Many homeschool families run their own businesses, and this can become a training ground for the students. It is fairly easy to begin operating a company in Phoenix, Arizona, but the tricky part comes in knowing all the forms that need to be filed and the details for completing them properly.
Once you have a business plan and a name for the enterprise, these steps will help to get started in the right direction for a simple business with a sole proprietor.
File for an EIN (Employer Identification Number) through the IRS.
- This is the number needed for all business transactions such as banking, applying for a business license, and all dealings with IRS and state taxing agencies.
- Apply by internet, phone, fax or mail. Internet is the quickest, and a number will be assigned upon completion of the interview form that can be used immediately for all transactions except filing a tax return.
- Cost: Free. Use the same EIN for one or multiple businesses you own.
- Renewal needed? No, but there are situations requiring a new EIN.
Register the business with the State of Arizona
- This is not required for sole proprietorships
- Some types of enterprises have special licensing requirements
- Certain occupations are governed by state regulatory agencies
Apply to the Arizona Secretary of State for the business name, trade name or DBA
- Also not required but is an accepted practice
- A registered name may be needed for banking or additional licensure
- Check name availability to avoid duplication of an existing entity
- Apply online, by mail, or in person (quickest way—name assigned immediately)
- Cost: Trade name registration $10.00 Various other fees
- Renewal needed? No, not legally required, but is an accepted practice. An expiration date of five years is found on the registration certificate. If not renewed prior, the name is open for anyone else to take. Cost: $10.00
- Penalty for late or non-renewal: None
Complete a Transaction Privilege Tax license (TPT—Sales tax) if you are selling tangible personal property or taxable services
- Amount of tax is based on products sold and varies by business and city
- There is a state TPT plus many cities and some counties have their own additional tax
- The state usually collects taxes for both entities, but larger cities collect their own
- Apply online (4 weeks for finalization), by mail (2 weeks) or in person (30 minutes)
- Cost of taxes: Varies
- Cost of license: $12.00 for Arizona. Cities may have additional fees.
- Filing and paying frequency for the taxes: Monthly dates vary
- Form for submitting: Arizona Joint Tax Application done online
- Renewal of license needed? No, unless there is a change in ownership or location or addition of other cities.
- Penalty for late payment of taxes: Yes. .5% per month to maximum of 10% of taxes owed plus a late filing penalty of 5%
Next:
- Arizona Joint Tax Application
- Quarterly Federal and State Income Tax returns (Self Employment Taxes)
- Adding employees
- New Hire forms
- Federal withholding (FICA, Medicare)
- State withholding
- State and Federal Unemployment Insurance
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