10 Key Steps in Starting a Business In Phoenix
Starting a business in Phoenix is relatively easy as Phoenix has relatively few requirements to get your business up and running. In starting your business, most of your time and effort will be focused on research and business planning. We highly recommend reading the following material to get you going in the right direction. Following these steps can save you time, money and reduce the stress associated with starting a business. (click here for PDF)
1. Research
All businesses, regardless of size, should always perform basic research or due diligence. In Phoenix, two distinct handouts are available to guide and direct you to various city, county, state and federal resources.
- For Start-up Businesses:
If you are a newly created business or are relocating to Phoenix, please review this information. If you still have questions, contact the City of Phoenix - Community and Economic Development Department (CEDD) .
- Business Expansion or Development:
If you are already an existing business in Phoenix, relocating to a new site or need to expand your current facility, use the “Development Due Diligence”, which provides a listing of important development issues within the city that can help you.2. Business Planning
For additional information regarding economic development programs that may be available to you, contact the City Of Phoenix - Community and Economic Development Department (Small Business Assistance Program).
Developing a business plan is very important. A business plan is a roadmap for your business as it shows you where you are and where you wish to be. A business plan is commonly required by banks to obtain loans. The following resources are available if you need assistance in this area:
- For start-up businesses:
Call the Maricopa County - Community Colleges Small Business Development Center. This agency offers a two-hour workshop called "How to Start a Successful Business" at various locations throughout the Valley. After you attend the class, you can work with their experienced business counselors one-on-one at no cost.
- For existing businesses:
The Management Technical Assistance (MTA) program. can assist businesses with developing a business plan.3. Business Name
Registering a business name or trademark is not legally required in Arizona for sole proprietors or general partnerships. However, it is common practice to search registered names to assure you are not using a business name that is already in use to protect yourself from legal action. It is also an accepted business practice to register your business name or trademark to prevent another business from using it and registering it later, and then seeking legal action against you.
To search and register your business name, contact the State of Arizona - Secretary of State, who can perform an online search of business names. Corporations and Limited Liability Companies can search name availability and register at the State of Arizona - Corporation Commission. You do not need to register with both entities. Names are protected through cross-indexing between the two divisions.
The Maricopa County - Recorder registers “doing business as (“dba” or fictitious) names. For any person other than a partnership, this registration will often suffice for bank accounts. However, there is no centralized index of trade names recorded in other Arizona counties and it remains the responsibility of the business owner to research the business name and seek legal counsel in the event of a name conflict
- Special Registrations
There are a few special registrations. Construction companies should check with the State of Arizona - Registrar of Contractors. Mortgage companies should contact the State of Arizona - Department of Financial Institutions. To file for a federal trademark, contact the Federal – U.S. Patent and Trademark Office4. Ownership Structures
Organizing your business will require you to select an ownership structure. The structure that you choose will have liability and tax implications and should not be taken lightly. Structures include sole proprietorships, general partnerships, limited partnerships, corporations and limited liability corporations and partnerships just to name a few. For more information on your options, please contact the State of Arizona – Corporation Commission , State of Arizona - Department of Commerce, and Federal – Small Business Administration (SBA)
5. Licensing and Tax Requirements
- Sales/Use Tax License
The City of Phoenix has two distinct licensing requirements for businesses, privilege (sales) and/or use tax and regulatory licensing. The City of Phoenix requires a license from all businesses that have a privilege (sales) tax or use tax liability. Information on and forms for business classifications subject to privilege tax can be obtained from the City of Phoenix - Finance Department (Privilege License Section). A business license (commonly called the privilege or sales tax license) is required in the city of Phoenix for businesses such as, but not limited to the following:
If your business is not subject to the privilege (sales) and/or use tax license, no business license is required. If you have a retail sales location outside of Phoenix and sell to Phoenix customers from that location, you are not required to obtain a Phoenix business license. For complete information, see the Phoenix Tax Code or call (602) 262-6785, Press 4, 1 or TTY (602) 534-5500 to find out if you need to be licensed.
