Kicking off a new venture in Arizona is exciting, but the registration process can feel complex. Don’t worry, this guide outlines 9 clear steps to help you establish your business with confidence.
Requirements may differ based on your business type, location, and industry, so always check with official sources like the Arizona Corporation Commission (ACC), Arizona Secretary of State, Arizona Department of Revenue (ADOR), and local government offices to ensure full compliance.
Step 1: Choose Your Business Structure
Choosing the right structure is a critical first step that impacts your taxes, liability, and operations in Arizona. Here’s a quick look at common options:
Sole Proprietorship
The simplest and most common structure for small, one-person businesses. In Arizona, you can operate under your own name without registering with the state. If you choose a business name that’s different from your own, you must register a trade name with the Arizona Secretary of State.
- Liability: Unlimited personal liability. Your personal assets (home, savings, etc.) can be at risk if the business owes debts or faces lawsuits.
- Taxes: All income and expenses are reported on your personal tax return (Form 1040, Schedule C). No separate business tax return is required.
Partnership
A business owned by two or more people. In Arizona, a general partnership doesn’t require state-level filing, but you’ll need to register a trade name with the Arizona Secretary of State if you’re operating under a name other than the partners’ surnames. Formal partnerships, like Limited Partnerships (LPs) or Limited Liability Partnerships (LLPs), are registered with the Arizona Secretary of State.
- Liability: In a general partnership, all partners share unlimited personal liability. LPs and LLPs offer varying degrees of protection.
- Taxes: Partnerships don’t pay income tax directly; profits and losses “pass through” to each partner’s personal return.
Limited Liability Company (LLC)
A popular choice in Arizona because it provides personal liability protection and flexible tax options. You must file Articles of Organization with the Arizona Corporation Commission (ACC).
- Liability: Protects personal assets from most business debts and claims.
- Taxes: By default, taxed as a pass-through entity (like a sole proprietorship or partnership), but can elect corporate taxation if desired.
Corporation
A corporation is a complex structure forming a distinct legal entity separate from its shareholders. To establish one in Arizona, file Articles of Incorporation with the Arizona Corporation Commission (ACC).
- Liability: Strongest personal liability protection, completely separating owners from business obligations.
- Taxes: A C Corporation faces double taxation. Profits are taxed at the corporate level and again when paid as dividends. An S Corporation avoids this by passing profits and losses directly to shareholders’ personal tax returns, provided it meets IRS eligibility rules.
Quick Tip: In Arizona, many small business owners choose an LLC for its balance of liability protection, tax flexibility, and straightforward setup. Sole proprietorships are easy and cheap to start, but carry a higher personal risk.
Step 2: Choose and Secure a Business Name
In Arizona, your business will have an official legal name (for formal entities like LLCs and corporations) and, optionally, a “Trade Name.”
- Legal Name: The legal name of a Sole Proprietorship or General Partnership is simply the owner’s or partners’ names. For an LLC or corporation, the legal name is the one registered with the Arizona Corporation Commission (ACC).
- Trade Name: This is a name you use publicly that’s different from your legal name. For example, “Jones Enterprises, LLC” could operate as “Jones Landscaping” by filing a trade name with the Arizona Secretary of State.
To ensure your legal business name is unique, you should first search the ACC’s eCorp database. This online search is free and will help you see if a name is already taken. You can also file an Application to Reserve LLC Name for a fee of $10 to secure the name for 120 days.
Unlike Georgia’s requirement to file a trade name with the county, Arizona requires you to file a Trade Name Registration with the Arizona Secretary of State. The fee is $10.
For nationwide brand protection, you should conduct a trademark search with the U.S. Patent and Trademark Office (USPTO) and consider registering your trademark.
Step 3: Draft Your Business Formation Documents
In Arizona, the documents required to register your business depend on the entity type you select. Below is a guide to the essential documents for common business structures:
Limited Liability Company (LLC)
To form an LLC, file the Articles of Organization with the Arizona Corporation Commission (ACC). This document officially establishes your LLC and includes details like the business name, statutory agent’s address, and organizer’s name.
Though not filed with the state, drafting an Operating Agreement is strongly advised. This internal document outlines ownership, member roles, and decision-making processes to ensure clarity and prevent conflicts.
Corporation
For a corporation, you must submit the Articles of Incorporation to the ACC. This filing creates your corporation as a legal entity and includes details such as the corporate name, number of authorized shares, and the statutory agent’s name and address. Additionally, create corporate bylaws (an internal document) to define the company’s operational rules and governance structure.
Partnership
For partnerships, draft a Partnership Agreement. This private document, not filed with the state, specifies each partner’s roles, responsibilities, and profit-sharing terms. It’s essential for avoiding disputes and is often required to open a business bank account.
