Last Updated 23 August 2017 | By:

How to start a business in Arizona (7 Simple Steps)

Step 1: Plan Your Business Idea

Write a Business PlanBefore taking any big leaps, you need to have a solid business plan. Business planning isn’t just smart — it’s essential for determining the validity of your business idea. Here are a few things you’ll outline in your business plan:

  • Your target market. Who exactly are you selling to? Be specific. Think about age, gender, occupation, income level, physical location, and any other relevant details. Once you know who they are, figure out the best ways to communicate with them. Are they active on FaceBook? YouTube? LinkedIn? Do they not use social media at all?
  • The market need. What problem does your product/service solve for your target market? How will you solve the problem better than your competitors?
  • Your mini-pitch and USP. Your unique selling proposition and mini-pitch are both intended to capture the mission of your business in a concise and catchy way. A USP should be a short phrase, and a mini-pitch should be one to two sentences long.
  • Your milestones. What do you plan to achieve in the next 3 months? 6 months? 2 years? Sure, you may not reach these at the exact increments you originally plan, but setting major milestones is still an important practice for keeping you motivated and on-track.
  • Your marketing plan. What’s your marketing budget? How and where do you plan on reaching your target market? Your strategy is bound to evolve over time, but you’ll lay out an initial approach in your business plan. 

Again, this is a super trimmed-down introduction to writing a business plan — there’s much more you’ll need to include, especially if you’re hoping to secure funding.

 

Resource Recommendation:

If you feel like taking a crack at this on your own, read through our definitive guide to writing a business plan for a look at everything it will entail. If you’re still up for the task, go for it — but if you’re like most new business owners out there, you could use some professional assistance.

Business planning software is a great way to hunker down on your business plan without having to write all the content off the top of your head. Check out our top 7 business planning software tools for a look at our favorite services!

Step 2: Form Your Business

How to Choose a Business StructureYour next major task is going to be registering your business with the state of Arizona. Before you can do that, though, you have to figure out what type of business you want to form: an LLC, S Corp, C Corp, or Sole Proprietorship. Let’s take a quick look at each:

  • LLC: The most popular business structure. Limited Liability Companies give small business owners the flexibility to choose how they’d like to be treated come tax time, and the same personal protection of a corporation. Arizona, like most states, also allows single-member LLCs, so you can reap the rewards of an LLC even if you’re the sole member of your company.
  • S Corp: Much more formal structure than an LLC, including a board of directors, corporate officers, and up to 100 shareholders. All the profit is claimed on the shareholders’ personal tax returns.
  • C Corp: No limit to the number of shareholders. The only structure that faces double taxation, as the shareholders and the business itself are both responsible for paying taxes on the profits. Check out our guide to forming a corporation in Arizona for more details.
  • Sole Proprietorship: The least formal structure possible — no need to file articles of incorporation/organization. You may want to file a DBA, though, in order to legally operate your business under a fictional name. Sole proprietorships are the highest-risk businesses, though, as there’s nothing protecting you from business liability. 

It’s extremely important to choose the right structure for your business, so don’t just choose one by default. Read over our business structure comparison guide to get a closer look at each option.

 

Resource Recommendation:

Filing all the necessary legal documents with the state can get technical depending on your business structure, and recruiting the help of an incorporation service is worth considering. Our top 7 business incorporation services is a great resource for learning about the best providers in the online filing industry.

Step 3: Tackle License & Tax Obligations

Small Business TaxesOnce you’ve formed your Arizona business, it’s time to make sure you’re totally compliant with the state.

Unlike most 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. They’ve got some information on business taxes too, but ultimately IRS is the best resource for finding out about federal tax requirements.
  • State: This free 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!

 

Resource Recommendation:

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 4: Create a Financial Foundation

Best Business Bank AccountNow’s the time to open a business bank account and completely separate your business and personal finances. Even if you’re running a sole proprietorship, it’s still a good idea to do this because:

  • It’ll make things a whole lot easier for you when tax time rolls around
  • You’ll be able to take advantage of waived fees and other incentives of business banking
  • It’ll help you better protect your personal assets

Letting your business and personal expenses get muddled never ends well, so make sure to take care of this as soon as possible. Keep in mind that you’ll need to acquire your EIN (Employer Identification Number) before you can open a business bank account. Read our guide to getting an EIN for free when it comes time for you to tackle this step!