The state also has a Transaction Privilege Tax, commonly referred to as a sales tax. The license is sometimes referred to as a Wholesale or Resale license. Additionally, there are state agencies that require licensing, certification or permits for business activities conducted in Arizona. Information and forms, as well as a listing of agencies and professions, can be found at the State of Arizona - Department of Revenue.
- Regulatory Licensing
Regulatory licensing applies to several specific business types which are identified on the City's Web site at http://phoenix.gov/LICNSVCS/index.html. Examples include, but are not limited to: alarm businesses, mobile and street vendors, sexually oriented businesses, scrap metal dealers, and massage establishments. For information and forms, contact City of Phoenix - City Clerk (Regulatory Licensing) (602) 262-4638, TTY (602) 534-5500.
Licenses for the sale of liquor are issued by the State of Arizona - Department of Liquor Licenses and Control. For more information on initiating an application for a liquor license, please visit www.azliquor.gov or call (602) 542-5141.
- Property Tax
Property taxes for real property and personal property (desks, computers, etc.) for business purposes are governed by Maricopa County - Assessor’s Office6. Site Selection
The choice of a business location can be a very important decision affecting the success of your business. Location choices can range from your home, leasing, or owning your own property and/or building.
- Home Based Business
There are very specific guidelines on the types of businesses that can be operated out of your home. For specific information on the zoning requirements for a home-based business, contact the City of Phoenix - Planning & Development Services Department.
- Leasing or Owning
Leasing or owning property/building each come with there own strengths and weaknesses. Such a decision should not be taken lightly as the cost associated with either of these choices can weigh heavily on a new business. The key issues in locating your business include knowing the zoning of the property and if any buildings are present, the building occupancy.
- Zoning
- Building occupancy
Zoning districts establish the type of land use which is allowed on the property (i.e. commercial, industrial, residential activity) and define specific types of business uses that are allowed. For specific information on the zoning requirements for your business, contact the City of Phoenix - Planning & Development Services Department. Property zoning should always be confirmed by the business owner to ensure the intended use of the property is allowed within the designated zoning district and to obtain development standards associated with the zoning district. If you wish written verification of your zoning from the city, you can request a zoning verification letter for a small fee. Such a letter will state, in writing, the zoning of the property and if the intended use of the property is allowed. Contact the City of Phoenix - Planning and Development Services Department for further information.
7. PermitsBuilding occupancy governs the use of a building. Building occupancy codes are used to categorize the types of uses within a building (i.e. retail, office, storage). When you change from one use to another use, you are essentially changing the occupancy of the building, which could necessitate construction improvements.If leasing, we recommend business owners make any lease contingent upon receiving necessary city approvals. This is especially important when the site and surrounding property does not have existing water, sewer and/or street improvements. Normally, the city requires the developer to install such improvements. As a lessee, this could add a significant cost to a project and make the property unfeasible for development for the intended business
Building occupancy is pre-determined by the previous user of existing buildings or when originally constructed. Changes to this occupancy may require additional building code reviews, which can add time and cost to a project. An architect or engineer should confirm the occupancy to ensure the project meets current building codes and ordinances. Additional information pertaining to allowable occupancies can be found in Chapter Three of the 2003 International Building Code. Contact the City of Phoenix - Planning & Development Services Department for additional information.
Unless specifically instructed by city staff, assume you will need to process plans and obtain permits via the city development process. For your convenience, a web site has been created to provide additional information for customers at phoenix.gov/DEVPRO. Permits commonly associated with starting a new business include site/civil permits, building permits, and sign permits. In all cases please contact the City of Phoenix - Planning & Development Services Department for permit information.
If you are moving into an existing building, we recommend contacting the City of Phoenix - Planning & Development Services Department. This department has an Adaptive Reuse Program that may assist you in understanding the city development requirements associated with moving into an existing building.
If you choose to build your own building, or to make improvements to an existing commercial building, general due diligence is the first step in development to assure that all issues related to a project are researched. Issues may include zoning, historic preservation, addressing, engineering, parking, street lighting and other factors that may be site-specific.
