Choosing the Best Ownership Structure

Starting a business in Arizona begins with choosing the type of ownership structure. Everything from your personal liability to your tax obligations might be influenced by the structure you decide on as well as local regulations. Here are the most common types of business ownership structures:

1. Sole Proprietorship
2. Partnership
3. Limited Liability Company (LLC)
4. Corporation
5. Nonprofit Corporation

Advantages of an LLC in Arizona

A Limited Liability Company (LLC) is an attractive choice for business owners in Arizona due to its wide range of benefits:

1. Limited Liability. The members of an LLC are not liable for the company’s debts and obligations.
2. Flexible Management and Ownership Structure. Arizona doesn’t mandate annual meetings or a board of directors for LLCs.
3. Pass-through Taxation. In general, an LLC has no obligation to pay business-level taxes.
4. Fewer Administrative Duties. LLCs have less annual filing requirements than corporations.
5. Easy Establishment. Setting up an LLC in Arizona is simple.
6. Flexible Profit Distribution. LLCs have the freedom to decide how to split their profits.
7. Credibility. Being an LLC is preferred by customers, vendors, and partners.
8. Perpetual Existence. LLCs in Arizona can have perpetual existence.

Consult with a business advisor, attorney, or CPA to make the best decision for your business.

Applying for Arizona Business Tax ID

Register for the appropriate tax identification numbers, licenses or permits for both federal and state taxes if you’re starting a business in Arizona.

Federal Tax ID (EIN)

1. Employer Identification Number (EIN) is a number assigned by the Internal Revenue Service (IRS) and is necessary for almost all types of businesses, especially if you plan to hire employees or create a corporation or partnership. You can apply for an EIN online at the IRS website. The service is free, and the number is typically issued immediately.

State of Arizona Tax ID

1. Arizona Joint Tax Application (JT-1) allows you to register for transaction privilege tax, use tax, and employer withholding and unemployment insurance. Complete this process online through the Arizona Department of Revenue‘s AZTaxes website.

Other Requirements

1. Business Licenses
2. Unemployment Insurance Tax
3. Employee Withholding Tax

Requirements may vary based on the specifics of your business. Consult with a tax professional or business advisor to ensure you’ve covered all necessary registration for your business.