Starting a service business in Arizona comes down to four things: picking a structure, registering with the state, getting licensed for your trade, and setting up a way to bill customers. Filing an LLC in AZ costs $50, ongoing reporting is no annual report for llcs, sales tax is 5.6% state + local (TPT), and personal income tax runs 2.5% flat. Below is the full sequence, the fees you should budget for, the licenses most trades need, and the deadlines that catch new Arizona owners off guard.
Most new registrations come out of Phoenix, Tucson, Mesa and the rest of Arizona — local business licenses are issued at the city or county level, so check yours after the state filing clears.
| Item | AZ cost |
|---|---|
| LLC / entity filing (one-time) | $50 |
| Annual / periodic report | No annual report for LLCs |
| Federal EIN (IRS) | Free |
| Sales tax registration | Typically free |
| Trade / professional license | Varies by trade |
| Local business license | Set by city / county |
Fees change — confirm current amounts with the AZ Secretary of State and the Arizona Department of Revenue.
Choose your structure and file with the AZ Secretary of State ($50). Get your free EIN from the IRS the same day.
Register for Arizona sales tax with the Arizona Department of Revenue, then open a business bank account under the registered name.
Apply for your trade license and local business license. This is usually the longest step: TPT license (free); Professional/trade license.
Get general liability insurance (and workers' comp before your first hire), then set up estimates and invoicing so you can bill the day you're cleared to work.
LLC Filing Fee
$50
Annual Report
No annual report for LLCs
Sales Tax
5.6% state + local (TPT)
Income Tax
2.5% flat
Choose a business structure
File with Arizona Corporation Commission ($50 for LLC)
Publish Articles of Organization in a local newspaper
Get federal EIN
Register for Arizona Transaction Privilege Tax (TPT)
Get local business licenses
Open a business bank account
Arizona uses Transaction Privilege Tax (TPT) instead of traditional sales tax
LLCs must publish Articles of Organization in an approved newspaper
No annual report required for LLCs — one of the easiest states
Low filing fees ($50 LLC), flat 2.5% income tax, and no annual report for LLCs.
Transaction Privilege Tax — Arizona's version of sales tax, charged to the seller.
Online LLC filings with the AZ Secretary of State are typically processed in a few business days, and an EIN from the IRS is issued immediately online. Trade licensing and local permits usually take longest — plan on two to six weeks before you're fully cleared to work, depending on your trade.
No — you can operate as a sole proprietor in Arizona and still invoice customers legally. An LLC ($50 to file, no annual report for llcs) separates your personal assets from business liability, which matters most once you're on customer property, hiring help, or signing contracts.
Arizona sales tax is 5.6% state + local (TPT). Materials and goods are commonly taxable, while labor treatment depends on the type of work, so bill parts and labor as separate lines and register with the Arizona Department of Revenue before you start collecting.
Open a business bank account under the registered name, then invoice from a tool that applies AZ tax per line item and accepts cards. Glo Invoice sends invoices by text with a one-tap pay link, and Tap to Pay lets you charge on site before you leave the job.