Starting a New Business
Starting a new business is an exciting venture and the department congratulates you on your decision to become an entrepreneur or franchisee.
The goal of the Arizona Department of Revenue (ADOR) is to help business owners maintain tax and licensing compliance. A Guide to Taxes for Arizona Businesses is designed to do just that. It describes the types of licenses and taxes applicable in the state, and it identifies other agencies that impose taxes and/or require licensing. This publication is part of a series that discusses in detail transaction privilege, employer withholding tax and other tax matters administered by the state.
Your business must register with ADOR before conducting any taxable business activity in Arizona for transaction privilege tax (TPT) and withholding purposes.
Arizona Business One Stop is an online portal that provides a single online location with personalized tools to plan, start, grow, move and close businesses in Arizona. It is a secure digital experience that does not require in-person interaction.
Arizona-based businesses should visit Business One Stop (B1S) if forming their business for the first time. Please note: New Business One Stop TPT licenses submissions will direct you to pay at AZTaxes.gov. TPT filings, payments,and renewals are only available at AZTaxes.gov at this time.
Buying a Business
When buying an existing business, please request the seller of the existing business to provide you with a Letter of Good Standing to ensure you will not be responsible for the existing business’s tax liabilities. The seller will use the Tax Clearance Application to request the Letter of Good Standing from ADOR. See A.R.S. 42-1110 for more information on Successor Liability. The new business must obtain their own transaction privilege tax (TPT) license if the business engages in a taxable business activity.
Licensing and Taxes
In Arizona, not all businesses are required to have a license, and some businesses must have more than one license.
The basic types of tax licensing in Arizona include:
- Transaction Privilege Tax License – A transaction privilege tax (TPT) license (commonly referred to as a sales tax, resale, wholesale, vendor or tax license) is required for businesses selling a product or engaging in a service subject to transaction privilege tax in the state.
Please see our TPT licensing section for more information.
- Withholding Tax Registation - As an employer, you must withhold employment taxes from your employee’s wages. To do so, you need an Employer Identification Number (EIN).
Apply Online: Employer Identification Number (EIN)
Employers withholding income tax from employees in Arizona must register their Employer Identification Number (EIN) with ADOR to file withholding returns.
Visit the Employer Withholding Filing Requirements page for additional details and information on applying for a withholding registration.
- Regulatory (Professional/Special) Licensing/Permits – Special licenses, certification, permits, etc. may be required for certain businesses/professions. Business regulations vary by state, local and federal government, and by industry.
Please note: A service business may or may not be subject to regulatory licensing, TPT and/or business licensing. Businesses may use the Arizona Commerce Authority (ACA) Small Business Services’ Checklist Program to research business compliance requirements that may impact; may also wish to consult an attorney for assistance. Businesses needing an accountant or attorney referral, may review the Finding Professional Partners in the ACA Small Business Services’ Checklist Program under “I am thinking about starting a business in Arizona.”
- Local Business/Occupational License/Permit(s) – Each Arizona city or town in which a business operates may require licensing. For additional information, including contact information and links to download license applications, click here.
Corporate Income Taxes
Businesses are also subject to corporate income tax.
Other Taxes and Licenses
Depending on the type of business, you may be subject to other taxes or licenses, such as if you conduct business involving liquor, tobacco, or bingo.
Arizona businesses that engage in activities which are supervised and regulated by one or more federal, state or municipal government office may be required to obtain special licenses, certifications or permits. These activities may include one or more of the following examples, but are not limited to:
- Construction Contracting
- Transportation for Hire
- Adult Home Care
- Child Care
- Home Inspection
- Pest Control
- Tobacco or Liquor Sales
IMPORTANT – The following link is only a suggestion of the sequence and type of steps that might be needed to start a business in Arizona. We recommend you consult with knowledgeable professionals such as an accountant and an attorney to determine the particular needs of your business.
Know Your Rights
Arizona Revised Statute outlines notice requirements for all licenses, fees, audits, rulemaking and written comments for small businesses.
Businesses should be aware of the following:
- Taxpayer Bill of Rights
- Know your rights | View A.R.S. § 41-1001.01
- Know your rights in an audit | View A.R.S. § 41-1009
- Authorized disclosure of confidential information | View A.R.S. § 42-2003
- Filing a Complaint against ADOR
- Filing a Complaint with Ombudsman-Citizens Aide
- Complete the TPT-2 Form in AZTaxes.gov -- Download Printable Step-By-Step Instructions. This step-by-step guide will walk you through completing your transaction privilege tax return online at AZTaxes.gov.
- New User Registration Instructions: As a reminder, a business must be registered in AZTaxes.gov and have a Username and Password for access.
- Apply for a TPT License Information Card
- Arizona Commerce Authority offers its checklist program to start, operate and grow a business in Arizona.
- IRS Self-Study Seminars offer CPE credits for practitioners. The seminars are based on videos of the 2012 nationwide tax forums.
- Visit the IRS Video Portal for video and audio presentations that address an assortment of tax issues, such as IRS Audits, disaster information, the Virtual Small Business Workshop, e-File, EFTPS and lien discharges.
- IRS Small Business and Self-Employed Tax Center
- Business Tax NAICS Description Codes
- Publication 010 - Summary of Arizona Taxes
- Arizona Commerce Authority (ACA) - ACA City/Town Office Directory
- Arizona Commerce Authority (ACA) - Business Licensing