Step 4: Register With the State of Arizona
Once you’ve drafted your business formation documents, you’ll need to file them with the state of Arizona to make your business a legal entity. This step is required for formal structures like LLCs, corporations, and certain types of partnerships.
Filing With the Arizona Corporation Commission (ACC)
- LLCs: To establish an LLC, submit the Articles of Organization to the Arizona Corporation Commission (ACC). This document formalizes your LLC’s existence, detailing the business name, statutory agent’s name and address, and other key information. The filing fee is $50 for online or paper submissions. Standard processing takes up to 15 business days, but expedited options are available for an additional fee.
- Corporations: For a corporation, file the Articles of Incorporation with the ACC. This document registers your corporation and includes details like the corporate name, number of authorized shares, and statutory agent’s information. The filing fee is $60.
Publication Requirement: A key difference from Georgia is Arizona’s one-time publication requirement. Within 60 days of filing your Articles of Organization or Incorporation, you must publish a notice of your formation in a newspaper for three consecutive weeks in the county where your business is located. This requirement applies to businesses located in all counties except Maricopa and Pima. The cost can vary by county.
Step 5: Obtain an Employer Identification Number (EIN)
Most Arizona businesses require an Employer Identification Number (EIN), a nine-digit identifier issued by the IRS, functioning like a Social Security number for your company. You’ll need an EIN for tasks like hiring employees, opening a business bank account, filing federal taxes, and securing specific licenses or permits.
Sole proprietors without employees can use their Social Security number instead of an EIN. However, many opt for an EIN to protect personal privacy and maintain clear separation between personal and business finances. The application process is free via the IRS website, takes only minutes, and provides your EIN instantly upon form submission.
Step 6: Apply for Licenses and Permits
Getting the right licenses and permits is a must for legally operating your business in Arizona. Requirements depend on your industry, activities, and location, and they often come from three levels of government: federal, state, and local.
Federal Licenses and Permits
Most small businesses in Arizona won’t need a federal license. However, certain industries are regulated at the national level. Examples include:
- Alcoholic Beverages: The Alcohol and Tobacco Tax and Trade Bureau (TTB) regulates manufacturers, importers, and sellers of alcohol.
- Firearms: Businesses dealing with firearms must comply with the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) requirements.
- Transportation: The U.S. Department of Transportation (DOT) regulates certain trucking, freight, and passenger transport services.
State Licenses and Permits (Arizona)
Arizona does not issue a general state business license. However, most businesses that sell goods or services subject to state sales tax must obtain a Transaction Privilege Tax (TPT) license from the Arizona Department of Revenue. This is commonly referred to as a sales tax license.
You’ll also need to check with the relevant state agency for specific professional or industry licenses. Common examples include:
- TPT License: Required if you sell taxable goods or services. You must register with the Arizona Department of Revenue through the Arizona Tax Center.
- Professional Licenses: Professions like attorneys, doctors, real estate brokers, and cosmetologists are regulated by state licensing boards under the Arizona State Board of Technical Registration or other similar agencies.
- Environmental Permits: If your business impacts air, water, or waste, you may need authorization from the Arizona Department of Environmental Quality (ADEQ).
Local Licenses and Permits
Your city or county may also have rules that apply to your business location and operations.
- Business License: While Arizona doesn’t have a state-level general business license, many cities and counties require a local business license or permit to operate within their jurisdiction. For example, the City of Mesa requires a business license for certain activities. The fee is typically based on your projected gross receipts.
- Zoning Permits: Check with your city planning or zoning department to make sure your business activities are allowed at your chosen location.
- Health Permits: Restaurants, bakeries, food trucks, and catering services must get permits from the local health department before opening.
Quick Tip: Arizona doesn’t have one central place to get all licenses. You’ll need to check with:
- The Arizona Department of Revenue for tax-related permits, like the TPT license
- Your industry’s state licensing board
- Your local city and county offices for local requirements
Step 7: Open a Business Bank Account
In Arizona, opening a dedicated business bank account is more than just good bookkeeping. It’s a critical step to protect your personal assets and maintain your company’s legal standing. Keeping your business and personal finances separate helps:
- Preserve Liability Protection: For LLCs and corporations, separating funds is essential to keep the “corporate veil” intact. Mixing funds could allow creditors to go after your personal property.
- Simplify Taxes & Accounting: A dedicated account makes it easier to track income, expenses, and deductions for both state and federal tax filings.
What You’ll Typically Need in Arizona
When you visit the bank, be prepared to provide the following:
- Employer Identification Number (EIN): Issued by the IRS, this is required for most businesses. While a sole proprietor with no employees can use their Social Security Number, an EIN is still highly recommended for privacy and professionalism.
- Business Formation Documents: This includes your Articles of Organization (for LLCs) or Articles of Incorporation (for corporations) filed with the Arizona Corporation Commission.
