Check The Availability Of Your Desired Name
If another business is using your desired trade name, you won’t be able to use that name or something similar. Search the website of the Arizona Secretary of State to check availability. Also, check with the county recorder’s office where your main office will be located. There are a few other important points to consider, such as:
- Names that have been trademarked cannot be used
- Check the federal trademark database website to ensure your desired name hasn’t been trademarked.
Open A Bank Account And Prepare For Future Taxes
Accounting can be difficult for first-time business owners to manage, especially if personal and business finances arenât kept separate. One way to keep the two separate is to open a business bank account. You would strictly use this account for business transactions such as invoicing and paying for expenses.
Along with a business bank account, itâs a good idea to obtain a business credit card. A credit card provides additional funds for the company, but it can also help build credit. You can use good credit in the future to secure business loans as needed.
Taxes are unavoidable and should be prepared for in advance. For example, since every business will need to file a tax return at the end of the year, preparing federal tax, income tax, and state tax in advance can save time during tax season.
Submit Your Formation Forms
Finally, after completing the above steps, it’s time to submit your formation forms to either Arizonas Secretary of State or Arizonas Corporation Commission . 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 Arizonas Secretary of State to create your startup. Youll 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.
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When Should A Sole Proprietorship Become An Llc
It is time to go from a sole proprietorship to an LLC when you are serious about growing your business and earning a profit.
Sole proprietorships are only good for very low-profit/low-risk businesses.
Example: A sole proprietorship is a good way to start out if you are doing business on a small scale or want to try out a low-risk venture to see how successful it will be.
Forming an LLC allows business owners to grow their businesses and take on risk. This is because LLCs provide personal liability protection.
What is personal liability protection? When a business owner has personal liability protection, they cant be held personally responsible if the business suffers a loss. This means personal assets are protected.
Our Picks For Registered Agent Services
Northwest can help. Youll need to file official documents to establish your business. The process is a little different in each state, but Northwest has offices all over the U.S. and helps business owners with this very thing every day. Northwest also offers registered agent services, annual report filings, and some free legal documents that pertain to starting a business.
ZenBusiness aims to help business owners start, run, and grow their businesses. When youre getting started, take advantage of the filing options, like setting up an LLC and business formation plans. Later on, you might want to take advantage of their registered agent services, domain name registration, or annual report filing.
Incfile offers a great library of material to help first-time business owners figure out what kind of business they should set up. From there, Incfile will aid with documentation and filing procedures and demystify terms like registered agent, articles of organization, and EIN. The company has a strong reputation and great reviews online too.
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Set Up Business Banking Credit Cards And Accounting
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
You can protect your Arizona business with these three steps:
1. Opening a business bank account:
- Makes accounting and tax filing easier.
3. Setting up business accounting
An accounting system helps you track the performance of your business and simplifies annual tax filings. Quality accounting software lets you download your bank and credit card transactions, making accounting fast and easy. Learn more about the importance of accounting and how to get started with accounting today. Or, hire a business accountant to help you navigate all your business accounting and tax needs from payroll to sales tax.
Recommended: An accounting service could be saving your business thousands of dollars a year. Schedule a consultation with a business accountant today.
What Is A Single Member Llc
A single member LLC is similar to a sole proprietorship as there is only one owner, however unlike the sole proprietorship they will be protected with limited liability. A single member LLC will have to follow the same formation guidelines as a normal LLC, but they are not allowed to have multiple owners.
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Register Your Business In Arizona
You have your business name, youve chosen your business entity and youve written your business plan. Now, its finally time to make starting a business in Arizona official by registering your business with the state.
Select a statutory agent
In Arizona, a registered agent is called a statutory agent and their responsibility is to receive business-related tax and legal documents on your behalf. Retaining a statutory agent is a requirement to register and operate your business in Arizona.
Hiring a professional statutory agent does have its advantages but you can appoint yourself, a business partner, or even a trusted friend as your statutory agent. Just verify that that individual is over 18 years old, a resident of Arizona and is always available during normal business hours.
Create an eCorp account
Starting a business in Arizona is more convenient now that you can register your business online with eCorp, Arizona’s web-based application to “manage the life cycle of your business registration. After you create your eCorp account, you will be directed to the online registration process.
File registration papers with the state
The type of paperwork you need to file when registering your business depends on which business entity you choose. Sole proprietors may have to file a DBA with the state, as well discuss below.
Please note that you will be charged a filing fee when submitting your application .
Filing for a DBA in Arizona
Determine Your Startups Entity Structure
Before you register your startup in Arizona, you must first determine its legal entity structure. When deciding upon your start-ups structure, its 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 , limited liability partnership , or limited liability limited partnerships . 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 Arizonas Secretary of State.
Founders also can choose between limited liability companies 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 he most complex type of business organization. It is formed by law as a from those who own it, and has its own rights and responsibilities.
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Sole Proprietorship Vs Llc
A sole proprietorship is an unincorporated business that one person owns. It is the easiest way to establish, maintain, and take apart , primarily because of the lack of government regulation. It allows small-scale business owners to try out the business venture. If its a small start-up business, its the only business structure that makes sense.
When mulling over an LLC ownership, keep in mind that the advantage of being a sole proprietor is that, as the owner, you pay personal income tax on the earned profits. But a business owner of a sole proprietorship is not exempt from liabilities incurred by the business. The owners personal assets and savings are at risk in case of legal challenges or if the business incurs debt.
