How to Register a Business in Arizona

by Jennifer Kiesewetter in August 20th, 2021
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TLDR

  • With Phoenix as the fifth largest city in the U.S., Arizona is a hotbed for startups, entrepreneurs, and founders.
  • When you register a business in Arizona, you'll need to satisfy several requirements, which will allow you to launch your startup legally.  Before registering, though, it’s a good idea to map out your business, including your location, your ideal customer, and your marketing and sales approach, to name a few topics. You can do this by drafting a business plan.   
  • In Arizona, you can choose from several different types of business structures. One of the more prevalent business types is the sole proprietorship.
  • In addition to choosing your startup’s structure, you'll also have to choose a name. When picking a name for an LLC, corporation, or limited partnership, you’ll need to distinguish it from any other business names already registered with the state.
  • Next, after you choose your startup’s name, you need to identify a registered agent. The Arizona Corporation Commission requires that every corporation or LLC doing business in Arizona must maintain a registered agent or a statutory agent.
  • Depending upon your chosen entity for your startup, you will have to pay your initial filing fee payment as well as any additional annual filings, and any taxes.
  • You’ll submit your paperwork to either Arizona’s Secretary of State (partnerships) or Arizona’s Corporation Commission (LLCs, corporations).   For new entities, the state of Arizona provides sample forms for your use or review.
  • If you founded a startup in a state other than Arizona, but you’d like to conduct business in Arizona, you’ll have to register your business as a foreign entity. Whether a business is a domestic or foreign entity depends upon where the startup was formed and which state governs its management and operation.

With Phoenix as the fifth largest city in the U.S., Arizona is a hotbed for startups, entrepreneurs, and founders. Often dubbed the “Silicon Desert,” JLL’s US Technology Outlook stated that, “Phoenix has become a magnet to tech entities for three main reasons: a lower cost of doing business, a more affordable quality of life, and a strong and growing talent pool,” as cited by TechAZ.org.

Furthermore, Arizona is home to 592,485 million small businesses, making up 99.4 percent of all companies in the state. Additionally, these small businesses employ 1.1 million people.

As you’re launching your startup and exploring where to locate your new business, this article will explore registering your business in Arizona.

When Do You Need to Register a Business in Arizona?

When you register a business in Arizona, you'll need to satisfy several requirements, allowing you to launch your startup legally. Before registering, though, it’s a good idea to map out your business, including your location, your ideal customer, and your marketing and sales approach, to name a few areas of operation. You can do this by drafting a business plan.   

To help guide you in drafting your business plan, you can check in with the U.S. Small Business Administration or SCORE, which focuses specifically on small businesses and startups. Arizona also offers numerous resources for founders when launching a startup, in addition to resources specifically for entrepreneurs. Once you’ve identified some of the basics about your startup’s operation, it is time to register your business.

Below, we've broken the Arizona requirements into an easy step-by-step process.

Determine Your Startup’s Entity Structure

Before you register your startup in Arizona, you must first determine its legal entity structure. When deciding upon your start-up’s structure, it’s a good idea to discuss your options with your accountant or attorney, as they can advise you in detail about the ownership, management, and tax benefits and drawbacks of each structure.

In Arizona, you can choose from several different types of business structures. One of the more prevalent business types is the sole proprietorship. If you operate as a sole proprietorship, you do not have to file your startup in Arizona formally. Instead, any profits or losses are reported on your personal tax return.

You also have a choice between a general partnership, a limited partnership (LP), limited liability partnership (LLP), or limited liability limited partnerships (LLLP). Like a sole proprietorship, a general partnership is not required to file in Arizona formally. However, both limited partnerships, limited liability partnerships, and limited liability limited partnerships must file with Arizona’s Secretary of State.

Founders also can choose between limited liability companies (LLCs) and corporations, which must be filed with the Arizona Corporation Commission. An LLC is a “flexible form of enterprise that blends elements of the partnership and corporate structures.” A corporation, on the other hand, is “[t]he most complex type of business organization. It is formed by law as a separate entity, completely distinct from those who own it, and has its own rights and responsibilities.”

Choose Your Startup’s Name

In addition to choosing your startup’s structure, you'll also have to choose a name. When picking a name for an LLC, corporation, or limited partnership, you’ll need to distinguish it from any other business names already registered with the state. You can check for available names by visiting Arizona’s entity search database.  

Additionally, you’ll need to follow Arizona’s naming conventions. For example, if your startup is an LLC, then you must include the words “limited liability company” or “limited company,” or the abbreviations of either. As an LLC, you may not use “association,” “corporation,” or “incorporated” in your startup’s name.

Suppose you’re not ready to register your business in Arizona, but you want to reserve your startup's name. In this case, you can reserve a business name, giving you 120 days to submit your entity documents with the state. Arizona notes that “[n]ame reservations obtained online will be given preference and priority over paper name reservations applications, and will be granted immediately.”

