Arizona DOES NOT LICENSE A PERSON ! Arizona provides a LICENSE to the BUSINESS ! The state requires the applicant to PRE-SELECT how he intends to set up his company BEFORE the license is issued. Which company operating entity is best for you and your family in this business endeavor? If you change the business entity after the license is issued, you must re-apply and repeat the licensing process.

At American Contractor Licensing Services, Inc., we specialize in the paperwork necessary to setup the company that will best suit your business needs. Get more information below on the differences in company structures. If you have more questions, we recommend speaking with your accountant or Lawyer.


The corporation seems to be favored by most long-term successful businesses. The Corporation provides the shareholders protection from total loss (unlike in partnerships and sole proprietorships) through a legal shield referred to as the Corporate Veil. By design, the shareholders of the corporation are exposed to the limit of their investment (stock). Arizona allows one person corporations, Therein, the same protection from corporate structure is awarded the one person corporation as is provided the large multinational corporations. Corporations are all filed as C corporations. Many small corporations elect Sub Chapter S status to eliminate the corporate income tax (some refer to this as double taxation). We set up corporations and do the S status filings to save our clients money. Your attorney and/or accountant should be able to answer additional questions you may have.

Limited Liability Company (LLC)

The Limited Liability Company is best described as a Partnership given some of the business benefits of the Corporation. This entity seems to be preferred by lawyers and accountants. However, there seems to be an inherent conflict in licensing a business when set up as a construction business. The State of California has decided to no longer license Contractors if they decide to choose an LLC as the business entity. That may provide a clue to future licensing issues in Arizona. The Registrar of Contractors requires complete new licensing if the business entity changes. The U.S. Tax Guide uses the word partnership in every paragraph of the LLC section adding to the confusion. Be informed! If you need legal or accounting advice, GET IT!


By definition, a PARTNERSHIP is a business entity of more than one owner. The owners of a partnership shall all profits and lossed of the company equally. There is no separation of business and personal assets/liabilities. Roughly, it's a business marriage of two or more sole proprietorships by Partnership Agreement.

Advantages and Disadvantages are similar to the Sole Proprietor. Change in ONE or MORE of the partners results in the extinction of the Partnership and loss of the Arizona Contractors License. Both Limited and General Partnership structures carry business losses and risk to the partners.

Sole Proprietor

A SOLE PROPRIETORSHIP is described as a business entity which has no separation of business and personal assets/liabilities. The "Sole" refers to having but one owner who takes on the responsibilities (good AND bad) of the company.

Advantages: More simple to form, simpler tases, less government regulations, less complex company structure.

Disadvantages: Complete personal liability and loss potential, harder to obtain financing, no perpetuity - cannot sell or transfer ownership, the business dies when the owner leaves, retires or dies and so does the Arizona Contractors License.