How to Start a Business in Arizona

Arizona Business Openings: Benefits

Arizona is among many states experiencing a rise in entrepreneurship. The number of new business applications jumped from 19,052 during the third quarter 2019 to 30,356 by the third quarter 2020. According to a 2019 article on azcentral.com, Phoenix is ranked ninth in the United States for best cities to start a business and second for net business creation.

Arizona State University has schools that offer a wide range of skills and a growing workforce to help entrepreneurs. Arizona’s small businesses make up a significant part of the state’s overall business landscape. Phoenix has approximately 95% of all businesses with 50 employees or less.

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How to start a business in Arizona

Arizona offers many resources for entrepreneurs looking to learn the best ways to start a business.

This assistance extends to the local level as well. Surprise has economic development teams that will assist you. The AZ TechCelerator offers coaching, business planning consulting, and assistance in accessing private and publicly funded startup resources. This includes networking, commercial real estate research, and a program to sign the state logo.

No matter what your business dreams are, the checklist below can help you get started.

1. Create a business plan

Writing a business plan is essential for transforming your entrepreneurial idea into a reality.

Your plan can help you:

  • Consider the potential problems that your business might face
  • How to win over your target customers by understanding their needs
  • Your business could be eligible for local, state, or federal business development incentives
  • Identify your competitors
  • Consider how you can stand out in your market
  • Create the “SMART” goals you want to track and the metrics that will help you do it.

A business plan is essential to understand your entrepreneurial journey. This will help you understand the problem that your product or service solves. It is possible to plan how your company will finance itself, how your path to profitability might look, and how you plan on scaling the business as it grows.

2. Choose an entity

Now it’s time for you to decide which legal entity your company will be established as. The sole proprietorship (LLC) and the limited liability company, which are two common business structures in Arizona, are both viable options. Before you make a decision, consider the pros and cons of each option.

Sole Proprietorship

A sole proprietorship can be a business structure with only one owner. You can establish it without the need for state registration. It also includes an easy taxation scheme. You must file separate schedules detailing your sole proprietorship’s profits and losses.

Sole proprietorships do not allow you to seperate your business and personal assets. Personal property, such as savings, real estate or other assets, could be at risk if there are any legal or financial problems within the business. While business taxes are easier to understand, long-term financing may be more difficult to obtain.

Limited Liability Company

However, LLCs can have multiple members or one owner. This separate legal entity can protect your personal assets and business liabilities. You may be eligible for lower taxes than corporations and business entities.

Although you must file the correct paperwork with the Arizona Corporation Commission, keeping annual filings and establishing your LLC, the benefits of starting a business here, especially the personal asset protection, may outweigh any paperwork challenges for many Arizona businesses.

 

3. Calculate your Arizona startup and operating expenses

Your startup and ongoing operations will include everything from equipment to licensing and business insurance, to leases. In Surprise, for example, an initial business license costs $168 and an annual renewal fee of $84.

Your industry may have different costs.

  • Contractors and employees being paid
  • Purchase of office equipment, computers, furniture
  • Transport expenses include fuel, repairs, maintenance, and leasing of vehicles.
  • Insurance: This coverage covers general liability, commercial auto, professional liability, and other common areas.

Another consideration is taxes. Arizona businesses, for example, pay the transaction privilege tax. Based on the size of your business, its revenue and/or industry, you may be subject to other state or federal taxes. You should also check with the local government to see if local taxes may be applicable.

4. Create an business name

Name your Arizona business is an important step in building your brand. If you wish to operate under another name than your company’s legal name, you can file an “assumed name” or “doing business as” name (DBA).

Consider easy-to-spell, easy-to-say, and easy to comprehend names when naming your business. First, make sure that your name is easily searchable.

Arizona law requires that business names must be distinct from all other business names or DBA names within the state. You will need to use a different name if another company is using the same name as you. Legal issues could arise if you try to use a name that is already owned by another company.

Search the Arizona Corporation Commission’s Business Database to see if a business name has been registered.

After you have identified a business name, search for domain names that are available to register your company website . Also, look into email addresses. You should ensure that you have the ability to reserve your business name on any of your preferred social media platforms if you intend to use them in your marketing.

5. Open a bank account for your business in Arizona. Get insurance.

As an owner of a business, one of the next steps is to set up the required registrations with Arizona. Although LLCs and corporations must register with the Arizona Corporation Commission for any business, it is not required for sole proprietorships or general partnerships trading under the names of the owners.

Obtain Arizona Business Licenses & Permits

Zoning compliance and state and local business licensing are required. The requirements vary depending on the city or town. Surprise, for example, has its zoning codes listed online. The City of Maricopa doesn’t require a general business license anymore, but licensed businesses such as tattooists, auctioneers, and scrap dealers need to apply for a business licence.

Register with ARD to receive a Transaction Privilege Tax License

Before you can conduct any tax-exempt business activity in Arizona, your business must also register with the Arizona Department of Revenue.

Apply for an Employer Identification Number

Depending on the type of company you run and whether you hire employees or not, the Internal Revenue Service may require that you obtain an employer identification number ( EIN) which you will use to hire, file taxes and open a business bank account.

Business Bank Account

You can avoid having to pay for both personal and business expenses through a business bank account. To build your credit, you might consider applying for a credit card for business.

You might also consider speaking to a local agent for business insurance.

6: Promote your Arizona business in

Create a Marketing Plan that reflects your company’s branding and how you will engage the public. It should also reflect who your target customers are.

Consider whether your prospects are active on social media. If they are, you can narrow down their conversations and engage with them via platforms like Instagram, Facebook, Twitter, or Twitter.

People can find you company online by optimizing your business profile on directories like Yelp and Google My Business. Word of mouth is still a great way to gain new business. Ask customers to spread the word about your company.

You can also set up a website to fully describe your business, who you are and how customers can reach you.


Good Businesses to Start In Arizona

There are many opportunities for new businesses in Grand Canyon State due to the high population and growth of the state.

  • Daycare
  • App development
  • Specialty food
  • E-commerce
  • AC installation and repair
  • Financial services
  • Sport and recreation equipment
  • Walking dogs
  • Barbershops and Beauty Salons
  • Coaching for the life you want


Bottom Line

Arizona wants to be a place that welcomes new businesses and allows them to open their doors quickly without any hassle. You can start a successful business in Arizona with the right business plan and understanding of your customers .

Arizona Business FAQs

  1. Is there a great place to start a business? Other cities that are growing and established include Phoenix, Flagstaff and Tempe.
  2. What is the cost of opening an LLC in Arizona? The filing fees and other fees required to create a limited liability company in Arizona range from $50 to $130. Different types of businesses may have different setup fees. For the most current fee information, visit the state website.
  3. What tax and business regulations must be followed by a limited liability Arizona company? The type of business and the tax requirements will affect your tax obligations. Taxes on business may include the state sales tax (SST), transaction privilege tax (TPT) and state unemployment tax.

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