This is where turning a sole proprietorship into an LLC comes into play. The main feature of a limited liability company is that it separates the owners personal assets from the business and, therefore, protects the property, ensuring that the business debt remains with the company. This business structure is between a sole proprietorship and a partnership, allowing for multiple owners .
The requirements for LLCs are minimal, and though they are encouraged to follow the same guidelines as some corporations, they arent legally required to do so.
|NOTE: Northwest Registered Agent is thought to be a great LLC option. In addition, it offers a Free Registered Service Agent for one year, as well as IncAuthority, Swyft Filings, and MyCompanyWorks.|
Obtain Business Permits Licenses And Zone Clearance
Arizona does not require a general business license by a sole proprietor but depending on the nature of the business activity you may need to acquire a business license to work in a compliant manner. Which state-level license your business will be needing depends upon the services or goods you offer as a sole proprietor. Business One Stop section of the State of Arizona website provides comprehensive information regarding the occupation or profession that require a state license.
Additionally, local regulations such as building permit, license, zone clearance etc may apply to your business. You need to check the license requirements of the county in which you intend to operate as a sole proprietor.
Moreover, a sole proprietor with taxable sales greater than $10,000 must obtain a standard business license from the local county clerk. In case your sales are less than $10,000. You may still need to get a minimal activity license from the local county office. Arizona Department of Revenue website, Registration, and Licensing section provides in-depth information on such licenses.
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How To Become An Arizona Sole Proprietor
When it comes to being a sole proprietor in the state of Arizona, there is no formal setup process. There are also no fees involved with forming or maintaining this business type. If you want to operate an Arizona sole proprietorship, all you need to do is start working.
However, just because its so easy to get started doesnt mean there arent some additional steps you should take along the way. While these parts of the process arent strictly required, many sole proprietors find that they are in their best interests.
How To Start A Sole Proprietorship In Arizona
If you are searching for a suitable business model for a small business owned by a single person in the state of Arizona, you might consider sole-proprietorship.
For a one-person business with fewer formalities, a sole proprietorship could be an excellent choice.
Not from Arizona? Learn to become a Sole Proprietor in any other State.
Point to Ponder! A sole proprietorship is not a formal/legal business entity like an LLC or a corporation. And there is no personal asset protection against any liability in the case of a sole proprietorship. Therefore we recommend forming an LLC, the most popular entity for small businesses. You can form an LLC by yourself or hire a service like Zenbusiness, to let them get the paperwork done for you.
A sole proprietorship is the most straightforward and easiest business model in the United States of America. Like every other state, in Arizona too, you do not need to file any legal document with the state government of Arizona to establish a one-person business also known as a sole proprietorship. Hence, a sole proprietorship is not a legal business entity like LLC or a corporation.
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How To Start A Business In Arizona
Rated by Forbes as one of five states with the best economic growth prospects, starting a business in Arizona is a great choice for entrepreneurs. Start your business today with our simple step-by-step guide and get on the fast track to financial and personal independence.
If you get stuck along the way, connect with a business resource in your local area for help.
Or simply use a professional service:
Become An Arizona Sole Proprietor
Luckily! There is no setup fee and you would not face too much hassle while starting a sole proprietorship in comparison to the legalities and paperwork that people face in other business structures. To have a sole proprietorship in Arizona, you simply have to follow a few simple steps to keep things smooth. Here are five easy steps you need to follow to become Arizona sole proprietorship.
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Choose A Business Idea
The first step in starting a business in Arizona is having a good business idea. Maybe you already have an idea picked out, or maybe you are still deciding on one. Regardless, you can check out our library of business ideas to get detailed industry information, trends, costs to start, tips, and lots more.
Arizona Small Business Statistics At
- In the 12 months between July 2017 and 2018, Phoenix added 25,288 residents, over 4000more people than San Antonio, Americas second-fastest-growing city.
- Arizona ranks 8th in property tax in the country and ranks in the upper half of states in corporate tax and individual income tax.
- 553,779 small businesses operate in Arizona, comprising 99.4 percent of all Arizona businesses.
- One million Arizonans are employed by small businesses, accounting for 44.5 percent of the states total workforce.
- The number of small business proprietors increased by 2.6 percent in 2016 over the previous year.
- 39,570 net jobs were created by small businesses in 2015, with firms employing 20 workers or less experiencing the greatest gains, adding 22,287 net jobs.
- Accommodation and food services are the top industries for small business employment in the state, followed by health care and social assistance and construction.
Also Check: How Much Tax For Sole Proprietorship
Build Your Business Website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that its out of their reach because they dont have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldnt delay building your website:
- All legitimate businesses have websites – full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own and control.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You dont need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldnt take you any longer than 2-3 hours to complete.
Register Your Arizona Business
Once youve chosen your business structure, the next step is to form your business. No matter what formal business structure you choose, there are a few common steps, including:
- Naming your business
- Choosing a statutory agent: an individual or business entity that accepts tax and legal documents on behalf of your business.
- Getting an Employer Identification Number : a number assigned by the Internal Revenue Service to help identify businesses for tax purposes.
- Filing formation documents.
In addition to these steps, each business structure has its own requirements that are unique to that business structure.
Here are the steps you need to take to register your business:
Form an LLC in Arizona
LLCs are the simplest formal business structure to form and maintain. With less paperwork than other business structures, you can easily form an LLC in six easy steps.
To file the Articles of Organization for an LLC in Arizona, you must submit your formation documents to the Arizona Corporation Commission online, by mail, or in person, along with the $50 filing fee.
Start a Corporation in Arizona
Read our full guide on How to Start a Corporation in Arizona.
Form a Nonprofit in Arizona
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