Starting a business in Phoenix gives you access to one of the most dynamic and entrepreneur-friendly environments in the United States. Arizona’s flat 2.5% income tax, absence of franchise tax, and growing infrastructure for startups and small businesses create favorable conditions for founders across industries. Whether you are launching a technology company near ASU in Tempe, opening a restaurant in Downtown Phoenix, or building a service business in the Scottsdale market, this step-by-step guide walks you through everything you need to do to start a business in Phoenix the right way.
Step 1: Choose Your Business Structure
Your choice of business structure determines your liability exposure, tax treatment, and administrative requirements. The three most common structures for Phoenix entrepreneurs are sole proprietorships, limited liability companies (LLCs), and corporations.
Sole Proprietorship
A sole proprietorship is the simplest structure — no formal registration required, and all business income passes through to your personal tax return. The major disadvantage is unlimited personal liability: your personal assets are exposed to business debts and legal claims. Sole proprietorships are appropriate for very early-stage testing of a business concept but generally should be upgraded to an LLC once real revenue or liability exposure develops.
Limited Liability Company (LLC)
The LLC is the most popular structure for Phoenix small businesses. It provides personal liability protection, allows profits to pass through to members’ personal returns without a corporate-level tax, and requires less administrative overhead than a corporation. Arizona LLCs are governed by the Arizona Revised Statutes Chapter 29 and formed through the Arizona Corporation Commission.
Corporation (C-Corp or S-Corp)
Corporations are appropriate for businesses planning to raise venture capital, issue stock options to employees, or eventually pursue a public offering. C-corporations pay corporate income tax (4.9% in Arizona) and shareholders pay tax again on dividends — but venture investors typically require C-corp structure. S-corporations allow pass-through taxation but have restrictions on shareholders. Talk to a Phoenix business attorney or CPA before choosing a corporate structure.
Step 2: Name Your Business
Your business name must be distinguishable from all other entity names registered with the Arizona Corporation Commission. Search the ACC’s eCorp portal to confirm availability before filing. If you plan to operate under a name different from your legal entity name, you will also need to register a Trade Name (DBA) with the ACC.
Additionally, search the U.S. Patent and Trademark Office database to confirm that your desired name is not already trademarked at the federal level. Securing a domain name and social media handles that match your business name before filing your formation documents is also recommended.
Step 3: Register with the Arizona Corporation Commission
Arizona LLCs and corporations are formed by filing with the Arizona Corporation Commission through the eCorp online portal at ecorp.azcc.gov. The filing fee is $50 for LLCs and $60 for corporations. Standard processing takes approximately one week; expedited processing is available for an additional fee.
Important: Arizona LLC Publication Requirement. Arizona law requires LLCs to publish a notice of formation in a newspaper of general circulation in the county where the statutory agent is located. This must run for three consecutive weeks and must be completed within 60 days of approval. Failure to publish can result in administrative dissolution of the LLC. Several publication services in Phoenix manage this process for a flat fee.
You will need to designate a statutory agent (registered agent) with a physical Arizona address. This can be yourself, a trusted individual, or a professional registered agent service.
For a streamlined formation experience: LegalZoom handles LLC formation, registered agent services, and Arizona publication requirements in one package.
Step 4: Get Your EIN from the IRS
An Employer Identification Number (EIN) is your business’s federal tax ID, similar to a Social Security Number for an individual. Apply for free at IRS.gov. The online application issues your EIN immediately. You need an EIN to open a business bank account, hire employees, and file federal and state business taxes.
Step 5: Open a Business Bank Account
Never mix personal and business finances. Open a dedicated business checking account as soon as you have your EIN and formation documents in hand. This protects your LLC’s liability shield, simplifies accounting, and makes tax preparation significantly easier.
Phoenix options include Arizona Federal Credit Union, Desert Financial Credit Union, National Bank of Arizona, Western Alliance Bank, and Arizona Business Bank. See our full Phoenix Business Banking Guide for a detailed comparison.
Step 6: Get Your Phoenix Business Licenses and Permits
Arizona does not require a general state business license, but most Phoenix businesses need a Transaction Privilege Tax (TPT) license from the Arizona Department of Revenue. Register through AZTaxes.gov.