 

Resource Recommendation:

Before settling on a bank, check out local options like Bank of Arizona and OneAZ Credit Union, and national options like Chase and Bank of America. Local and national business banking both have their perks, so it really comes down to choosing a bank that meets your top priorities. For you, this might be ATM accessibility, online banking, customer service or fee structures.

If your business has multiple members, talk this over together and arrive at a mutual decision to make sure you’re setting everyone up for success.

Once you’ve officially set up your shiny new business bank account, sync it with accounting software to start tracking your finances. This is especially important if you’re not working with an accountant yet! Check out our top software recommendations.

Step 5: Finance Your New Business

How to Finance a BusinessOnce you’ve got the fundamentals of your finances sorted, it’s time to get some money rolling in. The question is, from where? There are tons of funding options out there, so it’s best to decide based on:

  • The ownership structure of your business
  • Your current level of financial security
  • Your sales forecast
  • Whether your product/service could attract crowdfunding
  • Your personal credit

… and some other factors, depending on what approach you’re considering.

 

Resource Recommendation:

First, check out our guide to financing your new business where we cover everything from trade credit to social lending to angel investors. 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 6: Build A Brand

Build a Business WebsiteWhile every step so far has been largely logistical, this one gets down to the heart and soul of your business. Building your brand is all about capturing the essence of your company: your mission, your product/service, what sets you apart from your competition. Ideally, your company’s logo will encapsulate all of these to some degree.

When designing your logo, keep in mind:

  • Color counts. The colors your logo includes will play a significant role in a person’s initial impression of, and feelings toward, your business.
  • Distinctiveness is key. Your logo has to visually communicate that you’re different from your competitors. It’s better to be unique and memorable than to blend in with the crowd!
  • Professional aesthetic implies higher merit. Having a professional design is a great way to automatically increase your company’s perceived merit. Folks are more willing to trust a business that looks legit, and your logo is a big part of that.

 

Resource Recommendation:

For more information on choosing the perfect logo for your business, read our definitive guide!

Your website is another place where you can build your brand image, and a professional, relevant aesthetic will go a long way here, too. We think the best way to create a beautiful business website is through a service like StudioPress. Their platform is super user-friendly, and a great alternative to building a website from scratch. Check out StudioPress and some of our other favorite website builders!

Step 7: Market Your Business

Social Media ChannelHere comes the step that never ends: marketing your business! You’ve been doing this all along — including every barista, bartender and grocery clerk you’ve chatted with about your innovative idea. It’s a natural process in many ways, but also one that you need to approach strategically in order to maximize results. Merely networking isn’t enough anymore.

There’s so much to be said about marketing your business in the 21st century, but here’s a few main bullet points:

  • Know your target market. Without knowing who you’re selling to, you’ll be at a total loss when it comes to communicating with them. Knowing who your target customer is and where to find them — and we mean specifically, not just “25-30 year olds on social media” — is essential to successful marketing.
  • Don’t spread yourself too thin. Too often, small businesses’ marketing efforts fail because they try to take on too much at one time. Don’t try to master FaceBook and Twitter while running an email campaign and local newspaper ads. If you’ve done the proper research, you’ll know where the best place to reach your target audience is — odds are, dedicating consistent effort to marketing on that medium will pay off.
  • Make sure your strategy is measurable. If your marketing strategy isn’t measurable, you’ll have no clue what works and what doesn’t. You must have a way to gather analytics, and not just about vanity metrics (clicks, views, likes, etc.) — about the amount of sales you’re generating, too.
  • Be willing to evolve. If after a few months you find that your efforts simply aren’t getting results, you must be willing to revisit your strategy. This doesn’t necessarily mean throwing it all out and starting from scratch, but perhaps finding new, more effective ways to communicate with your audience. Or, maybe it does mean switching courses entirely. Be ready and willing to make calculated marketing decisions for your business.

 

Resource Recommendation:

Mastering the art of marketing is a full-time job, so naturally it’s best to delegate it to a professional. However, if hiring a marketer simply isn’t in the cards right now, read through our marketing guide for more tips and tricks.

There are tons of software solutions out there that can make marketing your business much, much easier. From scheduling social media posts to calculating ROI, modern software tools have truly revolutionized the way many entrepreneurs go about marketing — and many of them are quite inexpensive or totally free. We list several of our favorite resources at the tail end of our marketing guide!