Even in the midst of an economic slowdown, Arizona’s economy is considered to be one of the most dynamic and fastest growing economies in the country. The state capital, Phoenix is now number five in terms of city population. Many start-technology and Fortune 500 companies are based in Arizona. They enjoy many of the advantages offered by a competitive tax structure and business environment. The state’s knowledge-based and skilled workforce gives business a lot of options to expand their services.
Some of the most important sectors of employment are in the field of electronics and semi conductor manufacturing, aerospace, back-office operations, tourism and business services. Mining and agriculture, which are the state’s original exports, continue to be vital economic resources in many rural sections. The largest economic sectors include real estate and rental business, tourism, and government. The construction industry for its part is comparatively large due Arizona’s fast growth in the past years.
Arizona’s dynamic and fast growing economy is supported by an increasingly competitive tax structure that has been implemented over recent years.
According to the US Census Bureau, Arizona became the second fastest growing state, whose population went up 2.3 percent between 2007 & 2008.
The state sales tax rate is 5.6 percent. At present, all of Arizona’s 15 counties impose a tax on top of the state tax. The state capital Phoenix, located in Maricopa county, charges 0.7 percent increasing the state sales tax to 6.3 percent.
Arizona doesn’t charge a state tax on food destined for home consumption although some cities in the state do impose a tax. The state also adds an 18-cent per gallon tax on gasoline in addition to the tax levied by the federal government. There is no gift tax or inheritance tax. The state doesn’t impose tax on medicines prescribed by a physician or dentist licensed by the state.
Arizona was ranked number one by the Industry Week Magazine in 2008 for the lowest workers compensation and benefits paid in the whole country.
The state’s business costs savings as compared to California and the US are on the whole, generated by lower tax burdens, lower infrastructure costs and lower wages.
Since 2005, important business tax reductions have been implemented and they are expected to increase the state’s growing competitive tax position. New programs for tax credit incentives are being implemented.
- Starting a Business in Arizona
Here we shall try to explain the steps in the process that most business owners will have to go through when establishing a business or starting a cleaning service in Arizona.
- Research and Plan Your Business: prepare your business plan that will help you become a successful cleaning business owner. Go to the Arizona Business Portal where you can find tools and resources to help your plan, start or expand your business.
- Get Business Training and Expert Advice: You can take advantage of free training and counseling services offered by the state in your community which include preparing a business plan start up, getting the needed financing for your business, and help with expanding and/or relocating your business. Ask also if they have available cleaning business training.
- Select a Location: Figuring out where to locate your cleaning business can be a tough challenge and its selection can spell the success or failure of your business. So where should you have your cleaning business located? Some experts will tell you that where you set up your business is very important to assure your success; some of them will say that it is not that vital. Its actual importance is dependent on the type of business, the facilities you require and where the potential customers are bases. For your cleaning business, the actual physical location takes secondary priority to whether or not the present facility itself is able to comply with what you need. But regardless of the type of business you have, whether retailing or service oriented, it is vital that you have a definite picture of the set up you should have and what you would like to get. It is also essential that you define what you will not tolerate unconditionally and how much you can pay for the startup.
You can get advice about the right location and how to comply with zoning laws from the Arizona Department of Commerce Site Selection Services.
- Finance Your Business: The money you need to invest in your cleaning business may not be enough so you would need some help to get started. You can learn about government guaranteed loans, grants, and venture capital from www.business.gov so you can be well on your way to opening a cleaning business in Arizona.
- Getting a Business Name
Any business needs a business name that will identify it from other companies operating in the same industry. Getting the right business name for your cleaning services could be both simple and complicated at the same time. There cannot be anything simpler than choosing any clever word to serve as your business name but also there cannot be anything more complicated than choosing a name that will stand out and convey the essence and objective of your cleaning business.
The name you choose for your cleaning business must be easy enough to remember but should also be a definite and specific reminder of your business to the clients. It should be easily pronounced and should connote something positive that will push the potential clients to do business with you.
But a caveat is in order: be careful that you don’t infringe on the trademark or copyright ownership of the name. You need to know if your chosen name is not protected by copyright or trademark laws. Never use a name if you are not 100% certain that it is not owned by somebody else. If you do, you may have to face painful payment reparations to the business name’s original owner.