In addition to the TPT license, the following may apply to your business:
- City of Phoenix Business License: Phoenix requires a business license for most business activities conducted within city limits. Apply through the City of Phoenix License Office.
- Industry-specific permits: Food service businesses need a Maricopa County Environmental Services permit. Contractors need an Arizona Registrar of Contractors license. Healthcare businesses need Arizona Department of Health Services licensing.
- Zoning compliance: Confirm your business location is properly zoned for your intended use through the Phoenix Planning and Development Department.
- Home-based business permits: Phoenix allows many types of home-based businesses but has specific rules around customer traffic, signage, and permitted activities. Check current regulations before operating from home.
Step 7: Register for Arizona Transaction Privilege Tax
Arizona’s Transaction Privilege Tax (TPT) functions similarly to a sales tax but is technically a privilege tax on the seller for the privilege of doing business in Arizona. Most retail, restaurant, contractor, and service businesses must register and file TPT returns with the Arizona Department of Revenue.
Register at AZTaxes.gov. Phoenix has a combined TPT rate that includes state, Maricopa County, and City of Phoenix components. Filing frequency (monthly, quarterly, or annual) is based on your expected tax liability. Late filing penalties are significant — set up calendar reminders from day one.
Step 8: Get Business Insurance
Arizona requires workers’ compensation insurance for any business with employees. Even without employees, obtaining general liability insurance before opening protects your business from premises liability, property damage, and third-party injury claims.
Common insurance types for Phoenix businesses include general liability, commercial property, professional liability (errors and omissions), commercial auto, and business owners policy (BOP) bundles. Work with an Arizona-licensed independent insurance agent to compare coverage options and costs. Phoenix’s heat and construction activity create specific risk profiles worth discussing with your agent.
Step 9: Set Up Your Online Presence
Before you open, secure a domain name, build at minimum a landing page or basic website, and claim your Google Business Profile. Phoenix is a competitive local market and a verified, optimized Google Business Profile is one of the highest-ROI investments you can make in your business’s visibility.
Also claim your Yelp, Facebook Business, and Apple Maps listings. Phoenix consumers research businesses across all of these platforms, and an unclaimed or incomplete listing creates unnecessary friction in the customer acquisition process.
Step 10: Connect with Phoenix Business Resources
Phoenix has an excellent ecosystem of free and low-cost business support resources. Use them.
Arizona SBDC Network
The Arizona SBDC Network provides free one-on-one business advising, funding guidance, and workshop programming through multiple Valley locations. SBDC advisors can help with business plan development, financial projections, loan application preparation, and market analysis at no cost.
SCORE Phoenix
SCORE’s Phoenix chapter provides free mentoring from experienced business executives. Whether you need help with financial modeling, marketing strategy, or operational planning, SCORE mentors offer practical guidance grounded in real business experience.
Greater Phoenix Economic Council
The Greater Phoenix Economic Council (GPEC) connects businesses to incentive programs, site selection resources, and economic development partnerships that can accelerate growth and reduce startup costs.
Arizona Commerce Authority
The Arizona Commerce Authority administers state incentive programs including the Angel Investment Tax Credit, the Arizona Innovation Challenge, and various workforce development programs that can benefit Phoenix startups and growing businesses.
Phoenix Business Formation Checklist
- Choose business structure (LLC, corporation, sole prop)
- Search and confirm business name availability at ACC eCorp
- File Articles of Organization or Incorporation with Arizona Corporation Commission
- Publish LLC formation notice in Maricopa County newspaper (LLCs only — required by AZ law)
- Get EIN from IRS (free, instant online)
- Open business bank account
- Register for Arizona TPT license at AZTaxes.gov
- Obtain City of Phoenix business license
- Get industry-specific permits as required
- Get business insurance (workers’ comp required with employees)
- Set up Google Business Profile, website, and social media
- Connect with SBDC, SCORE, and GPEC for free support
Ready to keep building? See our full Doing Business in Phoenix guide for legal support, funding, commercial real estate, and more.
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