Easy Guide to Start a Small Business in Arizona
22 February, 2019
Are you planning to launch a business in Arizona? Well, then you need to get all the facts in place before you do so. Arizona is a great place to start your company as it invites people from all over the country to enjoy its exceptional landscapes like the Grand Canyon, and natural livelihood. All the greatness in the state means that it has something for everyone. Which is also the reason why many entrepreneurs tend to launch their companies in Arizona.
And since you would also become one of these entrepreneurs, it is better to have the things done right. By following the steps shared below, you would be on the right track:
Step 1: Plan Your Business Idea and Prepare Your Business Plan
Before you can jump towards starting a business, it is important to plan your business and prepare the business plan. Business planning isn't just for showing others proof that you have a great idea, it is also a smart step to take. It would help you in figuring out how you would be going about and would also help set a goal in mind for your business, along with determining the validity of your business idea. Here are some things that should be a part of your business plan:
- The Target Market: This is the main thing since you would need to be highly specific regarding who you would be selling your services/products to. And specific here means that you need to think about things like physical location, income level, occupation, gender, age and many other important details that would differentiate your target from the crowd. As soon as you figure this out, you would need to determine the various ways in which you would be able to communicate with them easily. Which platform can you use to target these people? Is it LinkedIn or Facebook? Do they even use social media? How would you make them notice your company?
- The Market's Need: Other than targeting the right audience for your service or product, you need to ensure that what you are offering solves the problem that the customers are hoping to have solved. Mention the problem in the business plan and explain how it would help the customers. Also, do not forget to specify how your product or service would help the customers better than your competitors.
- Your Pitch and USP: You mini-pitch and the unique selling proposition (USP) are designed to apprehend the mission of your business in the most precise and catchy way. Moreover, the USP should be a short phrase that says all you want to while the mini-pitch should just have one or two sentences at max.
- Your Milestones: What are your goals? What do you want to achieve in the next 6 months or a year or even two years? It is obvious that you would not always reach these goals on the exact time, but placing a milestone would help you work towards it. It is important as it would keep you motivated and on-track at all times.
- Your Marketing Plan: You would also have to add all about your marketing plan, like what is your budget. Also, how you would reach the market and where do you plan to find the target audience. The strategy you make would obviously change over time. But if you lay out the approach you would use initially, you would be able to move more smoothly.
As a matter of fact, this is just a small part of what should be in the business plan. There are a lot of things that you might have to include in it. This is important mostly if you are looking for outside funding for your company.
Step 2: Register Your Business
The next big thing that you would need to do is to register your business with the Arizona state government. But before you can do that, you would have to select the kind of business entity that you would want to form like the C corporation, S corporation, LLC, or Sole Proprietorship. Here is a brief of each type:
- LLC: The Limited Liability Corporation is one of the most popular kind of business structure. These companies offer the business owners with the flexibility in choosing how they would like to be treated during the tax period. The owners also enjoy the benefit of having their personal assets protected where if the company falls in trouble or has a lawsuit against it, the ownerâ€™s personal assets would not be affected. Moreover, Arizona allows to have a single-member LLC which can allow you to enjoy being the sole member of the company and reap its benefits.
- C Corporation: This structure has no limit placed on the number of shareholders the company can have. As a matter of fact, this is the only structure that has to face double taxation since both the business and the shareholders have to pay taxes on the profits they earn separately.
- S Corporation: This is a much more formal structure as compared to the LLC, which includes having a board of directors, up to 100 shareholders and corporate officers. Moreover, in this structure, the tax on the profits earned by the company is paid for through the personal tax returns of the shareholders.
- Sole Proprietorship: This is the most least formal company structure that is there, where you would not need to file for the articles of incorporation/organization. But since you do not need the articles of incorporation, it is advised to file a DBA so that you can legally operate your company with the fictional name. Moreover, this business structure has the highest risk since your personal assets would not be protected from your business.
It is very crucial to select the correct business structure for your company as it would help you operate it easily. Hence, do not just pick up anyone as a default one. Find out all the details and then decide which one would suit your idea better.
Step 3: Tackle License and Tax Obligations
As soon as you have created your business in Arizona, the next important thing that you need to do is take the time to ensure that your business is entirely compliant with all the state laws and regulations. One thing great about this is that you would not need a "general" business license in Arizona like the other states require you to have. But based on the business nature you might have to gain other licenses and permits for running your business.
Other than that, there are many special taxes that you might have to pay on the local, state and federal level as well. As a matter of fact, it is better to find out all about the licenses and taxes now and be ready, rather than to ignore it. It would then lead you to pay huge penalties later on and you would suffer a huge loss of capital. Hence, research all you can before you walk into a huge and visible penalty trap.
Step 4: Apply for an EIN
All the businesses need to apply for the https://www.incparadise.net/employer-identification-number/ (Employer Identification Number) which is used for various tax purposes. The EIN of a business acts like the social security number of the individual. It is like an identity of your business for the IRS. Moreover, it also helps you when you want to open a business bank account and is used for your various tax returns. Due to these things, it is important to have the EIN number applied for and obtained on time.
Step 5: Create a Financial Foundation
After you have received your EIN and your company is set in place to begin its operations, it is time for you to open an official business bank account so that you can easily keep all your personal and business finances separately. And even though you have a sole proprietorship, it is always better to have a separate account since it would help you more. Here are the reasons why it is a good idea to have a separate business bank account:
- This would make a lot of things easier for you when the time comes and you need to separate the expenses.
- This would allow you to take the advantage of any waived fees or any other incentives that your business bank account would offer you.
- You would be able to protect all your personal assets from this.
Allowing your personal and business expenses to get mixed up would always land your in trouble, even when you are doing your best to keep track of everything. Hence, it is better to take care of it all so that you can sleep with a peace of mind instead of worry about losing your home due to some random lawsuit against your company.
Now that you know all about the various steps that would help you to open a business in Arizona, you can begin with it right away. Just ensure that you are following the right steps as mentioned above so that you do not end up losing all that you worked for. And if you need any help in incorporation your business, IncParadise can help you. Learn more about it here!
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