How to Start a Business in Arizona
A Step-by-Step Guide for 2021
Thinking about launching your own startup but not sure where to start? We’ve got you covered. Our guide on how to start a business in Arizona walks you through everything you need to know to make your entrepreneurial goals come true. From forming your business to developing a marketing strategy — these are the steps you need to take to launch your own Arizona business.
Start an Arizona Business in 12 Simple Steps
Are You Ready to Start Your Own Company?
Before we jump into how to start your own business in Arizona, it’s important to make sure you’re ready to start your own company. Entrepreneurship is a rewarding and exciting career choice; however, it requires hard work and dedication to be successful. Take this entrepreneur quiz and find out how ready you are to launch a startup of your own.
Step 1: Choose a Business Idea
The first step to starting your Arizona startup is finding the right business idea. If you’re having trouble coming up with startup ideas, here are a few tips from our guide on How to Come up With Startup Ideas:
- Identify and solve a problem
- Focus on what you’re passionate about
- Get creative
- Conduct a brainstorming session
Fortunately, with a bunch of startup ideas to explore, finding the right startup idea can be less challenging than you might think. Not to mention, there are free tools such as this free business idea generator that makes choosing the right startup idea easier than ever.
Step 2: Plan Your Arizona Business
You’ve got your business idea; now it’s time to start turning it into a reality by planning your business. From choosing your business name to writing your business plan, this stage sets the groundwork for your startup in Arizona, outlining important business milestones and steps you will need to take to reach them.
Choose a Business Name
Deciding the best business name for your startup can seem a bit daunting. Fortunately, there are resources available to help you make the right decision, such as this business name generator. A few other things to keep in mind when choosing a business name:
- If you are marketing your startup in more than one location, avoid using a location in your business name.
- If you want your startup to be local, use our local SEO tool to help optimize your business name.
For a more in-depth look at everything you need to know about naming a startup, check out our guide on How to Name a Startup.
You can also search Godaddy for available domain names.
After securing a domain name, we suggest choosing a business phone system to improve customer satisfaction. Nextiva offers a top-notch phone service that integrates with all devices. Try Nextiva today.
Find a Business Location
Choose your location based on a) how many resources are in the area that can help you grow, and b) how much easier or harder it makes managing the business. Your business location will also determine specific requirements for your company, such as licenses and permits. Take your time, do some homework, and be strategic.
Identifying the best area for your business to set up shop is crucial to its success, a few of the most popular small business locations in Arizona to consider are Phoenix, Flagstaff, and Tucson. If you’d like to brush up on everything that goes into making this decision, refer to our guide on How to Choose the Perfect Business Location.
Conduct Market Research
Having an in-depth, concrete understanding of your market is essential to the success of your startup in Arizona. The best way to identify your competitors and target market is to conduct market research. Here are a few ways to conduct thorough market research:
- Conduct a survey.
- Hold a focus group.
- Do search engine optimization (SEO) research.
- Use existing research such as customer reviews.
The goal of this research is to develop an understanding of who your business will market to and how your business stands out from the competition. All of this research will inform your business strategy and improve your chances of success.
Write a Business Plan
Before starting your business in Arizona, you’ll need to make a business plan. A well-crafted business plan is important for many reasons, such as securing funding, managing cash flow, and tracking your progress as your business grows.
There are a few things to include when writing your business plan:
- Pitch: A quick, one-page summary of your plan that succinctly covers all the key points below (and more).
- Unique Selling Proposition (USP): A short phrase that captures the core mission of your business. For example, our USP at Startup Savant is “Entrepreneurship Simplified.”
- Target Market: Who you’re selling to and where to find them. It’s essential that you define your target demographic and the most effective ways to communicate with them.
- Marketing Plan: How are you planning to market your business? Establish a primary marketing strategy and decide how much you’re able to spend.
- Milestones: Where do you see your business in six months? A year? Five years? Setting up some initial goals is a great way to stay focused and track your business’s performance over time.
Recommended: For a more in-depth guide, check out our business planning guide to learn about creating a USP, marketing plan, executive summary, sales forecast, and anything else you will need.
If you’re feeling overwhelmed, consider using business planning software. There are several reliable programs out there that can help you create a detailed business plan. Take a look at our top 7 business planning software tools for an overview of our favorite programs.
Step 3: Get Funding
We all know that you need funding in order to start a business in Arizona, but before you can bankroll your startup idea, you need to know exactly how much money you need. Calculating your startup costs will help you know exactly what you need to get your business off the ground as well as the best funding choice to meet your needs.
To get started, we recommend referring to our guide of the Startup Costs Entrepreneurs Should Know.
