Arizona is a state in the Southwestern United States with many advantages for businesses looking to relocate. Arizona seems to be the new hotspot for firms, both small and large.
The cost of living is lower than in other states. Most business owners and entrepreneurs love to have the ability to decrease their expenses, and that includes the taxes they have to pay. Arizona offers lower business and general taxes, which makes it more convenient for companies to operate there.
Sales Tax Rates
The sales tax rates vary from city to city across the US, and major cities in Arizona have similar sales tax rates when compared to other major cities. However, even though they have similar sales tax rates, Arizona has popular business incentives that compensate for the sales taxes. Here are the sales tax rates for major cities across the US, including three cities in Arizona.
• Dallas, TX – 8.25%
• Los Angeles, CA – 9.5%
• Nashville, TN – 9.25%
• New York City, NY – 8.875%
• Philadelphia, PA – 8%
• Phoenix, AZ – 8.6%
• San Francisco, CA – 8.625%
• Seattle, WA – 10.25%
• Tempe, AZ – 8.1%
• Tucson, AZ – 8.7%
State Corporate Tax Rankings
You can easily see that the Arizona cities’ sales tax ratings are lower than some of the other states’ cities. Arizona stays in the middle of the road for corporate tax rankings, ranking at number 23.
The higher ranked states have higher corporate tax rankings, and they are California, New Jersey, Oregon, Pennsylvania, and Texas. While having a lower corporate tax rating and many tax credits and other incentives, Arizona is becoming home to many other new up-and-coming businesses.
Arizona’s Tax Credit Options and Other Business Incentives
Arizona is offering thousands of dollars in credits and grants for businesses that meet specific criteria. The qualifying criteria include the companies’ capital investments and the creation of quality, higher-paying jobs. These credits and grants are listed below as follows:
• Quality Jobs Tax Credit
• Qualified Facility Tax Credit
• Research and Development Income Tax Credit
• Arizona Competes Fund
• Sales Tax Exemption
• Computer Data Center Tax Exemption
• Arizona Job Training Grant
You can take advantage of many tax exemptions and grants if you’re an entrepreneur operating and living in Arizona. Most of these tax exemptions and grants are given depending on your company’s location, your capital investment, and the number of quality jobs your company can provide to strengthen Arizona’s economy.
Businesses that are set up in Arizona’s urban areas have higher criteria to meet to qualify for these grants and tax exemptions. This is because they have more growth potential in a heavily populated area instead of more rural regions.
Technology Is Also Advancing in Arizona
Many large tech companies are also moving into the area because the economy grows throughout the state. Digital innovation and technology dominate the market since that is the way of the future. It’s been said that many companies are looking at the region as becoming the next Silicon Valley.
Companies with broadly used smart device apps are the ones most interested in moving to the area. For example, the popular food delivery app company, DoorDash has made its headquarters in the state. Many other technologically advanced companies will likely follow suit if they have not already. Additionally, the real estate market is also doing very well, offering consumers lower living costs in the area.
Arizona Is a Right to Work State
Another perk to owning a business in Arizona is that the state is a right-to-work state. This means that companies can hire employees that don’t have to join a union. They are free to work where they want without the boundaries of union membership. But, as many people know, union workforces are not the same as they once were.
Union organization was needed in early industrialization because companies could push unsafe working conditions, long hours, or even child labor practices on workers. Unions were the answer as it was the best way to ensure workers had a higher probability of being safe at work.
However, unions are not needed nowadays because there are laws in place to make sure companies provide safe work environments for their workforces.
Having these laws in effect creates more manufacturing jobs and provides more competition in markets and industries. Not being unionized means that employees can work without joining a union or paying union dues to work at a company.
It is better for businesses because it doesn’t cost as much to run their operations efficiently, and it even means that some companies can enjoy lower property taxes. Other advantages are that employees are held accountable for their actions in the workplace.
Lower Costs of Living in Arizona
The median wage in a given state affects its business costs. When you think about it, you have to consider the many expenses to run the business successfully. For example, in Los Angeles, the median income is about $67,000 a year, and the median home price is almost $800,000.
The cost ratio in the Los Angeles area is about 11.8 times the median wage, making it more expensive to live there. The median closing price for a home for sale in Scottsdale is approximately $400,000, and the median salary is just under $65,000. Additionally, Scottsdale’s cost ratio is 5.98 times the median wage, which is far more appealing to many people, especially residents in bordering states like California.
Arizona residents are more than likely going to spend more money with Arizona businesses because they are being offered competitive salaries. More local customers means more demand for all.
The business real estate market is also looking up because of the state attempting to grow the economy. Since California has higher tax obligations, businesses based initially in that state are looking to move their operations to Arizona.
It’s not just large corporations that can benefit from the move either. Small businesses can enjoy the growth from the California migration, as well. Local small businesses don’t have to fear large corporations because the many California residents will likely choose to reside in the cities, which could mean much more local traffic to all the businesses within the area.
An increase in population will mean increased demand, which is always a good thing. However, when businesses cannot meet the increased product and service demand, they can raise their prices just enough to be able to obtain more supply. If that’s not a viable option, the business could use one of the many grants and credits available.
As you can see, the advantages of expanding or moving operations to Arizona surely outweigh the disadvantages. Multiple smaller advantages can add up to an excellent and lucrative opportunity for small and large businesses. Qualifying for the offered grants and credits is not difficult and very advantageous for business owners and entrepreneurs.