How to Start a Business in Arizona 2022: Ultimate Step-by-Step Guide

Listed by Forbes as one of the five states with the best prospects for economic growth, starting a business in Arizona is a great choice for entrepreneurs. How you have to understand the step-by-step procedures on how to Start a Business in Arizona.

With these step-by-step guides, you can start your business in Arizona and get on the fast lane to financial and personal independence.

According to a new study, Arizona enables new businesses to survive and thrive, making it one of the best places in the United States to start a business. In a report by WalletHub, Arizona was picked as the seventh-best state in the country to start a business in.

How Much Does It Cost to Start a Business in Arizona?

The cost of incorporating an Arizona Limited Liability Company (LLC) is $50. This fee is paid to the Arizona Corporation Commission when filing the LLC’s articles of association.

The registration fee is a one-time fee. You don’t have to pay any monthly (or annual) fees to maintain your Arizona LLC.

There are two ways to set up your LLC:

You can hire a professional LLC incorporation service to set up your LLC (for an additional small fee).
Or, you can use our free guide to Form an LLC in Arizona to do this yourself.

To form an LLC in Arizona, you must file the organization’s articles with the Arizona Corporation Commission. The state of Arizona charges $50 to process and record this document.

In Arizona, newly incorporated LLCs are required to publish an LLC incorporation notice in a licensed newspaper in the county where the LLC is headquartered for three consecutive weeks.

The cost of publishing ranges from $30 to $300 and depends on the county. This must be done within 60 days of the establishment (except in the Maricopa or Pima counties).

How long does it take to register a company in Arizona?

How long it takes to register a business in Arizona depends on the type of filing (online or through the mail) and how much you pay. On the slow side, it can take 14-16 working days. The next fastest is 7-9 working days. And an approval time of one day is even faster.

Steps to Starting a Business in Arizona

#1: Choose a business idea

The first step in starting a business in Arizona is having a good business idea. Perhaps you have already chosen an idea, or perhaps you are still deciding on one. Look for an idea that suits your interests, personal goals, and natural abilities.

This will help you stay motivated when things get tough and greatly improve your chances of success. Regardless, you can get detailed industry information about the company you’re venturing into. Trends, startup costs, tips and much more.

#2: Write a Business Plan

Once you have a solid business idea, it’s time to start working on the business plan. Successful businesses are built through careful planning.

Before investing a significant amount of money and other resources in your business, do a critical analysis of your idea and create a game plan.

Many people only think about writing a business plan because the bank is asking for one in order to get money. While this is a valid reason, more importantly, writing a business plan gets the ideas out of the entrepreneur’s mind and helps create a roadmap for the desired business location.

Just as most builders wouldn’t build a home without a blueprint, a business owner shouldn’t build a business without a business plan.

#3: Select a Business unit

The next step in starting a business in Arizona is choosing a business unit. The business unit is sometimes referred to as the business structure or legal structure, which refers to how a company is legally organized.

There are four main companies: sole proprietorship, partnership, corporation, and limited liability company (LLC).

#4: Register a company name

After deciding on the business unit, the next step in starting a business in Arizona is to register the company name.

Registering your business in Arizona as a legal entity such as an LLC or a corporation has two main advantages:

Increased credibility
Protection from personal liability in the event that your company is sued

For most small businesses, registering an LLC is a good option. Compared to other companies, LLCs are easier to set up, easier to manage and have favourable tax treatment. You can start an LLC in Arizona for between $90 and $210, depending on your county.

Before deciding on a name, the first thing to do is check that the name you are about to use is not already registered with another company.

You can also register to prevent others from using your company, product, or service name.

#5: Get an EIN

The Employer Identification Number or EIN (sometimes called the Federal Employer Identification Number or FEIN) is a nine-digit tax identification number issued by the Internal Revenue Service (IRS).

This number identifies a company operating in the United States and is used to pay income taxes, file tax returns, and more. Much like a Social Security number is for a person, the EIN is similar to a Social Security number for a company.

While most companies require an EIN, some don’t. Partnerships, corporations, and most LLCs OR sole proprietorships with employees MUST register for an EIN.

Sole proprietorship or a sole proprietorship company with no employees are NOT required to earn an EIN. In these cases, the owner’s social security number is used to identify the company.

Filing of the EIN can be done online through the IRS website which takes only a few minutes and the number of which is instantly available. Alternatively, an EIN can be registered by mail or fax by submitting the IRS Form SS-4.

#6: Insure yourself

Business insurance helps you manage risk and focus on growing your business. The most common types of business insurance to consider are:

General liability insurance
Labor compensation insurance
Professional liability insurance

It is usually recommended that all small businesses, including private companies, take out general liability insurance. Companies that sell professional advice or services, such as consulting and accounting firms, should also consider a professional liability policy.

In Arizona, companies with one or more employees, other than officers and LLC members, are required by law to take out employee compensation insurance.