- Trade Name Registration: If you’re a sole proprietor or partnership operating under a name other than the owner’s legal name, you’ll need to provide the Trade Name Registration filed with the Arizona Secretary of State.
- Operating Agreement or Corporate Bylaws: Some banks will require these to verify ownership and authorized signers.
- Government-Issued Photo ID: Such as an Arizona driver’s license or passport for each owner or authorized signer.
Arizona Tip: Be aware that some banks may also require proof of your business address, such as a utility bill or lease agreement. If you’re a home-based business, be prepared to provide documentation tying your address to your business.
Step 8: Register for State and Federal Taxes
Federal Tax Obligations
The IRS requires every business to handle federal taxes according to its structure:
- Sole Proprietorships & Partnerships: These are pass-through entities. The business doesn’t pay income tax directly. Instead, profits and losses “pass through” to the owners, who report them on their personal tax returns (Form 1040).
- LLCs: By default, a single-member LLC is taxed as a sole proprietorship, and a multi-member LLC is taxed as a partnership. However, LLCs can elect to be taxed as an S Corporation or C Corporation by filing the appropriate IRS forms.
- Corporations: C Corporations pay corporate income tax on profits, and shareholders pay personal tax again on dividends (double taxation). S Corporations avoid double taxation by passing income and losses directly to shareholders’ personal tax returns.
Arizona State Tax Obligations
Arizona has both a state income tax and a Transaction Privilege Tax (TPT). You’ll likely need to register for the following, all of which are managed through the Arizona Department of Revenue (ADOR).
- Arizona Transaction Privilege Tax (TPT): Required if you sell taxable goods or services. This is a tax on the privilege of doing business in the state and is often referred to as a sales tax. The state TPT rate is 5.6%, but local taxes vary, leading to a combined rate that can be higher.
- Arizona Corporate Income Tax: Arizona has a corporate income tax on profits. The rate is currently a flat rate of 4.9%.
- Arizona Individual Income Tax: If your business is a pass-through entity, such as a sole proprietorship, partnership, or LLC, your business income will be subject to Arizona’s individual income tax. The rate is a flat rate of 2.5%.
- Withholding Tax: If your business has employees, you must register to withhold state income tax from their wages.
Step 9: Maintain Ongoing Compliance
Registering your business in Arizona is only the beginning. Ongoing compliance is critical to avoid fines, penalties, or the loss of liability protection. Regularly submit required filings, such as annual reports with the Arizona Corporation Commission (ACC), and renew licenses or permits as needed.
Staying on top of these obligations ensures your LLC or corporation remains in good standing and safeguards your business’s legal and financial health.
Maintaining Compliance for Your Arizona Business
- File the Annual Report: Arizona corporations must file an annual report by the anniversary of their formation date with the Arizona Corporation Commission (ACC). The filing fee is $45. LLCs are not required to file annual reports in Arizona.
- Renew Licenses and Permits: Local business licenses, health department permits, and other licenses or permits often have expiration dates. Track and meet renewal deadlines to avoid fines or interruptions to your business operations.
- Maintain a Current Statutory Agent: Arizona law mandates that every business entity maintain a statutory agent with a physical Arizona address. If the agent’s details change, promptly update the information with the ACC to ensure compliance.
- Keep Business Records Organized: Maintain accurate, up-to-date records, including financials and corporate meeting minutes. Proper documentation supports smooth operations and preserves your liability protection.
Frequently Asked Questions About Registering a Business in Arizona
Launching a business in Arizona is a thrilling step, but it comes with questions about costs, timing, and whether you need expert help. Here are answers to common queries for aspiring Arizona entrepreneurs.
How Much Does It Cost to Register a Business in Arizona?
Costs vary by business type. Registering an LLC costs $50, while a corporation is $60. Additional expenses include a statutory agent ($50-$150/year), publication fees ($30-$300, depending on the county), and local business licenses ($50-$500+). Total startup costs typically range from $200 to over $1,000.
How Long Does It Take to Register a Business in Arizona?
Online filings through the Arizona Corporation Commission take about 13-15 business days. Mail filings may take longer. Expedited processing, available for an extra fee, can cut this down to a few business days.
Do I Need a Lawyer to Start a Business in Arizona?
Hiring a lawyer isn’t mandatory. However, legal advice is helpful for complex businesses with multiple owners, intricate contracts, or regulated industries. Lawyers can guide you in selecting the right structure and ensuring compliance. For simple setups like sole proprietorships or single-member LLCs, many entrepreneurs use online tools to register on their own.
Conclusion – Starting Your Arizona Business
Registering a business in Arizona is straightforward with the right approach. Proper registration builds a strong legal foundation, protects your assets, and enhances credibility with customers.
Investing time upfront to navigate the process correctly helps avoid future legal or financial headaches, letting you focus on growing your business in Arizona.
