Did you know that small businesses account for 44.5% of Arizona’s private workforce? If you fall into that category (and it’s safe to assume that if you’re reading this, you may), your business, hard work, and dedication are a significant contributor to the state of Arizona’s economy.
That’s a fantastic group to be a part of!
As a small business owner, you understand the importance of being compliant with state and federal requirements. That means having critical documentation, like a business license.
But how exactly do you go about obtaining an Arizona business license? And do you even need one?
There’s a lot of information out there from various sources. Plus, not all businesses in Arizona need a license. That’s why we’ve done some research for you and created this guide to help you along.
Let’s look at how to get a business license in Arizona — from start to finish.
Do I Need an Arizona Business License?
The short answer is: it depends. Some businesses may be required to carry more than one license, whereas others may not need a license at all. For example, if you’re running a residential rental business or a restaurant or bar, you will need an Arizona state business license.
If you do need an Arizona business license, here’s how getting one can be beneficial to your business:
- It can help you open new locations
- You may avoid costly penalties or lawsuits
- You legitimize your business, not only in the eyes of the state of Arizona, but to your customers
- It can be easier to manage and organize your finances and taxes
Now that we’ve covered some of the benefits of obtaining an Arizona business license, let’s look at how to apply.
How to Get a Business License in Arizona
1. Identify the type of license you need (if you need one).
Because all small businesses don’t need to apply for a state business license, you may not need to take action. If you do need an Arizona business license, the type of license you need will depend on your business’s nature.
There are three types of Arizona business licenses:
1. Transaction Privilege (Sales) Tax License (TPT). You’ll need this license if you sell products or if your business is subject to transaction privilege or use tax. This could include businesses with activities like advertising, commercial leasing, communications, construction contracting, and more.
2. Arizona Business License. The state of Arizona does not mandate or issue business licenses, as there is no general business license. But the majority of city or town offices do issue business licenses. Depending on your business’s nature and where it operates will determine what type of local license you need. Be sure to confirm your business license requirements with your city or town officials.
3. Special Licensing Permits. Is your business involved in activities or services that are under the supervision of a federal, state, or local governmental office? If so, it’s likely that you’re required to obtain special licenses to be compliant with the law. Visit the Arizona Commerce Authority website to learn more about the specifics around special licenses.
2. Gather your business information.
If you’ve verified that you need an Arizona business license or licenses, the next step is to apply.
Before you apply, it’s a smart idea to round up the essential documents and information regarding your business so the application process goes as smoothly as possible.
This includes information like your Federal Tax ID, EIN, or Social Security number, your personal contact information, and your business plan.
If you haven’t officially registered your business organization, that may be required for specific Arizona business licenses. You can learn more about this by visiting the Arizona Corporate Commission (ACC) website.
If you choose to operate under a fictitious business name or a DBA (“doing business as” name), you can complete that application via the Arizona Secretary of State (SOS) website.
3. Adhere to your city’s application guidelines.
Each city may have different requirements, depending on the type of Arizona business license you need, so be sure to check with your local city officials.
For example, the City of Phoenix requires that only specific types of businesses obtain licenses, like massage therapists, amusement parks, auctions, and more.
How Much Does an Arizona State Business License Cost?
The city where your business operates will determine the cost of your Arizona business license, as well as which business license you’re applying for. The fees vary by city or town for TPT licenses and typically range anywhere from $2 to $10.
On the other hand, some Arizona cities require a blanket fee, regardless of your business’s makeup. For example, in the City of Surprise, the initial business license fee is $168 per license with an annual renewal fee of $84 per license.
Arizona Business License + Insurance: What You Need to Know
In tandem with your Arizona business license, it’s important to consider business insurance as well (if you don’t already have a policy in place).
Arizona, in general, requires small businesses with employees to obtain workers compensation insurance. That way, if something were to happen to any of your employees while on the job, your business may be exempt from fines, bills, and other expenses.
It’s also a smart idea to add general liability insurance to your overall business insurance plan. This type of insurance can protect your business from situations like third-party property damage, medical expenses, claims from product defects, and so much more.
If you’re interested in learning more about Arizona business insurance, our team of insurance experts are happy to assist you.
Applying for an AZ Business License?
You may need to show proof of business insurance to get your license.
That’s where we come in. Compare free insurance quotes for policies as low as $19.58/month.*
Boost Business with an Arizona Business License
By obtaining a business license (or multiple, if necessary), you’re setting your business up for long-term success.
For the small businesses that need an Arizona business license, it’s essential to complete this process for several reasons. Getting a business license not only legitimizes your business in the eyes of the city or town you operate in, but it may help your customers feel confident in choosing your business.
This may be one additional thing on your to-do list, but it’s worth it!