Starting a business in Arizona can be an exciting venture, but before you open your doors, there are several legal and regulatory requirements you’ll need to meet. Obtaining the right licenses, permits, and insurance coverage is essential to operate legally and protect your new business.
Here’s a guide to help you understand the basics about licenses, permits, insurance requirements, and more so you can get your Arizona business up and running smoothly.
Business Licenses in Arizona
Unlike some states, Arizona does not have a general statewide business license. However, most cities and towns require a local business license if you operate within their jurisdiction.
You’ll need to check with the city or town where your business is located to determine the requirements. For example, Phoenix requires a privilege (sales) tax license for businesses selling taxable goods or services, while Tucson requires a business license for most commercial activities within city limits.
The Arizona Department of Revenue (ADOR) provides guidance on which licenses may apply depending on your industry. You can visit their website to register for a Transaction Privilege Tax (TPT) license, which is required if you sell products or certain services.
Permits You May Need
Depending on your industry, you may need additional permits or certifications. Here are a few examples of permits you may need:
- Health permits for food service businesses.
- Professional licenses for trades such as contractors, cosmetologists, and healthcare providers.
- Environmental permits for businesses handling hazardous materials.
The Arizona Commerce Authority’s Small Business Checklist is a helpful resource that outlines which permits and licenses may apply based on your business type.
Required Insurance for Arizona Businesses
Insurance is not just an added protection; it’s often required by law. The types of insurance you need will depend on your business structure and whether you have employees.
1. Workers’ Compensation Insurance
Arizona law requires nearly all businesses with employees to carry workers’ compensation insurance. This coverage provides benefits for employees who are injured or become ill due to their job.
2. Commercial Auto Insurance
If your business owns or operates vehicles, Arizona requires you to carry commercial auto insurance that meets the state’s minimum liability limits.
3. Professional Liability or General Liability Insurance
While not always legally required, these policies are highly recommended. They protect your business from lawsuits related to negligence, property damage, or other claims.
4. Health Insurance for Employees
If you have 50 or more full-time employees, the Affordable Care Act (ACA) requires you to offer health insurance that meets minimum essential coverage standards. Even if you have fewer employees, providing benefits can make your business more competitive in attracting and retaining top talent. According to the Kaiser Family Foundation, 54% of small businesses offer health benefits to their employees.
Tips for Getting Started
Register Your Business: Choose a business structure (LLC, corporation, etc.) and register with the Arizona Corporation Commission if required.
Get Your EIN: Apply for an Employer Identification Number (EIN) through the IRS for tax purposes.
Open a Business Bank Account: Keep personal and business finances separate for easier accounting and tax filing.
Work With Professionals: An insurance broker, accountant, and attorney can help you meet all legal requirements and set your business up for success.
Protecting Your Business and Employees
While getting licenses and permits is a necessary step, insurance is what protects your business from unexpected financial risks. Without proper coverage, one accident or lawsuit could be devastating to a new company.
Starting a business can feel overwhelming, but you don’t have to navigate the process alone. J.C. Lewis Insurance Services has decades of experience helping Arizona businesses find affordable, comprehensive insurance solutions, including employee health benefits. Reach out today to get expert guidance on the insurance coverage your new business needs.
