Are you trying to start a business and/or obtain a Tax ID in Arizona? Arizona has a thriving entrepreneurial scene. There are more than 553,000 small businesses in the state, representing a massive 99.4 percent of all Arizona businesses. Together, they employ more than 1 million employees, which represents 44.5 percent of the entire state’s workforce. Over the past year, those businesses have created more than 39,000 net new jobs, helping support the entire economy. On top of that, the economic outlook for the state is enormously positive. Economic growth in Arizona is stronger than it’s been since 2007. While several different industries and market segments are responsible for the growth, manufacturing businesses are the industry leaders. Real estate, rentals, and retail trade are also strong sectors. There are also many cities that welcome and support entrepreneurship in the state, including Phoenix, Tucson, Flagstaff, and Scottsdale.
Steps to Obtaining a Tax ID (EIN) Number and Registering a Business in Arizona
- Forming a Business in Arizona
- Federal Tax ID (EIN) Number Obtainment
- Arizona State Tax ID Number
- Localized Licenses and Permits in Arizona
One of the first major decisions you’ll need to make for your business is what type of structure to apply to it. There are many different business structures to choose from, each with their own strengths and weaknesses, and not all of them will make sense for your company. You can get a better idea of what business structure will suit you best by researching and writing a full business plan.
You could choose to create a sole proprietorship, which is the simplest of all the business structures to create. In this type, you’ll pay taxes as an individual on any income you make. However, you’ll also be exposed to more liability than you would in other business structures, personally taking on debts and potentially rendering yourself liable for the actions of your business. Partnerships work almost identically; the one exception is that you’ll be working with other people, so you’ll be splitting the profits, expenses, and exposure to liability.
You could also form a limited liability company or LLC. While slightly more complex than a sole proprietorship or partnership, these companies aren’t hard to create. They exist as separate legal entities, and therefore provide you with a limited degree of liability protection. In terms of taxes, they’re considered pass-through entities; they won’t owe taxes on LLC income, but you’ll pay taxes as an individual on salary or profits you make as an individual from them. In Arizona, you won’t owe a state-level tax on your LLC, nor will you be required to file an annual report, giving it a key advantage over other states.
Corporations are the most complex, and for good reason. Because they can raise funds by publicly issuing shares, they’re subject to far more rules and regulations than other businesses. Like LLCs, they’re treated as separate legal entities, but they provide you with much more liability protection overall, making them ideal for large-scale operations. As a downside, corporations will owe a corporate income tax on any income generated, and individuals collecting from the business will also owe personal taxes, resulting in double taxation. The corporate tax rate in Arizona is currently a flat 4.9 percent, though it has varied over the years.
Most Arizona businesses will need to get a federal tax ID number. This is a 9-digit number issued by the federal government when you register your business with it. It’s also known as an employer identification number, or EIN. You’ll need this number if you’re going to create a business that includes multiple members, like a partnership, LLC, or corporation. You’ll also need this if you’re going to hire any employees. And because this number functions almost like a social security number for businesses, you’ll also need it for any business bank accounts or business lines of credit you open.
The easiest way to get a federal tax ID is to apply for one online using our federal tax ID number obtainment services. All you’ll have to do is answer a handful of questions about your business, and you’ll receive your tax ID number in less than an hour.
If your business is going to hire employees in the state of Arizona, if you’re going to owe excise taxes, or if you’re selling taxable goods and services in the state, you’ll also need to obtain an Arizona state tax ID number. This number serves as a unique identifier like your federal tax ID number, but it registers your business with the state government of Arizona.
To get an Arizona state tax ID number, you’ll first need to get a federal tax ID number, which you can get easily using our federal tax ID number obtainment services. From there, you can use our Arizona state tax ID number obtainment services, filling out an online application with key information on your business. You’ll receive your state tax ID number in 4 to 6 weeks.
Many Arizona businesses will need a business license, permit, or other form of certification, but there is no single business license that covers all Arizona businesses, nor is licensing handled by a single licensing office. Instead, if you’re required to get a business license or permit, those regulations are likely handled at the local level. You may need to get a license based on your industry or the type of services you’re providing. But because there are so many types of licenses and so many differences in how they’re distributed, it’s best to contact your local Chamber of Commerce to learn more about the rules and restrictions in your specific area.
Do you have an idea for an exceptional Arizona business? You don’t have to let your idea remain fruitless in the back of your mind. Instead, if you utilize the online resources available to you, do some thorough research, and follow all the steps necessary, you can formally establish your business and make your idea a reality. Starting a business is an exciting, if stressful journey, but you can make things easier on yourself by relying on fast, convenient online application methods. Use our federal tax ID number and Arizona state tax ID number obtainment services to meet the legal requirements for your business faster, and start generating revenue.