To reserve a name for your startup, you’ll pay a nonrefundable filing fee of $45. If you want to file a paper application without immediate approval, you’ll only pay a nonrefundable $10 filing fee.

Note that reserving a startup name is not the same as registering a “doing business as” or DBA name. DBA names are also called trade names. For trade names, you’ll need to file the appropriate documentation with the Arizona Secretary of State’s office, not the Arizona Corporation Commission. Depending on where your startup is located, you also may file your trade name with your county recorder’s local office.

Identify Your Registered Agent

After you choose your startup’s name, you need to identify a registered agent. The Arizona Corporation Commission requires that every corporation or LLC doing business in Arizona must maintain a registered agent or a statutory agent.

A statutory agent is “an individual or a business entity that a corporation or LLC appoints for the purpose of accepting service of process (lawsuit or legal documents) for the corporation or LLC.”

For Arizona partnerships, you’ll designate your registered agent on your formation forms and then submit those forms to Arizona’s Secretary of State.

Submit Your Formation Forms

Finally, after completing the above steps, it's time to submit your formation forms to either Arizona’s Secretary of State (partnerships) or Arizona’s Corporation Commission (LLCs, corporations).   For new entities, the state of Arizona provides sample forms for your use or review.

For example, if you choose to register as a limited partnership, you will file a Certificate of Limited Partnership with Arizona’s Secretary of State to create your startup. You’ll pay a filing fee of $10, plus $3 per page. Typically, processing takes two to three weeks. However, you can expedite your filing by paying an additional $25.

How Much Does It Cost to Register a Business in Arizona?

Depending upon your chosen entity for your startup, you will have your initial filing fee payment, any additional annual filings, and any taxes. For example, you must pay a $50 filing fee for registering an LLC  or a for-profit corporation ($85 for an expedited filing). For a corporation’s annual report filing, the founder must pay $45 or $80 for expedited filing.

In addition to filing and annual fees, new businesses must also register with the Arizona Department of Revenue for tax purposes before conducting business. Most Arizona businesses are subject to corporate income taxes.

Additionally, most Arizona startups must apply for specific business licenses, such as a transaction privilege tax license, a withholding tax registration, a regulatory license, or a local business license.

The Arizona Department of Revenue provides resources for entrepreneurs and founders, such as "A Guide to Taxes for Arizona Businesses." This resource describes both the taxes and licenses required for Arizona businesses. Note that to understand how much your startup will cost, you should consult with an accountant familiar with Arizona’s tax rules.

How to Register a Business in Arizona that Started in Another State

If you founded a startup in a state other than Arizona, but you’d like to conduct business in Arizona, you’ll have to register your business as a foreign entity. Whether a business is a domestic or foreign entity depends upon where the startup was formed and which state governs its management and operation. For example, a startup that is registered in Arizona is a “domestic” startup. Say you have a Delaware registered startup, but you want to conduct business in Arizona, your business would be considered a “foreign” startup.

To register as a foreign for-profit corporation, you’d file an Application for Authority to Transact Business or Conduct Affairs in Arizona with the Arizona Corporation Commission. The filing fee is $175, with an additional $35 fee for expedited processing.

The Benefits of Registering a Startup in Arizona

Registering a startup in Arizona comes with many benefits. According to the 2020 Census, as reported by azcentral, “Phoenix grew at a faster rate than any other major city in the last decade, officially surpassing Philadelphia as the nation's fifth-largest city, new data from the 2020 census show ... Phoenix grew by more than 160,000 people from 2010 to 2020, an increase of 11.2%.”

Arizona also has a lower cost of doing business than other areas in the U.S., thanks to low office space costs and a more affordable quality of life. According to TechAZ.org, “[a] Phoenix resident earning an annual salary of $50,000 would have to earn $91,275 in San Francisco to maintain a similar quality of life.”

Additionally, Arizona boasts top-notch educational institutions, such as Arizona State University (ASU). ASU’s Tempe campus ranks ninth in the nation in helping students transition from high school to college, while ASU’s main campus ranks number 16 nationally in undergraduate teaching, helping to produce high-quality talent for local businesses and startups.

The Limitations Associated with Registering a Startup in Arizona

There aren’t that many limitations associated with registering your startup in Arizona. However, here are a couple of points to keep in mind:

  • Like other states, it can often be challenging to find startup capital.
  • Where Arizona has a lower cost of living, it also has lower income per capita than the national average. This directly impacts how many discretionary funds residents have to spend on goods and services, which may include those of your startup’s.

We can help!

At AbstractOps, we help early-stage founders streamline and automate regulatory and legal ops, HR, and finance so you can focus on what matters most — your business. If you're looking for help registering your Arizona startup, we can get your documentation ready, overall shepherding this process to ensure it's done right. Drop us a note at hello@abstractops.com.

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Note: Our content is for general information purposes only. AbstractOps does not provide legal, accounting, or certified expert advice. Consult a lawyer, CPA, or other professional for such services.

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