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Arizona Business License Basics

Arizona Business License Basics

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Arizona Business License Basics

Starting a small business in Arizona often means registering with several federal, state, and local agencies. Let’s review common Arizona business license registrations so your business starts off right.

Related: Guide to starting a business in Arizona 

First Step – Set Up the Business

Sole proprietorship: In Arizona, a sole proprietorship is a business owned by one person. It is the simplest form of business structure, with no legal distinction between the owner and the business. The owner has complete control over the business but is also personally liable for all debts and obligations.

General partnership: A general partnership in Arizona is an agreement between two or more individuals to operate a business together. No formal setup is needed, but a partnership agreement, but it’s a great idea to draw up a partnership agreement to outline operations and responsibilities.

Corporation: An Arizona corporation is a legal entity separate from its owners, known as shareholders. It offers limited liability protection, meaning shareholders are not generally personally responsible for the corporation’s debts and liabilities. The downside is that corporations are the most complex structure to start and operate. 

Limited Liability Company (LLC): An Arizona LLC combines aspects of a sole proprietorship or partnership and a corporation. It provides limited liability protection to its owners, called members, shielding their personal assets from the company’s debts and liabilities, in addition to a flexible management and tax structure.

Related: Comparison of Business Structures

What Licenses Do Arizona Businesses Need?

With the business structure out of the way, we can begin looking at the different types of registrations businesses in Arizona may need. There isn’t a standard business license, as requirements vary depending on where the business is located and its activities. Here is a general overview of the different registrations your business may need.

Business Licenses

There is no general state of Arizona business license, however, many cities require businesses to be licensed in order to operate. Rules for business registration vary depending on location and what the business does. Below are a few cities that have licensing requirements.

  • Phoenix: Amusement businesses, massage establishments, vending machines, mobile food vendors, and others require licensing from the City of Phoenix.
  • Tucson: The City of Tucson requires a license for businesses operating within City limits, including businesses operating out of personal residences.
  • Mesa: Common businesses requiring a business license in Mesa include; pawn shops, antique dealers, massage establishments, scrap metal dealers, and more. Licensing is through the City of Mesa.
  • Chandler: The City of Chandler requires a Business Registration Application for each business with a physical location operating within City limits.
  • Flagstaff: A business license is required for any business operating in or providing a service within the City of Flagstaff. Home-based businesses are also required to complete the Application for Home Occupation Permit.
  • Prescott: City licensing is required for special events, liquor sales, and peddlers or solicitors who sell products and services door-to-door.
Take the guesswork out of figuring out what licenses and permits are required to start your business with license research packages from Bizee and LegalZoom.

For as little as $99, you can save a lot of time and know your business is in compliance with local, state, and federal requirements. 

Trade Name Registration

Sole proprietorships and partnerships in Arizona that want to operate under a business name other than the full name of the owner(s) will register for an Arizona Trade Name (also known as a Doing Business As or DBA) with the Arizona Secretary of State.

State Liquor License

Businesses selling alcohol will need to apply for a liquor license with the State of Arizona Department of Liquor Licenses and Control.

State Transaction Privilege Tax License (TPT)

The most common license from the state a business may need to register for is the Arizona Transaction Privilege Tax (TPT) from the Arizona Department of Revenue (ADOR). The TPT is typically referred to as a sales tax permit but is actually a tax on the gross sales of a business.

Resale Certificate

After obtaining the TPT, most businesses will want to obtain an Arizona Resale Certificate. This allows them to not pay sales tax on their inventory purchases meant to be resold to customers.

Professional / Occupational License

A variety of professions and occupations in the state are regulated and need to be registered before offering certain services. A few common occupations that require licensing in Arizona include; construction, transporting for hire, massage, child care, home inspection, pest control and many more. Additional information, fees, and licensing requirements for professions are available from the Arizona One Stop.

Employer Identification Number (EIN)

The Arizona Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses operating in Arizona. It is used for tax filing and reporting purposes, similar to how an individual uses a Social Security number. Companies can apply for an EIN through the IRS website or by submitting a paper form.

Next Steps

While it’s a good start, there are so many different licenses that may be needed. Double-check with the City Clerk’s Office, Chamber of Commerce, and/or Economic Development office in your area before opening your doors.

Author

  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

Arizona Business License Basics

Arizona Business License Basics

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