#7: Open a commercial bank account

Keeping your business and personal finances in separate commercial bank and credit card accounts makes it easier for you to keep track of the company’s income and expenses.

Using dedicated commercial bank and credit accounts is essential to protecting personal assets.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is known as piercing your company veil.

Additionally, when you learn how to build business credit, you can get credit cards and other finance on behalf of your business (instead of yours), better interest rates, higher lines of credit, and much more.

There are two #s you can take to protect your business:

1. Opening a commercial bank account:

Separates your personal assets from the assets of your company that are necessary for the protection of personal assets.
Facilitates bookkeeping and tax returns.

2. Get a business credit card:

Helps you separate personal and business expenses.
Creates your company’s credit history, which can be useful for later raising capital (such as small business loans).

Every bank is different, but in general they will require:

Sole Proprietorship and Partnership – Trade Name Certificate, EIN or SSN, and Driver’s License

Corporation – Certificate of Formation, bylaws, Certificate of Good Standing, EIN, and owner(s) driver’s license

LLC – Certificate of Incorporation, Company Agreement, Seal of Approval, EIN, and Driver’s License

#8: Apply for business licenses and permits

To legally operate your new business, you must comply with federal, state, and local government regulations. In many cases, this requires obtaining one or more business permits and/or licenses.

Certain licenses and permits are required to operate a business in Arizona. The licenses required depend on the company’s activities and location. Some common registrations are:

Business Licenses – There is no business license for the state of Arizona. However, many cities require a business license to work.

Transaction Privilege Tax License – Companies that sell products and certain services must register with the Arizona Department of the Treasury (ADOR) for a Transaction Privilege Tax License (TPT). The TPT is like sales tax in other states.

Professional Licensing – Some services such as construction, transportation for rent, massage, childcare, home inspection, and pest control require government licensing.

Visit the Arizona Commerce Authority Small Business Services website for more information about professional license regulations. While this is not a license for the company, a license is required to operate.

#9: Find Funding

Raising the funds to start a small business is a challenging process for many.

Not only are there unfamiliar terms like collateral, equity, assets, liabilities and others, but also different sources of funding with different rules, processes and costs.

From traditional bank loans to Small Business Administration (SBA) loan guarantees to investors, grants and many others, researching what is available and best for your business can be difficult.

#10: Hire Employees

Hiring employees is a complex and often overwhelming process for a new small business owner with multiple agencies registered and labour laws to be understood.

Employers are responsible for reporting new hires, verifying the eligibility of US workers, withholding tax, unemployment tax, and withholding tax including Social Security and Medicare.

#11: Get Business Insurance

Business insurance is never high on the list of things to do when starting a business. However, corporate insurance can be critical to protecting your business.

Most types of business insurance are optional, with the exception of workers’ compensation insurance in most states. Some states also require professional liability insurance for companies that offer certain services and commercial auto insurance.

Even if insurance is not required and there is a fire, theft, or personal injury incident, the business owner may have to pay damages and legal fees out of pocket.

Domestic businesses and ancillary businesses may also want to consider corporate insurance as their personal home and vehicle policies may not be covered in the event of a business loss.

#12: Define your Brand and Promote your Business

The strongest and most memorable companies are built on a solid brand. When developing your brand, consider the following:

What does your company stand for?
Your core values
How do you create customer trust?

Once you are sure of your answers to these questions, it is time to move on to your company name. Your company name is the cornerstone of good branding and a successful business

Once you’ve set your name, you’ll need a logo to finalize your brand. For something as important as your branding image, it’s always a good idea to source ideas from different places.

#13: Set Up an Accounting System

Setting up an accounting system for your business is one of the most important things you can do for your business to ensure long-term success.

An accounting system helps you keep track of your company’s performance and simplifies annual tax returns. With high-quality accounting software, you can download your bank and credit card transactions, making accounting quick and easy.

There is only one problem: you are not a numbers person. Your head hurts just to think of closings, debits and credits, and accounting software.

Keeping track of the finances not only helps you avoid problems with the IRS, it also helps you track and monitor company trends and maximize profits.

Fortunately, understanding the numbers doesn’t mean getting a financial close. Tracking a company’s financials can be done with pen and paper (not really recommended), spreadsheets, accounting software, or hiring an accountant.

#14: Set Up a Web Presence

A professional website is vital to the long-term success of your business, no matter what industry you are in.

A website enables potential customers to find your business online and discover the products or services you offer, and it also adds credibility to your business.

In addition to having a website, there are other ways you should your business online:

Setting up social media profiles (Facebook, Twitter, etc.)
Create accounts on review sites (Yelp, Google Reviews, etc.)
Register for a local Google profile

Conclusion

Starting a new business is an exciting endeavour and the department congratulates you on your decision to become an entrepreneur or a franchisee.

The above #s are just suggestions of the order it may take to start a business in Arizona. Your particular business, tax, or legal needs may require you to take different actions or do things in a different order.