Once you know how much capital you need to start your Arizona business, it’s time to explore your funding options. Deciding on the right financial backing depends on a few factors such as your startup’s growth potential, the type of business you’re starting, and the amount of capital you need.
Explore Business Funding Options
- Bootstrapping: Most startups are funded by the owner’s personal savings also referred to as bootstrapping. This funding method requires good money management and self-restraint. However, since you aren’t borrowing money from another source, you will have more money to invest back into your startup.
- Friends and Family: Funding your startup through friends and family loans is a great way to get capital from a trusted source, especially if you are having trouble securing funding from other lenders. If you plan to use this type of funding, it is important to make sure you have a written agreement and repayment plan.
- Small Business Grants: Believe it or not, small business grants are essentially money for your business that you don’t have to pay back. Many grants are industry-specific or geared toward women, veterans, and minority business owners. An important thing to keep in mind, while you do not have to repay grants, they often come with specific rules and requirements for how the funding is spent.
- Small Business Loans: Unlike small business grants, small business loans require repayment; however, they also provide an excellent source of capital for your business if you don’t have the money to fund it yourself. Small business loans are typically granted by banks or other lending institutions.
- Crowdfunding: Why have just one funding source when you can generate funding from a variety of people? Crowdfunding is just that - your business generates the funding it needs by several investors contributing money to actualize your business goal either for a return on investment or to simply support your entrepreneurial goals.
- Venture Capital (VC) Firms: VC firms are investors seeking investment opportunities with rapid expected growth in order to achieve the highest return on investment possible. This funding source is best suited to tech startups and other startups that are poised for high, fast growth.
- Angel Investors: An angel investor is similar to venture capital firms in that they both seek investment opportunities that will yield a high ROI. Comparatively, angel investors are typically individuals with money to spare that are willing to bank on riskier investments or startups that may have trouble finding funding elsewhere.
Learn how to plan, raise, and manage your funds by visiting this comprehensive guide to Small Business Finance. Once you feel like you’ve got a handle on the basics, reach out to your local Small Business Development Center. Arizona has dozens of SBDC locations across the state where you can get help with:
- Identifying sources of capital
- Finding loans
- Analyzing your cash flow
- Creating financial projections
The best part is that their business counseling is completely free unless you sign up for a paid workshop.
Step 4: Choose a Business Structure
Your next major task is going to be registering your business with the State of Arizona. Before you can do that, though, you need to determine which business structure you want to form. Check out our business structure comparison guide to get a more detailed idea of the advantages and disadvantages of each.
Let’s take a quick look at the business structures below:
If you’re doing business on your own without incorporating, you’re automatically seen as a sole proprietorship. Since it’s an informal structure, there is no need to file anything with the state unless you file for a “doing business as” (DBA) name, which allows you to operate under a name aside from your own legal name).
The main problem with this structure is that nothing is shielding you from business liability.
Another informal business structure, a partnership is an unincorporated business with multiple owners. Like sole proprietorships, partnerships offer no personal liability protection but do offer flexibility in terms of registration.
Limited liability companies (LLCs) are the most popular structure because they allow entrepreneurs to enjoy the protection of a corporation without the double taxation. Plus, you’re able to select whether you want to be treated as a corporation, partnership or sole proprietorship for federal tax purposes.
Corporations are generally the business structure of choice by large companies such as Apple. There are several types of corporations to choose from (S corporation, C corporation, B corporation, etc.), each with its own advantages and disadvantages. The benefits of starting a corporation is personal liability protection and potential tax benefits.
If your startup is focused on working for the greater good, a nonprofit business structure may be the right choice for you. While not all nonprofit organizations have tax exemption or 501(c)(3) status through the IRS, qualifying can save your startup money to reinvest back into making a difference. There are a few additional steps to start a nonprofit, including creating bylaws and establishing a board of directors. However, the benefits outweigh the cons if your startup fits this structure.
Step 5: Register Your Arizona Business
If you choose a formal business structure, no matter which one, there are a few things you can expect during the formation process including naming your business, choosing a registered agent, filing formation documents, and getting an Employer Identification Number (EIN). In addition to this, each business structure will have its own unique requirements. Here are the steps you need to follow in order to form an LLC, corporation, or nonprofit in Arizona:
Start an LLC
LLCs are the easiest business structure to form and maintain, requiring little paperwork and and six easy steps that you can do yourself or with the help of a professional service. Just be sure to submit your Articles of Organization for an LLC in Arizona online or submit the following forms by mail or in person along with the $50 filing fee:
Here is how to form an LLC in Arizona:
- Name Your Arizona LLC
- Choose a Statutory Agent
- File Your LLC With the State
- Complete State Publication Requirements
- Create an LLC Operating Agreement
- Get an EIN
Form a Corporation
Forming a corporation is a little more complicated than other business structures such as LLCs. However, for businesses that are well suited to this business structure, the benefits are immense. If you’re ready to form a corporation, file your Articles of Incorporation for an Arizona corporation online, by mail, or in person, along with the $60 filing fee. If submitting by mail or in person, you will also need to complete the following forms and submit them at the time of filing:
- Cover Sheet
- Director Attachment
- Incorporator Attachment
- Statutory Agent Acceptance
- Certificate of Disclosure
Here are the four steps to form a corporation in Arizona:
- Create a Name for Your Arizona Corporation
- Choose an Arizona Statutory Agent
- Choose Your Arizona Corporation’s Initial Directors
- File the Articles of Incorporation
Read our full guide on How to Start a Corporation in Arizona.
