Can You Use Your Home as a Business?
To operate a home-based business in Arizona, entrepreneurs must comply with Arizona regulations. Home-based business owners must maintain a professional image, create an efficient workspace within their homes, and implement effective marketing strategies to facilitate growth and success.
Zoning Regulations and Permit Requirements
Arizona has a supportive environment for home-based businesses, with laws and regulations that are designed to facilitate entrepreneurship and small business growth. One of the most critical aspects of starting a home-based business in Arizona is understanding the zoning and permit requirements. For example, businesses that involve heavy foot traffic or the use of hazardous materials may not be allowed in certain residential zones.
Taxation and Business Setup
Rather than a tax on a sale paid by the buyer, Transaction Privilege Tax (TPT) is a tax for "the privilege of doing business" in the state of Arizona and levied on the seller. In Arizona, a seller is responsible for remitting TPT whether or not they actually collect TPT on a transaction.
Steps to Start a Home-Based Business in Arizona
- Assess Skills and Interests.
- Conduct Market Research and Business Plan.
- Choose a Business Structure.
- Register Your Business.
- Obtain Licenses and Permits.
- Set Up Your Home Office.
- Open a Business Bank Account.
- Implement Marketing Strategies.
Considerations for Home-Based Businesses
One reason to think about starting a business in Arizona is that the state filing fees are quite low. In some cases, you can expect to pay under $100 to set up your business with the state. Additionally, the state doesn’t require a business license to operate.
Location Choices and Tax Deductions
One of the first decisions to make when deciding to start a small home-based business is choosing the business location. You could operate out of a co-working space, rent an office/studio/workshop, rent a building, or work from home. Each location has its advantages and disadvantages. For a sole proprietorship, one of the greatest advantages of working from home is that you are already paying for that space.
If your home office is used exclusively and regularly for business purposes, you may be able to deduct a portion of your home-related expenses, such as mortgage interest, property taxes, homeowners insurance, and some utilities.