You need to be cautious that your business name is not copied or is an imitation of an already existing and established name. A business name should not have embarrassing spellings or intentional misspellings that have the potential to be offensive. It should also not contain abbreviations that may imply profane or offensive meanings. Your business name should not have implied associations with groups that have nothing to do with your business.
The steps listed below can help you check if there are existing names similar to yours
You may engage the services of a trademark attorney who could handle the entire process in your name.
- Registration of Business Name
It is not a legal requirement for businesses in Arizona to register trade names. It is however, an accepted business practice to do so. You can register your business name, also referred to as DBA (Doing Business As) at the Office of the Secretary of State.
- Go to the website of the Arizona Registered Name Information Search and look up you chosen name to see if that name or a variation of the name exists already in their database. Do not limit your verification to your specific name but search of similar spellings or variations as well. There is a high probability that the name you have selected is available to you if you do not find a similar name.
- Remember that the trade name or trademark is not approved until the office of the Secretary of State has received the application and fee, and the proposed name has been examined carefully. It is recommended that you do not purchase business cards or do your advertising before obtaining your certificate of registration.
- The Office of the Secretary of State encourages filers to use descriptive names as their business name. There are approximately 350,000 names already registered at the state level as Trademarks, Trade Names, LLC’s, Corporations or Partnerships. They suggest that you perform independent and extensive research before trying to register a name. They cannot give any guarantee that the name you register will not conflict with already existing business names.
- Go to the state of Arizona’s website to download a trade name registration application. Fill out the forms and include applicable fees.
You can mail the application to:
Office of the Secretary of State
1700 West Washington, 7th Floor
Phoenix, Arizona 85007
Or bring it in person to:
Customer Service Center, 14 N 18th Ave
- Also consider filing for a federal trademark. For more information on doing so, visit the United States Patent and Trademark website. Or you can contact them at their office located at 2021 Jefferson Davis Highway, Arlington, VA. General information requests should be addressed to General Information Services, U.S. Patent and Trademark Office, Crystal Plaza 3, Room 2C02, Washington, DC 20231
- Domain Name
Having an online presence is one of the prerequisites of modern business. This is especially true if you are considering owning a cleaning business. People now almost automatically go to the Internet for whatever information they need. In this light, it pays to have a website for your cleaning business that your clients can access whenever they need someone to clean their premises.
It is important that the domain name you select reflect your website or cleaning business. As much as possible, your domain name should also be your website name. This way, there would be fewer things your customer must remember to get to you on the web. Giving your website the same name as your domain is important since people think of its name when they think of your website.
The domain name you want might not be available because somebody else has bought it ahead of you. You may have entered late into the game so others have beaten you to that name. So what are you to do? If you are really bent on getting it, especially if you already have an existing brand name or business that you own and have been known for it, you would probably do everything you can to get it. One option is to offer to buy the domain name from its owner. You can find out who the owner is by checking up the “whois” information available for the domain and get in touch with the person or company listed as the current owner. If they are willing to sell, be prepared to pay a bit more than if you are getting a new domain name.
If you are just beginning in your business, try obtaining an available domain first, one that fits your business type and then name your website and business too, after the domain name you have bought. For example, you were able to buy the domain name “mycleaningbusiness.com, then you may name your business and website My Cleaning Business.
- Business Logo
A logo that is appropriate for your company can help your clients remember your cleaning service. If you choose the correct one, you can count on it as one of your most effective marketing tools in promoting and expanding your cleaning business. Consider the following tips when getting a logo:
- What you want your business to represent in terms of value, creativity and quality
- Observe the type of logos your competitors are using. What you want is a logo that will make you stand out from the rest.
- Make sure that the colors and shapes you choose would give positive effects in your cleaning business.
- Get the services of one (or several) good graphic artists who will design your logo. Give them relevant information about your business, its name and other important facts that the designer can use as basis for the design.
- Show the finished logo to your family, friends, and potential clients and ask for their opinions.
- Revise the logo using the reactions you have received as starting point.
- Test your logo once more and revise as needed.
- You can trademark the logo if you want.
- Have business cards, letterhead, signs and packaging carry the final logo design.
- You can help your clients associate the logo with your business by always adding your business name beneath the logo.
