If you’re planning to start a business in Arizona, obtaining the necessary licenses and permits is an important step. While Arizona doesn’t have a statewide “general” business license, most businesses are required to apply for specific licenses at the local, state, or federal level depending on the type of business. This step-by-step guide will help you navigate the process smoothly.
Step 1: Determine Your Business Structure
Before applying for a business license, you’ll need to decide what type of legal structure your business will take. Common structures include sole proprietorships, partnerships, LLCs, and corporations.
- Tip: Most new businesses opt for LLCs because they provide liability protection and are easier to set up than corporations.
Once you’ve decided, you must register your business name with the Arizona Corporation Commission (for LLCs or corporations) or the Arizona Secretary of State (for trade names).
Key Resources:
- Arizona Corporation Commission (https://ecorp.azcc.gov/)
- Arizona Secretary of State (https://azsos.gov/)
Step 2: Obtain an Employer Identification Number (EIN)
If your business has employees or is structured as a corporation or partnership, you’ll need to obtain an EIN (Employer Identification Number) from the IRS. It’s used to identify your business for tax purposes.
- How to Get It:
- Visit the IRS website here to apply online.
Step 3: Check Local Licensing Requirements
Arizona does not issue a general business license at the state level, but most cities and towns have their own licensing requirements. Check with your local city government to find out what licenses are required for your type of business.
Examples of Local Licensing:
- Phoenix – Apply for a privilege (sales) tax license if you sell goods or services. Learn more at the City of Phoenix website (https://www.phoenix.gov/).
- Tucson – Businesses must apply for a City of Tucson Business License. See details (https://www.tucsonaz.gov/).
- Scottsdale – Businesses operating in Scottsdale must apply for their Business Registration. More info is available (https://www.scottsdaleaz.gov/).
Step 4: Apply for a TPT License (For Sales Tax)
If your business sells goods or services subject to sales tax, you’ll need a Transaction Privilege Tax (TPT) License, issued by the Arizona Department of Revenue (ADOR).
- Steps:
- Register your business with the ADOR at AZTaxes.gov.
- Complete your application for a TPT License.
- Tip: Even if your business is service-based, check if it still requires a TPT License. Certain services like landscaping or contracting are subject to tax.
Step 5: Check for Industry-Specific Licenses
Depending on the type of business, you might need additional state-level or industry-specific licenses. Some common industries requiring special licensing include:
- Food Establishments – A permit from the local health department is required.
- Contractors – A license from the Arizona Registrar of Contractors is mandatory.
- Childcare Providers – Licensing is handled through the Arizona Department of Health Services.
Pro Tip:
Use the Arizona Commerce Authority’s Business Licensing Requirements Tool (link) to find industry-specific licensing requirements for your business.
Step 6: Stay Compliant with Ongoing Requirements
Once you’ve obtained your licenses, ensure your business remains in compliance with state and local rules. Common requirements include:
- Paying your taxes on time (sales tax, employer taxes, etc.).
- Renewing any licenses annually or as required by your specific city or industry.
Final Checklist:
- Decide your business structure and register your name.
- Apply for an EIN (if required).
- Check and apply for local or city business licenses.
- Obtain your TPT License for tax purposes.
- Apply for any required industry-specific permits or licenses.
Starting your business in Arizona can be a straightforward process as long as you stay organized and ensure you meet all licensing and permitting requirements. Take your time to go through each step, and don’t hesitate to consult with a local business attorney or advisor if you have any questions.