5 Easy Steps to Starting a Small Business in Arizona

Imagine this: You sit down at your desk, open your laptop and have full control of your schedule for the rest of the day. You can pick up your kids from daycare at two, have lunch with a friend or take off early for a doctor’s appointment without getting manager approval. You choose who (if anyone) gets hired or fired. Best of all, you’re doing the work that you want to be doing. Sound appealing? You're not alone.

Now more than ever, Americans are choosing to leave the daily nine-to-five grind of corporate offices for the benefits of starting a business. According to the U.S. Small Business Administration, there are more than 550,000 small businesses in Arizona. Considering that small businesses nationwide are responsible for more than half of U.S. sales, it’s easy to see how this career option could be lucrative as well as personally rewarding.

So you’ve decided to open a small business — whether it’s making jewelry or founding a marketing consulting firm. How do you get started? Businesses will have varying types of legal, tax and procedural requirements. For example, retailers may have to purchase state or city sales licenses. However, these five basic steps can help you on the road to your new career as a small business owner, no matter what business you’re in.

1. Choose a Name

For some new business owners, this is the fun part of the process. Others find it as grueling and problematic as naming your first child. When it comes to name selection, do your homework. Conduct online searches to see if there are similarly named businesses in your area. Then, verify name availability and secure your business moniker in the state of Arizona on the Arizona Corporation Commission (ACC) website.

2. Purchase a Domain

Now that you’ve decided on a name for your small business, you’ll need some kind of online presence. While you might be sold on selling your wares through Etsy and Ebay or have a brick-and-mortar plan, it’s beneficial to purchase an available domain that closely resembles your business name even if you don’t plan to conduct business online. This way, no one else beats you to the punch. You can easily check for available domains through a hosting service such as GoDaddy or HostGator.

3. Become an Entity

You knew there would be some paperwork involved in creating your own company, and here’s where the bulk of it appears. Luckily, nearly every action you must complete to legally start up a small business can be done online or over the phone. First, visit the Arizona Corporation Commission website to form your business. Filing can be done online for a nominal fee (typically around $50 for an LLC, slightly more for a corporation).

There are several organizational options for businesses, including corporation, sole proprietorship and limited liability company (LLC). If creating an LLC, you’ll also be required to have the provided Articles of Organization printed in an approved Arizona newspaper for a small additional cost. Review the ACC website for the full details and requirements for each business type. Why become an LLC or a corporation? While you could do freelance or independent contractor work on your own, becoming a legal business mitigates some risks in the event your business has a loss.

4. Get a Federal ID#

You'll need something beyond a personal social security number to verify your business’ identity. Visit the Internal Revenue Service (IRS) website at www.irs.gov to obtain an Employer Identification Number (EIN) or federal Tax Identification Number (TIN). You'll use this number on your tax returns as well as other official forms. For business planning purposes, review the taxes you'll have to pay as a business owner, which can include sales taxes, self-employed tax and/or the Arizona transaction privilege tax.

5. Open a Business Bank Account

Show me the money! Once your business is set up, you’ll need a place to complete transactions and receive funds. While a business bank account is not required for every type of business, many small business owners prefer to keep their company and personal accounts separate to better protect their personal assets. You may also wish to obtain a business credit card for making purchases, or consider taking out business loans to increase your working capital.

While this is by no means a comprehensive list of everything you’ll need to create and secure your small business, considering these five steps will aid you on your journey to becoming a business owner. For more information on starting a local small business, consult a legal professional or visit the Arizona Small Business Association at www.asba.com.

Grow your business and bank with ease.

SEE MY OPTIONS

The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.