- Not all logos need to be a graphic or picture icon. A graphically customized business name can also serve the same purpose
- Make sure that you acquire all the legal rights for present and future use of your logo.
- Legal Structure of Your Cleaning Business
There are several business structures that you could use for your cleaning business. Each one of them differ some important features.
- Sole Proprietorship: It is the most common type of legal structure and most appropriate for small businesses because it is easy to establish and run. The owner or sole proprietor of the cleaning business has full and total control of the business and is not held accountable to any partner or investors. The money invested in the business is purely the owner’s. The one great disadvantage of a sole proprietorship is that the owner is solely responsible for all the financial responsibilities of the business. If the business operations fail, the personal assets of the business owner may be utilized to pay the financial obligations incurred by the cleaning business. The sole proprietor is also the only one responsible for the employer's share of the employees’ taxes which pegged at fifteen 15% could mean a tremendous strain on resources.
- General Partnership: this structure has two or more partners sharing investments, profits and losses generated by the business. The profits or losses from the business will be on the individual tax returns of the respective partners who are responsible for the operation, decision making and financial obligations of the business.
- Limited Partnership (LP): comprises general partners in charge of running the business and are subject to personal liability and limited partners who put investments in the business but have only their investments exposed to business risks.
- Limited Liability Partnership (LLP): this is similar to limited partnerships. The only difference is all partners have limited liability. This structure offers both the pass-through taxation of a partnership and the protection from liability of a corporation.
- Corporation: this is the most common form among bigger companies. Corporations are separate and distinct from their owners. It has juridical personality that is subject to taxation for any profits it will realize and is liable for any financial responsibilities it will sustain. One advantage of this legal structure is that investors do not have personal liability on the business. Their liabilities are limited to the amount they invested. A disadvantage though is that investors have very little or no control at all on the running of the corporation. This is left to professional managers who get paid for doing this job.
- C Corporations: These are publicly held companies where stock shares are sold to the public who get their share of earnings when the corporation earns money. One clear disadvantage of this business structure is that your income is double taxed. The corporation pays taxes for income realized before they pay dividends to the stock holders. The dividends earned by the stockholders will be taxed too since they must be declared as part of their income. No special allotments of itemized tax exist in Arizona Corporations. Investments poured on the corporation can be taxed unless the incorporators meet the eighty percent control test of Section 351 as provided by the Internal Revenue Code. All shareholders may not deduct losses from their corporate income.
- S Corporations: This business structure is not subject to double taxation like a C Corporation since this type enjoys special tax status with the IRS. Forming an S corporation allows you to benefit from the limited liability of a corporate shareholder but pay income taxes like you were the sole proprietor of the business or just a partner.
In a regular or C corporation, the company itself is taxed on profits earned from the business. The owners have to pay individual income tax only on money they get from the corporation as dividends, bonuses or salary.
In an S corporation on the other hand, all business earnings pass through to the owners, who must report them on their personal tax returns. An S corporation itself doesn’t pay income tax. However, such a corporation which has more than one owner is obligated to file an informational tax return to report each owner’s share of the income of the corporation.
Many states don't levy a corporate tax on S corporations. Instead, they choose to impose tax on the business's earnings on the shareholder or owners’ personal tax returns. Approximately half a dozen states tax an S corporation like any regular corporation. In Arizona, S corporation status is recognized and the state doesn’t require a separate yearly filing from the S-corporation other than Tax Return Form 120S.
- Employer Identification Number
An Employer Identification Number (EIN) is the same as a Federal Tax Identification Number. This number is used to identify a business entity. As a general rule, businesses need an EIN. You may apply for one using various methods such as online, by phone, mail or fax.
- Apply Online: This is the preferred method. The information you entered in the online application is validated during the session and an EIN is immediately issued. You can access the online application at the Internal Revenue Service website.
- Apply Toll-Free Telephone Services: You can get your EIN immediately by contacting the Business and Specialty Tax Line. They will get your information, assign your EIN and gives the number to an authorized person.
- Apply by Fax: You can send by fax the completed Form SS-$ application. If you provide your fax number, they will send your EIN within four business days.
- Apply by Mail: Processing time for application for EIN through mail is usually four weeks.
