Starting a New Business in Arizona
April 7, 2022
The 928 Law Firm offers this helpful guide to understanding the basics for starting a new limited liability company ("LLC") or corporation in Arizona. These steps are for informational purposes only, and do not provide legal advice or opinions. Hiring a lawyer to assist you in this process is the best way to know that you are in full compliance with Arizona law and that your company is properly created. If you wish to start an Arizona business, The 928 Law Firm can help you in this process. If you're looking for information about maintaining or fixing problems with an existing LLC, check out our blog called Getting the Most out of Your LLC.
Starting with A Business Idea
As the potential owner of a business, you (and any partners you wish to have) are in the best position to determine exactly what your business will do. First, you will need to research different possible ideas for what your business will do. As the future business owner, you will want to consider your personal skills, ideas, finances, resources, time commitment to the company, and why you wish to form the business. You will also want to assess the likelihood of success based on the needs of your potential customer base and the public need for such a business in the geographic location that your business will serve.
Start by writing a business plan which evaluates your company’s potential for profitability. When writing this plan, you should also assess your possible startup costs, existing competition, and strategies for profitability. This type of business plan will help investors and lenders in their review your potential business before they provide any possible financial assistance. We also recommend that you have your business plan reviewed by somebody with extensive experience in the industry, or by your local Small Business Development Center.
Choosing Your Legal Structure
Common company structures include:
Limited liability company (LLC): One or more members/managers form a company that limits the liability of the member(s)/manager(s), and may have tax advantages in some circumstances
Corporation: One or more shareholders form a company that can have various classes of stock and numbers of shareholders
Professional limited liability company or professional corporation: A variation of a standard LLC or corporation which may or must be used when the company will be used by certain licensed professionals
Sole proprietorships: One person forms a business without the benefit of using a separate legal entity
Partnerships: Two or more persons form a business without the benefit of using a separate legal entity
In addition to these common company structures, there are also more specialized company structures including non-profit companies, closely held corporations, limited liability partnerships, S-corps, and C-corps. If you form a new company without consulting with legal counsel, you may later need to change your business structure, which could be costly and disruptive to your business. The 928 Law Firm is experienced with a wide range of company structures, and we can ensure that you choose the best option for your business.
Selecting a Name for Your Company
Once you have chosen a name for your company, a lawyer can let you know if the name contains any prohibited characters or other terms, and can also search government records for the proposed name to see if it is already being used by another person or company. If the name is already taken, you may be completely prohibited from using the name for your business, or you may be able to use it with certain limitations. Alternatively, if the name is available, a lawyer can form your company right away to secure the name, or temporarily reserve the name so that it is unavailable for others to use during that time. A lawyer can also help you reserve and secure a trade name that you may want to use for doing business rather than using the company’s formal legal name.
Creating Your Business Entity with the State of Arizona
Arizona imposes different registration requirements depending on the type of business that you are forming. The 928 Law Firm is familiar with a wide variety of business types, and can ensure that you choose the correct business structure and prepare to be compliant with other requirements such as city business licenses, state and local TPT (sales tax) licenses, federal excise taxes, and other categorical requirements. Our lawyers can also ensure that you remain in “good standing” with the state so that the Arizona Corporation Commission does not dissolve your company due to noncompliance with regulatory requirements.
Getting an EIN, Licenses, and Permits
Getting an EIN/TIN: Although doing so is not always required, most businesses should have their own EIN/TIN (employer identification number / taxpayer identification number) with the Internal Revenue Service so that it is recognized as a separate legal entity for tax purposes, rather than its tax information being directly associated with your social security number. The 928 Law Firm can get your business’s EIN for you, which will allow you to open bank accounts and take other official actions in your business’s name.
Getting a TPT license: Most businesses that sell goods and services in Arizona must have a TPT license and file monthly tax returns with the Arizona Department of Revenue (AZDOR). The 928 Law Firm can get your TPT license and help you understand your obligations for filing periodic TPT returns.
Other Registration Requirements: If your business will have workers such as independent contractors or employees, then it may be required to have workers’ compensation insurance and/or pay unemployment insurance. The 928 Law Firm can determine whether any such registration requirements apply to your business, and can help you comply with them.
Regulatory licenses and permits: Depending on the nature of your business, you may also need to apply/register for other necessary permits and licenses. For example, the state and federal governments impose special licensing and permitting requirements for breweries, wineries, tobacco and cannabis companies, gas stations, trucking companies, and other businesses. The 928 Law Firm can determine whether any such license and permit requirements apply to your business, and can help you comply with them.
Determining Your Business Location and Zoning Requirements
The location of your business is important in certain types of companies due to state and local zoning requirements that you may have to follow to open your business and keep it in good standing. In addition to location limitations for certain business types such as alcohol-serving establishments, there are also regulations applicable to businesses that are run from your home without a physical business location. Before you sign a lease or settle on your location, The 928 Law Firm can help you ensure that the location you ultimately choose is appropriate for your business.
Getting Business Insurance
Business insurance is an important way to protect yourself and your company from unexpected potential losses. Depending on what your business does, you may want to obtain general liability insurance, liquor liability insurance, loss-of-income insurance, or other policies. The 928 Law Firm is familiar with a wide variety of losses that can affect businesses, and whether there may be insurance policies available that can protect from these types of losses.
The 928 Law Firm is Here for You
When The 928 Law Firm forms a new LLC or corporation for a client, we take great care to ensure that we understand how you will use your company, and we make sure that you are ready to use your company properly. Specifically, when you hire us to form an company, we will:
Discuss how you will use your company to ensure that we understand your goals and objectives;
Pay the AZCC’s expedited processing fee so that your company is ready for use more quickly;
Arrange and pay for publication of your company’s articles of organization (or incorporation), which is generally required by the AZCC;
Contact the IRS to get an employer identification number (“EIN”) which will allow you to open bank accounts for your new company;
Get a transaction privilege tax (“TPT”) license, city business licenses, and any other licenses you may need to legally operate your company;
Get a trade name certificate for your business, if it will publicly do business under a name other than its legal company name;
Prepare “Meeting Minutes,” which you may need in order to open bank accounts and take other official actions on behalf of your new company; and
Advise you on how to insure your company and manage its finances so that you get all the legal protections available for an company.
The 928 Law Firm is experienced with a wide variety of business types and issues, and can help ensure your business’s success. Whether you are forming a new company or needing to fix issues or problems with an existing business, The 928 Law Firm can help. Mention this article when you call our office, and we’ll give you a free 30-minute consultation to help with your business.