Glossary · Institutions & Instruments
City business license
In short
A city-issued permit to do business in that city. Arizona has no state business license, and this is not a TPT license.
In full
A city business license is a municipal regulatory license. Some Arizona cities require one, some do not, and each city sets its own requirement, fee and renewal. Questions about it go to the city.
A separate license is easy to confuse with it and is not optional anywhere. A.R.S. § 42-5005(B) requires a person wanting to do business within a city or town that imposes a municipal privilege tax to apply **to the Department of Revenue** for an annual municipal privilege tax license, with a fee of up to $50 set by the city's own ordinance, submitted with each new application. The statute bars engaging or continuing in business until that license is obtained, and requires the Department to hold the fees in trust for the city.
So the distinction is not state versus city. It is regulatory versus tax. The regulatory license comes from the city and may not exist at all; the municipal privilege tax license is required by state statute, applied for from the Department, and priced by the city.
Both are separate again from a transaction privilege tax license under § 42-5005(A) and from Registrar of Contractors licensure. A contractor working across jurisdictions may need several city licenses, one, or none, while the tax licensing position does not vary that way.
A different matter reaches city offices without being a licensing question at all. The Annual Bond Exemption is the Department's documentation to city building authorities that a contractor has met the bonding requirements of A.R.S. § 42-5007, which a city checks before issuing a building permit.
A.R.S. § 42-5005(A), (B); A.R.S. § 42-5007; ADOR Contracting FAQs, Licensing