Starting a Business in Arizona
Arizona is a decent place to start and run a small business. While it does not have astounding economic expansion, it has steady growth and stability, a constantly expanding workforce, a reasonable regulatory environment and fair tax burden. The Grand Canyon State has much to offer entrepreneurs who will take a chance and operate there. Starting a business in Arizona can come with an array of benefits and available opportunities that businesses can leverage in order to expand growth. The most common are incentives that are given through tax credits, grants, and to companies who physically situate themselves inside a State designated Enterprise Zone.
STEPS TO STARTING A BUSINESS IN ARIZONASome steps you can take after starting a business in Arizona are trying to make payments of Arizona sales tax after looking up an Arizona sales tax rate and following up on filing a form JT-1. Additionally, you can search for the relevant Arizona business licenses for your company to meet compliance requirements. The Arizona Department of Revenue oversees the policies and procedures related to sales tax collection and remittance while guidelines for new and existing businesses are set by the Arizona Secretary of State. Once you complete an Arizona corporation search and pick a company name, you can register a DBA (doing business as). After forming an entity with the Arizona Secretary of State, you can apply online for a TPT License (Seller’s Permit). If you need to open a business bank account, it may also be necessary for you to get a Federal Employer Identification Number. To avoid costly penalties or other fines and remain compliant, you may also need to obtain the Business Licenses you require based on your business type. Once you have finished your other administrative tasks, you can start looking at the beneficial programs offered in Arizona. Here are some of the very lucrative tax credits and grants that businesses can take advantage of:
- The Arizona Innovation Grant Program is meant for new tech startups that want to expand. It applies to all newly registered tech businesses in Arizona.
- The Arizona Innovation Accelerator Fund is a loan program offered to eligible businesses with 500 employees or less. Funds can be used for working capital, inventory and equipment, and for expanding the workforce.
- The Arizona Foreign Trade Zone Incentive allows for an approximate 70-80% reduction in real and personal property taxes.
- The Arizona Sales Tax Exemption for manufacturing incentive offers qualified manufacturing businesses an exemption on machinery or equipment used in the manufacturing process. Energy consumption such as fuel, electricity, and natural gas used at a manufacturing company is also exempt from sales and use tax.
- Arizona offers a tax credit to certain businesses that have eligible R & D activities within the state. The R & D tax credit is equivalent to 15% of qualified R & D expenses up to $2.5 million of qualified R & D expenses that exceed that amount. Qualifying expenses include (but not limited to) R & D related equipment or supplies. The credits are taken against income tax and are capped at $5 million annually.
- The Arizona Renewable Energy Production Program extends an income tax incentive to qualified companies. To qualify, a company must pay a wage of 1.25 times the state average to over 50% of the workers. Companies must also use solar or wind energy to produce electricity for a 10 year period.
- There is a Sales and Use Tax Exemption for companies that have a qualified data center. A qualified data center is any new facility that a minimum of $25,000,000 or $50,000,000 is invested into depending on the location of the facility in the state. You will need to have a seller’s permit in order to get your resale certificate to qualify