Step 1: Decide on a Business Structure
There are 3 basic options: a DBA, a Corporation or an LLC.
- A DBA or “Doing Business As” (also known as a “Fictitious Business Name” or FBN) is not really a separate structure, but just a different name that an individual or partners use as their business name.
- A Corporation is a separate entity (provides liability protection to the owners) that has a structure that includes shareholders, directors and officers. More complex than a DBA but the entity of choice for large companies and startups that intend to raise funding. Some professions are required to choose what is known as a “Professional Corporation” or PC (doctors, lawyers, architects, etc.).
- An LLC or “Limited Liability Company” is a newer type of business that is both a separate entity but provides very easy management and taxation. Has largely replaced the DBA and Corporation in popularity recently as it provides liability protection but with much less complexity and taxation than a Corporation.
Step 2: Pick a Business Name
Choosing a business name is easier said than done. Many legal and business problems can arise from picking the wrong name. We highly recommend you do the following before searching Arizona state databases:
- Make sure you’ve covered the basics: unique, easy to understand/pronounce. Ask yourself, “Is this easy to say out loud?”, Is this easy to remember?” and “Will this stand the test of time?”(Something like ‘DVD World’ wouldn’t work.)
- Search the web for your proposed name. Search Google, Bing and DuckDuckGo as a quick check for any potential conflicts, especially in your state or local jurisdiction. This should cover many cases where a company name is being used but not officially trademarked
- Do a trademark search with the US Patent and Trademark Office (USPTO). This will be a very good indicator if you’re name will have any conflicts.
TIP: search misspellings, plurals, variations of spelling, sound-alikes and other versions of your chosen name to be sure it’s not already registered.
Once you’ve completed those steps, you can visit the Arizona Corporation Commission to make sure your company name choice is available.
Familiarize yourself with the Arizona business naming guidelines. LLC entity names need to contain the words words “Limited Liability Company” or “Limited Company” or the abbreviations LLC, L.C., L.L.C. or LC in uppercase or lowercase letters.
Step 3: Register the Business
Each state has its own requirements for registering a business. Now that you’ve chosen a business structure and picked your business name, here are the requirements to register your business in Arizona.
How to form an LLC in Arizona
- File the “Articles of Organization” with the Arizona Corporation Commission.
- Once the articles are filed and approved you will then need to properly organize the LLC (this also applies to “1-person LLC’s”) by holding an “Organizational Meeting” which takes contributions from the members, issues Member Certificates, adopts the company Operating Agreement and more.
How to Incorporate in Arizona
- File the “Articles of Incorporation” with the Arizona Corporation Commission.
- Hold an Organizational Meeting to properly organize the corporation, take contributions from the shareholders, elect directors and officers, issue stock, adopt the Corporate Bylaws and more.
- Optional: Corporations can elect S-Corporation status with the IRS by filing IRS Form 2553.
Considerations when incorporating or forming an LLC in Arizona
- The Arizona Corporation Commission can take from 5-6 weeks to process the paperwork. Rush filing service will take about 2-3 weeks.
- A Registered Agent is required for every Arizona Corporation and LLC. Many people list their home or business address on the Articles of Organization or Incorporation. This can cause issues because it becomes public record (you’ll get lots of junk mail). A professional Registered Agent will provide their address and forward any important documents to you, this is also convenient if you have to move (you don’t have to file forms or pay fees, just update your address with your agent).
How to File a DBA in Arizona
- To file a DBA in Arizona you will need to visit the Arizona Secretary of State online application for a trade name. Processing time can take up to 2-3 weeks.
- Once your trade name application has been accepted, you will receive an email asking for payment. Upon completion of your payment, you will receive your DBA certificate via email.
- In Arizona, trade names cannot contain a corporate ending such as “Corporation” or LLC.
Step 4: Obtain Your Federal Employer Identification Number
Your EIN is like your Social Security Number for your company. It’s required for Corporations and LLC’s and optional for DBA’s (if you don’t have any employees, then it’s required). However, if you are a DBA and don’t obtain an EIN you will be forced to use your Social Security Number on many documents so it’s typically recommended you obtain the EIN to prevent identity theft.
Step 5: Open Company Bank and Credit Accounts
To keep business and personal expenses separate, you should open a separate account for your business. In addition, getting business credit cards is how you begin to build a company credit profile (corporation or LLC required) and can later qualify for larger loans and lines of credit. To open the account simply call your chosen bank and inquire on the steps to open a business bank account. Typically you’ll need a) your filed paperwork, b) your EIN and c) a company resolution authorizing your company to open the account (signed by the owners, members, officers or directors, etc.).
Step 6: Set-up An Accounting System
Setup your Accounting and Record-keeping system and learn about the taxes your new company is responsible for paying.
Company documents generally are required to be kept for 3 years, including: a list of all owners and addresses, copies of all formation documents, financial statements, annual reports, amendments or changes to the company. All Tax and Corporate Filings should be kept for at least 3 years.
Step 7: Obtain Licenses and Permits
Now that you’ve registered your business name you need to obtain a business license for your company – this authorizes your company to do business in your city or county. Typically this also involves registering for state taxes and permits (the city may require them as part of the business licensing process).
Step 8: Hire Employees (if applicable)
If you intend to hire yourself or others as a full or part-time employee of your company, then you may have to register with the appropriate State Agencies or obtain Workers Compensation Insurance or Unemployment Insurance (or both). Step 9: Obtain Business Insurance
Step 10: Obtain Insurance
There are many types of insurance for businesses but they are usually packaged as “General Business Insurance” or a “Business Owner’s Policy”. This can cover everything from product liability to company vehicles. A decent policy can run as little as $300/year and offers a great extra level of protection.
Step 11: Systemize and Organize
Prepare the business as if someone needed to take it over and run it for you. This means have a method to process orders, pay bills, pay employees, pay taxes, maintain your permits, etc. Basically, try to make the operational aspect of the business as automated and efficient as possible so you can concentrate on growing your business.
Step 12: Branding and Marketing
Now that you’ve set-up the company for success, you need to get the word out. Create a marketing plan for your products and services that targets your ideal customer.
Ready to Start a Business in Arizona?
Heins Law, P.C. is passionate about supporting the entrepreneurial spirit. We strive to simplify the legal process involved in starting, running, and growing your business. Business law presents so many different legal issues that require an innovative approach to law, so feel free to fill out the form below to schedule a free consultation.