Form a Nonprofit
Finally, forming a nonprofit requires more legwork than corporations or LLCs, including drafting bylaws, selecting board members, and (if you choose to do so) applying for tax exemption. Once you’ve done so, submit your Articles of Incorporation for an Arizona Nonprofit online, by mail, or in person, along with the $40 filing fee. If submitting by mail or in person, note that in addition to the Articles of Incorporation document, you will also need to submit the following:
- Cover Sheet
- Director Attachment
- Incorporator Attachment
- Statutory Agent Acceptance
- Certificate of Disclosure
Here are the necessary steps you need to take in order to form an Arizona nonprofit:
- Name Your Arizona Nonprofit
- Appoint a Statutory Agent
- Select Your Board Members and Officers
- File the Arizona Articles of Incorporation
- Draft Bylaws and Conflict of Interest Policy
- Conduct an Organizational Meeting
- Get an EIN
- Apply for Exemption from Federal (501(c)(3) status) and State Taxes
Read our full guide on How to Form a Nonprofit in Arizona or have a professional service form a nonprofit for you.
Step 6: Set up Business Banking, Credit Cards, and Accounting
Using a dedicated business banking account and business credit card is essential for maintaining personal asset protection.
Once you register your Arizona business, you’ll need to take steps to protect your personal assets and establish your business as its own entity.
When your personal and business accounts are mixed, your personal assets (including your home, your car, and other valuables) are at risk in the event someone sues your business. In business law, this is referred to as piercing the corporate veil.
You can go a long way in protecting your assets with these three steps:
1. Open a Business Bank Account
A business bank account separates your personal assets from your company's assets, which is necessary for personal asset protection. A designated business bank account also makes accounting and tax filing easier.
To open up a bank account for your business in Arizona, you’ll need to obtain an EIN (Employer Identification Number). You’ll use your EIN in place of your social security number so that this account is completely separate from your personal finances. After this, start doing your research on various business bank accounts. Local options and national banks, like Chase, both have their perks.
Recommended: Read our guide to the Best Banks for Startups and Entrepreneurs to find the best online bank, ecommerce banks, the best for tech startups, real estate investment banks, and more.
2. Get a Business Credit Card
A business credit card helps you separate personal and business expenses. A business credit card will also help build your Arizona company's credit history, which in turn will help you raise capital later on.
Recommended: Learn about the best small business credit cards with our guide.
3. Set up Business Accounting
Accurate accounting and bookkeeping are essential to the financial wellness and success of any startup. From preparing and filing taxes to issuing payroll and even managing business expenses — every startup can benefit from hiring a business accounting service. Talk to a business accountant today to find out how much time and money your Arizona startup could save.
If you aren’t sure hiring a business accountant is the right choice for you, business accounting software tools are a good alternative. However, you run the risk of misfiling and overpaying taxes - especially if you don’t have experience in accounting or bookkeeping.
Step 7: Get Insured
The next step is to protect your startup in Arizona by getting business insurance. Depending on the type of business you’re operating, your insurance requirements and needs may vary. So, what is business insurance exactly? Business insurance protects your business’s assets from losses that can happen naturally while doing business, such as property damage or lawsuits. Here are the types of business insurance to consider:
- General Liability Insurance — this protects your business in the event that it faces a lawsuit.
- Professional Liability Insurance — this is typically used by business service providers such as accountants or consultants to protect you in the event of malpractice claims or other business errors.
- Workers’ Compensation Insurance — this protects you in the event that one of your workers is injured on the job and it is required in the state of Arizona.
Step 8: Obtain Permits and Licenses
Unlike many states, Arizona doesn’t require you to have a “general” business license. But, depending on the nature of your business, you may be obligated to obtain several permits and pay special taxes on a federal, state, and local level. Trust us, it’s worth putting the effort in now to avoid getting hit with a hefty fine later on.