All non-residential uses that need to submit plans for city review and approval will be required to have plans drawn by a registered architect or civil engineer. Customers are advised to contact the State of Arizona - Registrar of Contractor’s, the Arizona Institute of Architects (AIA), or look in the business pages to obtain an acceptable professional. We recommend customers ask their potential registered professional if they are familiar with the city of Phoenix development process, the number of projects and how recently they worked with the city.
In most cases, once you have submitted plans to the city, a development process team and team leader within the Development Services Department will be assigned to your project. This team will work with you until you have your building permit. If you have questions regarding this process, call the City of Phoenix - Planning & Development Services Department.
8. Other Regulatory Requirements
Vending related activities are regulated by various city departments in Phoenix. The link above will provide general information that should help you in understanding what is required for various vending related activities.
- Food Services
Businesses serving food should contact the Maricopa County - Environmental Health Department, regarding licensing, permits, regulations, training and other programs. Liquor licenses are granted by the State of Arizona - Department of Liquor License and Control.
- Contractors and subcontractors
Please contact the State of Arizona - Registrar of Contractors for information on regulations and licensing. Additionally, some projects will require bonding before a contract can be issued. Information on bonding can be found at the National Association of Surety Bond Producers (NASBP). Although NASBP is a national organization, there are links on its Web site to Arizona members.
- Environmental Regulations
You can receive environmental information and assistance from non-regulatory programs associated with various environmental agencies. These programs reside within the State of Arizona - Department of Environmental Quality and Maricopa County - Environmental Health Department. Additionally, if you will be manufacturing, storing or using hazardous materials, you should contact the City of Phoenix - Fire Department.
- Chauffeurs / Taxis / Vehicle Sales or Registration
Most regulations governing commercial use or sale of vehicles, vehicle registration and driver licenses are the responsibility of the State of Arizona - Department of Transportation (Motor Vehicle Division). This includes transporting people or products for a fee; allowing someone else to use your vehicle(s) on a fee-for-hire basis; or selling, titling, manufacturing, transporting or recycling automobiles or parts.9. Employment Requirements
If you have one or more employees other than yourself, you will need to obtain an Employer Identification Number (EIN) from the Federal - Internal Revenue Service. This number is used for filing and reporting purposes, and also is known as a federal tax identification number.
You may need to provide Workers’ Compensation Insurance for your employee(s). You may provide this by insuring with the State of Arizona - State Compensation Fund, with another authorized carrier or qualifying as a self-insurer. Contact the State of Arizona Industrial Commission/State Labor Department for more information on self-insurance.
There are other federal and state requirements, such as Arizona’s New Hire Reporting Program from the State of Arizona - Department of Economic Security and employment eligibility verification for the Federal - U.S. Citizenship and Immigration Services. The State of Arizona - Department of Commerce provides information and links to many of these agencies 10. Other Questions
The City of Phoenix provides businesses a myriad of business-related services. If you have additional questions regarding general business assistance or regulatory processes required by the city, you should contact the City of Phoenix - Community and Economic Development Department (CEDD), which can help direct you to the appropriate department or partner to assist you.
This document highlights the most common issues facing a new business. The information in this document includes, but is not limited to, various city, county, state and governmental contacts that may have programs or be able to assist you with your business issues. As each business is different, so are individual business needs. While every effort has been made to ensure this information is correct, the City of Phoenix can not guarantee this information is inclusive, current and assumes no liability for problems that may arise from the use of this information. You are encouraged to obtain professional assistance if you have questions about setting up or modifying your business.
Ultimately, you are responsible for ensuring that all obligations – federal, state, county and city – are met. In addition to the contact information in this document, the Maricopa County Small Business Development Centers and the Service Corp of Retired Executives (SCORE) offer seminars, classes and free consulting services to assist you in understanding your regulatory obligations.
If you have questions regarding this page, please contact the city Community and Economic Development Department at 602.262.5040.
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