- Registration for State Taxes
Arizona State taxes at a glance:
- Tax Range:
- Income Brackets*:
- Lowest - $10,000
- Highest - $150,000
- Brackets number: five - 2.87%, 3.20%, 3.74%, 4.72% and 5.04%.
- Standard Deduction:
- Single - $3,500
- Married filing joint tax return - $7,000
- Personal Exemptions:
- Single - $2,100
- Married - $4,200
- Married with dependents $6,300
- Dependent - $2,300; Senior - $2,300
- Dental/Medical Deduction: Limited to excess of four percent of adjusted gross income
- NB: * these numbers are applicable for single taxpayers only. For joint returns, the taxes are double the tax levied on half the income.
Filing your state income tax return in Arizona. The state imposes personal income taxes if your gross income is at least $15,000. The same applies if the adjusted gross income is at least $11,000 for married taxpayers who file jointly. The amount is $5,500 for taxpayers who file as single, head of the household or as married separately filing their tax return.
The state of Arizona imposes tax on the same income that residents report for purposes regarding federal income tax. Included here are unemployment compensation and income earned in other states. The state provides no special handling and action for capital gains; they are taxed using regular rates.
If you opt to take the deduction that is standard on your federal income tax return, under Arizona laws, you can still itemize your deductions. To do this, first complete both the federal and Arizona Schedule A and attach the two of them to the state tax return. But even though you are able to deduct the your state income tax from your federal income tax return, you will not be able to claim federal income tax deduction on your Arizona state tax return.
Tax laws in Arizona do not allow tax credits for children but you can claim an exemption for each child. Common credits that are allowed include tax credit on school tuition, tax credit on public school, and the tax credit on family.
In Arizona, the income you include in your federal income tax return is considered as taxable. As a result, your retirement income earned from another state is still taxable. If you are doubly taxed on income from another state however, you may find that you are eligible for a tax credit. This will be determined by your filing status in each state. Finally, non-residents employed in the state need to file an Arizona income tax return.
- Getting an Arizona Business License
Not all businesses need to obtain a license while some types of businesses do need to have more than one. No generic state business license exists. For local business/occupational license or permits for operating cleaning services in each incorporated city or town, you need to get in touch with local authorities as they may have their own restrictions or requirements for licenses, permits, zoning rules and taxes. These may affect the operation of your business. Look for information about cleaning business license or other business activities and their requirements under keywords such as permits, licensing, application forms or certifications.
If you are opening a cleaning business in an unincorporated region of the county, you have to get in touch with that county’s Planning and Zoning and/or Development Services to check their zoning laws. You also have to contact their Fire Department and county Sheriff’s department to check their regulations or restrictions that might affect your cleaning business. You need to get in touch with the County Recorder if you need to file a business name that is fictitious.
- Operating a Business in Arizona
There are several things you should do so you could operate your cleaning business legally in Arizona. You can contact the Small Business Ombudsman who functions as advocate and guide for small business owners if you run into any issues concerning rules and regulations that could not be resolved through the normal course of doing business with a state agency.
- Pay Your Taxes: Most businesses established in Arizona are required to pay their business taxes to the Arizona Department of Revenue. You can go to the following websites for guidance on how to file and pay business taxes:
As an employer you must also pay Unemployment Insurance Tax and Workers' Compensation Insurance.
- Keep Your Business and Professional Licenses and Permits in Good Standing: You can visit the Licenses and Permits which has links to services and information for applying and renewing Arizona permits and licenses.
- Hire and Manage Employees
If you are just starting your cleaning business, you can study the Ten Steps to Hiring a New Employee where you can learn how to comply with federal and state laws concerning labor.
If you will hire independent contractors for your business, it is important that you understand the difference between employees and independent contractors.
All Arizona business owners and employers should follow federal and state labor laws and equal employment opportunity laws that prohibit discrimination in employing workers.
- Report New Hires: All employers are required by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 to report newly hired and re-hired employees to a state directory within twenty days of their being hired or rehired. You can go to the Arizona New Hires Reporting page for more information on how to register.
- Post Required Notices: State and federal laws require employers to display prominently specific posters in the workplace that gives information to employees regarding their rights and responsibilities of employers. You can get these free posters from state and federal labor agencies.
The Workplace Posters page for specific federal and state posters will give you the needed information for your business.
