By Jake Lawson, LLC Formation Strategist
Arizona offers one of the most business-friendly environments in the country—no franchise tax, reasonable costs, and a regulatory climate that actually wants you to succeed. After helping over 1,200 entrepreneurs launch their businesses, I can tell you that Arizona gets most things right when it comes to supporting new ventures.
Let me walk you through the complete process of starting your Arizona business, including the insider tips that can save you time, money, and headaches.
Why Arizona Is Great for New Businesses
Before diving into the how-to, let’s talk about why Arizona should be on your radar:
No franchise tax – Many states charge annual franchise taxes just for existing. Arizona doesn’t.
Business-friendly regulations – The state actively courts new businesses with streamlined processes.
Growing economy – Phoenix and Tucson are booming, creating opportunities across industries.
Strategic location – Access to California markets without California costs and regulations.
Quality workforce – Universities and transplants provide skilled workers.
Now let’s get your business started properly.
Step 1: Choose Your Business Name (Do This Right)
Your business name is more important than most people realize. It affects everything from customer perception to trademark protection to domain availability.
What Makes a Great Business Name
Memorable and distinctive – Think “Uber” not “Transportation Solutions LLC”
Easy to pronounce and spell – Your customers shouldn’t struggle with your name
Industry-appropriate – A law firm named “Wild West Legal” might not inspire confidence
Domain available – If BusinessName.com isn’t available, keep thinking
Trademark-friendly – Avoid names too similar to existing brands
Domain Name Strategy: Grab your domain before someone else does. My domain guide shows you exactly what to buy (hint: get the .com) and how to navigate GoDaddy without falling for their seventeen upsells. After watching three clients lose perfect domains while “thinking about it,” I now tell everyone: register first, overthink later. Domains cost $15/year—your perfect business name getting squatted costs thousands to buy back.
Arizona Name Requirements
Must include entity designation – LLC, Corporation, Inc., etc.
Must be distinguishable – Can’t be confusingly similar to existing Arizona businesses
Avoid restricted words – Bank, Insurance, University require special licensing
Check Name Availability
Use Arizona’s entity search tool:
Arizona Corporation Commission eCorp Entity Search
Pro tip: Search variations of your name to avoid problems later. If “ABC Consulting LLC” is taken, “ABC Consulting Services LLC” probably won’t be approved either.
Step 2: Choose Your Business Structure (This Matters More Than You Think)
Your business structure affects taxes, liability, and how you operate. Here’s the real story on each option:
LLC (My Recommendation for Most Businesses)
Advantages:
- Personal asset protection from business liabilities
- Pass-through taxation (no double taxation)
- Flexible management structure
- Credibility with customers and vendors
- Easy to maintain compared to corporations
Arizona LLC cost: $50 filing fee
Best for: Most small to medium businesses, real estate investors, consultants
Corporation
Advantages:
- Maximum credibility and structure
- Easier to raise capital and bring in investors
- Established legal framework
Disadvantages:
- Double taxation (corporate + personal income tax)
- More compliance requirements
- Board meetings, corporate minutes, etc.
Arizona Corporation cost: $60 filing fee
Best for: High-growth companies seeking investment, businesses going public
Sole Proprietorship
Advantages:
- Simplest structure (no formation required)
- Complete control
- Pass-through taxation
Disadvantages:
- Zero personal asset protection
- Limited credibility
- Difficult to scale or sell
Cost: $0 (but you’re risking everything)
Best for: Very small, low-risk businesses testing concepts
Partnership
Advantages:
- Simple structure for multiple owners
- Pass-through taxation
Disadvantages:
- No personal asset protection
- Joint liability for all partners’ actions
- Complex to modify or exit
Best for: Nobody (seriously, just form an LLC instead)
Step 3: Register Your Business with Arizona
For LLCs and Corporations
File with the Arizona Corporation Commission (ACC):
Arizona LLC:
- File Articles of Organization (Form L010)
- $50 filing fee
- Can file online or by mail
- Processing time: 1-2 weeks
Arizona Corporation:
- File Articles of Incorporation (Form C010)
- $60 filing fee
- Same filing options and timeline
For Sole Proprietorships and Partnerships
No state registration required—you’re automatically in business when you start operating.
Trade Names (DBAs)
If you want to operate under a name different from your legal entity name, file a Trade Name with the Arizona Secretary of State (not the Corporation Commission).
When you need a Trade Name:
- Your LLC wants to do business as “Phoenix Plumbing” instead of “Smith Plumbing LLC”
- Your sole proprietorship wants a business name instead of just your personal name
Step 4: Get Your Federal EIN (Required for Most Businesses)
An EIN (Employer Identification Number) is your business’s Social Security number with the IRS.
When You Need an EIN
Always required for:
- LLCs and Corporations
- Any business with employees
- Businesses with business bank accounts (most banks require it)
How to get it:
- Apply directly at IRS.gov (it’s free)
- Takes about 15 minutes online
- You’ll receive your EIN immediately
Warning: Never pay for EIN services. It’s free from the IRS, and third-party services often charge $100+ for something you can do yourself in minutes.
Step 5: Open Your Business Bank Account
Keeping business and personal finances separate isn’t just good practice—it’s essential for liability protection.
What You’ll Need
For LLCs:
- Articles of Organization (approved/stamped)
- EIN confirmation letter
- Operating Agreement (recommended)
- Photo ID
For Corporations:
- Articles of Incorporation (approved)
- Corporate bylaws
- EIN confirmation letter
- Photo ID
Choosing a Bank
Consider these factors:
- Monthly fees and minimums
- Transaction limits
- Online banking features
- Local branch access
- Business lending options
Arizona banking options:
- National banks: Chase, Bank of America, Wells Fargo
- Regional banks: Zions Bank, Banner Bank
- Credit unions: Arizona Federal Credit Union, Desert Financial
Step 6: Register for Arizona Taxes
Arizona requires most businesses to register for state taxes before conducting business.
