 7 steps, you can ensure that you have everything in order to operate legally in the state. In fact, you can begin receiving online payments in no time when you sign up for an account with Pay.com.
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