- Adopt Workplace Safety Standards: Employers must comply with the standards provided by the Occupational Safe and Health Administration (OSHA) which offers free on-site, consulting services. They can help the business owners identify and eliminate hazards in the workplace. You can also visit Arizona Division of Occupational Safety and Health for additional information on how to comply with OSHA regulations.
- Comply with Environmental Regulations: Depending on the type of your business, you may be required to comply with specific environmental regulations and get environmental permits. This is needed especially by those business that release environmental pollutants or if your business involves storing, treating or disposing of hazardous or solid waste materials. Disregarding this requirement can cost you hefty fines. The Arizona Environmental Permit Requirements and Environmental Compliance Assistance will give you information if your business needs to comply with these requirements.
- Insure Your Business: Your investments are protected by insurance by reducing financial risks that are linked to unexpected occurrences like a partner’s death, an employee’s injury, a major lawsuit or uncontrollable and unpredictable natural disasters. It is the state government that determines insurance requirements for local businesses. For more information regarding purchase of commercial insurance and help in finding a licensed agent, go to the Arizona Department of Insurance.
- Keep Good Records: As a business owner you may be legally required to keep tax and employment records. You can visit the following websites for resources and tools to help you maintain your tax records and other required documents such as payroll, eligibility to work, etc.
- Starting Your Cleaning Business in Arizona
People put up their own business to make profits – to earn money they could use for other purposes that would make their life more comfortable and enriched. For those who are lucky their business is based on something they love to do. But for all intents and purposes, you don’t have to love cleaning houses to start operating cleaning services successfully. In fact, you can begin even without possessing a iota of knowledge about this industry.
Your target income will depend on the size of the cleaning business you want to set up. You could start as a one person cleaning service with a home office or you could immediately start big and get a commercial office and hire qualified personnel to work as your employees.
Below are some easy steps to help you start a cleaning service in Arizona:
- Determine the kind of cleaning service you will offer. You need to decide if you are going to clean houses or commercial establishments, and what kind of cleaning will you offer in these places, whether you are going to do vacuuming, making beds, dusting, etc.
- Pricing your cleaning services. You have to have an idea about the rates you will charge your customers. For this, look at your competitors in the industry. Consult your telephone directory and read the classified ads of your local newspapers to look them up and call them to find out the cleaning services they are offering and the rates they charge for their services. Base your own pricing on the information you will gather.
- Workout your startup costs. Include in your calculations the materials, tools, advertising, transportation, insurance and other expenses you incur. Create a list of all those you use. Find out how much each item cost you and write the amount next to the item being considered. After listing these down, you can start adding up your total costs for the startup.
- Name your business. The name you give your cleaning business can sometimes determine if a client will choose you over other providers of the same services. Choose the appropriate name that has not been taken by others and one that will make your cleaning business stand out from the rest of the industry players.
- Learn the zoning regulations and other cleaning business regulations of the local area where you are going to set up your business. Find out their cleaning service requirements and cleaning business laws. They may have regulations and restrictions that could affect your business operations. Some zoning regulations for example prohibits home based businesses.
- Offer a few free cleaning jobs. They will not be really free as in doing so, you get references and leads while at the same time establish your credibility and dependability. Try these on your friends, relatives or non-profit groups in your area.
- Advertise your business through promotions, word of mouth and other media. Create tie ups with local businesses like a restaurant or a grocery store. Set up a raffle box or any suitable container in these places where potential clients can put a slip of paper with their name and contact numbers. At the specified time, draw the winner who will have free cleaning services from you. This type of promotion helps promote your cleaning business.
- Start getting your first paying client.
This is only the beginning of a profitable cleaning business. To help you manage your business better, try taking a cleaning business course so you can improve your business in terms of expansion, growth, accounting and inventory practices, tax filing, insurance, improved marketing strategies and more.
Many people who want to start a cleaning business not only to make extra money but also to escape from their current day job they see as boring and without further rewards. They feel stagnated there.
Starting a cleaning business is not easy but certainly rewarding personally and professionally, and not to mention, lucrative. The earnings are great and on top of that you establish your own work hours. You will have fun being your own boss. People will have more than enough cleaning jobs for you and who knows, you might enjoy your work environment more than you ever expected.