Transaction Privilege Tax (TPT)
This is Arizona’s version of sales tax, required for most businesses selling goods or services.
How to register:
- File with Arizona Department of Revenue
- Online registration available
- Required before making any sales
Other Arizona Tax Considerations
Withholding tax: Required if you have employees
Use tax: For purchases made out-of-state
Property tax: For business personal property
My recommendation: Work with a local accountant familiar with Arizona tax requirements. The state has unique rules that can trip up newcomers.
Step 7: Obtain Required Licenses and Permits
License requirements depend on your industry and location. Arizona is generally business-friendly, but certain activities require permits.
Common Licensed Activities in Arizona
Professional services: Legal, medical, accounting, real estate
Construction: Contractors, electricians, plumbers
Food service: Restaurants, food trucks, catering
Transportation: Towing, moving companies
Personal care: Barbers, cosmetologists, massage therapists
Where to Research Requirements
State level: Arizona Department of Health Services, various professional boards
County level: Each county has different requirements
City level: Municipal licensing departments
Resource: Arizona Commerce Authority provides helpful licensing guidance
Arizona Business Formation Costs
Here’s what you can expect to pay:
| Business Type | State Filing Fee | Additional Costs |
| LLC | $50 | Registered agent (~$100/year) |
| Corporation | $60 | Registered agent (~$100/year) |
| Sole Proprietorship | $0 | Trade Name ($10 if needed) |
| Partnership | $0 | Trade Name ($10 if needed) |
Plus common costs for all businesses:
- EIN: Free from IRS
- Business bank account: $0-50/month
- Business license: Varies by industry
- Operating Agreement/Bylaws: $0-500
Post-Formation Essentials
Get a Registered Agent
Arizona requires LLCs and Corporations to have a registered agent—someone available during business hours to receive legal documents.
Options:
- Serve yourself (if you have an Arizona address and are always available)
- Hire a service (recommended for most businesses)
Why I recommend professional services:
- Your address stays private
- No missed legal documents
- Professional appearance
- Reliability during travel
Create Your Operating Agreement or Bylaws
LLCs: Draft an Operating Agreement (not required but strongly recommended)
Corporations: Create corporate bylaws and maintain corporate records
These documents establish how your business operates, who makes decisions, and what happens in various scenarios.
Arizona Annual Requirements
LLCs: No annual report required (one of Arizona’s best features)
Corporations: Annual report required
This makes LLCs particularly attractive in Arizona—you avoid the ongoing paperwork burden many states impose.
Arizona-Specific Business Advantages
No Franchise Tax
Many states charge annual franchise taxes just for existing as a business entity. Arizona doesn’t, saving you hundreds or thousands annually.
Business-Friendly Legislation
Arizona actively courts businesses with favorable laws and reduced regulatory burden.
Strategic Location
Access to major markets in California, Nevada, and Mexico without the regulatory costs of California.
Growing Tech Sector
Phoenix is becoming a major tech hub, creating opportunities for B2B services and talent.
Common Arizona Startup Mistakes
❌ Choosing sole proprietorship for businesses with liability risk
❌ Skipping the EIN and trying to use personal SSN for business
❌ Not registering for TPT before making sales
❌ Using personal address as registered agent (privacy issues)
❌ Assuming no licensing required without proper research
❌ Mixing personal and business finances (destroys liability protection)
Industry-Specific Considerations
Real Estate
Arizona’s booming real estate market creates opportunities, but requires proper licensing and entity structure for liability protection.
Construction
Hot climate creates year-round construction opportunities. Licensing requirements are strict but reasonable.
Technology
Growing tech sector in Phoenix and Tucson. Consider Delaware incorporation if seeking venture capital.
Tourism/Hospitality
Seasonal businesses need to plan for fluctuating revenue and staffing. Multiple licenses often required.
Working with Professionals
When to Hire an Attorney
- Complex business structures
- Multiple owners with different interests
- High-liability industries
- Significant startup capital or investors
When to Hire an Accountant
- Complex tax situations
- Multiple income streams
- Employee payroll
- Industry-specific tax requirements
When to Use Formation Services
- You want to delegate the paperwork
- You need registered agent services anyway
- You’re forming multiple entities
- You want to ensure everything’s done correctly
My Arizona Business Formation Recommendations
For most small businesses: Form an LLC using Arizona’s online system. It’s fast, affordable, and provides excellent protection.
For high-growth companies: Consider incorporation if you plan to seek investment or go public.
For simple service businesses: LLC provides the best balance of protection and simplicity.
For partnerships: Form a multi-member LLC instead of a general partnership for liability protection.
The Bottom Line on Starting an Arizona Business
Arizona makes it relatively easy and affordable to start a business. The state genuinely wants you to succeed and has structured its laws accordingly. The key is choosing the right business structure for your situation and ensuring you comply with tax and licensing requirements from day one.
My standard recommendation: Form an LLC, get your EIN, open a business bank account, and register for applicable taxes. This covers the essentials for most businesses and sets you up for growth.
Arizona’s business-friendly environment is one of its biggest advantages—take advantage of it by starting your business properly from the beginning.
Ready to start your Arizona business? Whether you file yourself or use a formation service, make sure you understand the ongoing requirements and take advantage of Arizona’s business-friendly policies. The foundation you build now will determine how smoothly your business operates for years to come.
Questions about starting your specific type of business in Arizona? I’ve helped hundreds of entrepreneurs navigate Arizona’s business formation process across dozens of industries. The key is getting the structure right from the start based on your long-term goals.