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Advantages of Incorporating a Business in Arizona

When you think of a startup company in Arizona you will be confronted with several questions like, is setting up a business in Arizona a profitable venture? Are there any incentives for businesses? What is the tax situation? These questions might cause concern and hence the following information is an effort towards enlisting certain advantages or benefits that you or your business entity may derive in this state.

Business Growth Incentive for New Businesses

As one of the top registered agents in the state, we can help you to register a new business in Arizona and this is all so that your business entity can capitalize upon several benefits, incentives, and advantages that the state has to offer. These will ensure long term growth and profitability for Corporations, LLC, Partnerships etc. Let’s take a look at some of the advantages:

Advantage#1: Salient benefits of Corporation or LLC formation

Corporation

  • Limited Liability: In an Arizona corporation, the shareholders will enjoy limited liability where the corporation’s debts are concerned and will be protected from any judgments made against the corporations.
  • Additional Funds: When you register a new business in Arizona as a corporation, you will be able to raise additional funds through sales of stock.
  • S Corporation: At any given point in time, you can convert from a C Corporation to S Corporation status through a proper process. This election will enable your business entity to be taxed in a similar way as a partnership.

LLC

  • Limited Liability: As an owner of an LLC, you will be able to enjoy limited liability protection similar to what a corporation enjoys.
  • No Minutes of meetings: Unlike a corporation, an LLC startup company in Arizona will not be required to maintain any minutes of the meetings or resolutions.
  • Flexible Profit Distribution: An LLC has the benefit of being able to select different forms of distribution of profits.
  • Flow through Taxation: When you register a new company in Arizona, an LLC can benefit from the process of flow through taxation that will ensure there are no double taxations.

Advantage#2: Enterprise Zone Program

This is one of the most rewarding programs for a startup company in Arizona or new businesses registered in the state. The primary goal of the “enterprise zone program” is to ensure there is improvement in the economies of some of the distressed areas of the state. There is a range of incentives as well as initiatives being provided by the local government of each Enterprise Zone to encourage businesses to locate as well as grow in the proposed zone. The incentives and initiatives vary from financial or economic incentives to providing improved infrastructure, increased public services, regulatory simplification, and structural rehabilitation. Let’s look at some examples of incentives for businesses situated in the Enterprise Zones:

In Pinal County, incentives provided to businesses include – Low-interest business financing through the Pinal County Industrial Development Authority (IDA), Targeted Community Development Block Grant (CDBG), Rural Development (RD) funds, and Job Training Partnership Act (JTPA) among others.

Download Arizona Enterprise Zone Guideline​​

Advantage#3: Incentive Programs

If you register a new business in Arizona then you can take advantage of various incentives being offered by the state. Some of the important ones include:

  • Angel Investment Tax Credit Program: This program provides income tax credit to those “qualified investors” who invest in the early-stages of a “qualified small business.” The income tax credit can be equivalent to almost 30% of the investment amount, and it increases to 35% for those investments, which have been made in “bioscience enterprises” as well as a Startup Company in Arizona situated in rural Arizona.
  • Arizona Innovation Challenge: This is an Innovation Grant Program that is meant to enable the growth of early stage tech ventures. If you register a new business in Arizona, you will be able to benefit from the $1.5 million in grant funds made available by the American Recovery and Reinvestment Act (ARRA).
  • Variety Programs: When you register a new company in Arizona, a range of other incentive programs can be benefited from including AZFAST Grants for Small Business Innovation Research (SBIR), Arizona Innovation Accelerator Program, Arizona Job Training Program under A.R.S. §41-1541 et seq., Foreign Trade Zone Program, Healthy Forest Enterprise Incentives Program (HF), and Pollution Control Tax Credit among others.

Are there any Disadvantages of Incorporating in Arizona?

When you register a new business in Arizona, you can benefit from the variety of incentive and business targeted programs but are there any disadvantages as well? There are a few disadvantages like process of incorporation is time consuming and has a higher fee as compared to other types of business entities. Incorporation can also lead to higher overall taxes and similarly LLC’s will get dissolved if a member dies or the business is declared bankrupt. When you weigh the advantages over disadvantages, the former is many more times higher and business growth oriented.

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