Here are some great resources for learning about what taxes/licenses you might need to take care of:
- Federal: The Small Business Association website’s federal licenses and permits page is a great place to find the federal departments you may need to get in touch with (Department of Agriculture, Alcohol and Tobacco Tax and Trade Bureau, etc.) if your business deals with highly monitored goods or activities.
- State: This Transaction Privilege Tax PDF from the Department of Revenue outlines Arizona business taxes pretty succinctly, and directs you to the governmental units you may need to get in contact with. For licensing information, take advantage of their interactive licensing checklist.
- Local: Since regulations can vary from county to county and city to city, you’ll have to get in contact with your local chamber of commerce to find out if there are any local requirements your business needs to fulfill.
Since Arizona doesn’t require you to obtain a general business license, it’s possible that you won’t have to obtain any permits or licenses whatsoever — but it’s still important to put in the research to make sure.
If you end up feeling completely swamped with federal, state, and local license applications, you can always enlist the help of a business license service. These companies specialize in doing all the research on your behalf based on the specifics of your business, so all you’ll have to do is fill in a few details and sign your name on the forms. This isn’t necessary for every business, but it can be a real lifesaver in certain circumstances.
Step 9: Hire Employees
Unless you’re planning to operate your startup in Arizona alone, you will most likely need to build a team. The right team can create a strong foundation for your business and help propel it forward; however, there is more to it than just choosing the right people.
Before you start interviewing potential hires, make sure you know your employment requirements, such as registering for the proper employee taxes and setting up payroll. Take a deeper look at the process of hiring employees for your startup by reviewing this small business hiring guide.
Register for Arizona State Employee Taxes
If you hire employees, you will need to register for Unemployment Tax and Employee Withholding Tax through the Arizona Department of Revenue.
Step 10: Define Your Brand
Now that you’ve planned, formed, and made your Arizona business compliant, it’s time to build your brand. Having a professional and unique brand image is a great way to gain credibility and build an enthusiastic customer base. Many factors contribute to your brand image, but two of the main ones are your business name and logo.
Fortunately, creating a business name that accurately represents your brand is quick and easy with the help of this free business name generator. Once you have your business name squared away, get started creating the perfect logo for your business’s brand using this free logo maker by TRUiC or our friends at Tailor Brands.
Step 11: Build a Business Website
No startup is complete without a well-crafted business website. Your startup’s website serves not only as a resource for customers to learn important information about your business in Arizona — it is a visual representation of your brand. Depending on your experience level, you can build your business website yourself or use a website builder such as GoDaddy (full GoDaddy review).
Recommended: A website builder allows you to create and maintain a professional website without the headache, or massive expense, of building one from scratch. Check out our top 5 business website builders guide for prices and other information about our favorite services.
Step 12: Promote and Market Your Business
Promoting Your Arizona Business
It’s no secret that an effective marketing strategy is essential to growing a successful startup. Whether you’re issuing a press release, running a Facebook ad campaign, optimizing your Google listing, or a combination of these strategies, there are many marketing strategies available to promote your business in Arizona.
Press releases are a great way to communicate important information about your Arizona business to media outlets and potential clients. One of the best ways to ensure you are sending out effective press releases is to hire a press release distribution service that will not only write your press release but will ensure timely delivery to the most impactful sources.
Our favorite press release distribution service for startups is Sitetrail for their budget-friendly pricing and full-service offerings, including the writing and distribution of targeted press releases.
Creating a Facebook page is an impactful way to reach customers and expand your brand exposure. Not only does this platform give you a chance to showcase your business’s products and services, but you can also run effective ad campaigns depending on your business needs.
Keep in mind that creating a strong social media presence, especially on Facebook, requires time and effort in order to gain traction and produce results.
Google My Business
A Google My Business (GMB) account allows you to manage how your business in Arizona appears during Google’s search engine results (SERP) as well as Google maps. With a GMB account, you can share important information about your business, such as your hours of operation, your physical address, and your phone number. It also helps to increase brand awareness and communicate with customers.
Resources for Your Arizona Business
Below are links to our core resource guides that can introduce you to some savvy tools and insight if you’re not already familiar. You can also check out our comprehensive list of business resources.
- Business Incorporation Services: Our top pick is ZenBusiness.
- Business Planning Software: Our top pick is LivePlan.
- Business Accounting Software: Our top pick is Xero.
- Business Bank Accounts: Our top pick is Capital One.
- Business License Services: Our top pick is Incfile.
- Business Website Builders: Our top pick is GoDaddy.
- Logo Makers: One of our top picks is TRUiC's Free Logo Maker Tool.
The above content regarding how to start a business in Arizona is by no means legal advice, it’s for basic informational purposes and nothing more. For genuine legal assistance as you learn how to start a business, contact an attorney, other accredited professional, or service provider.