Arizona is one of the faster-growing restaurant markets in the country, with Phoenix and Scottsdale driving significant independent restaurant activity. The Arizona Restaurant Association represents over 11,000 restaurant locations statewide. Arizona's regulatory environment is generally business-friendly, but the state's liquor license system creates a secondary market that most closing owners do not know how to navigate.
Arizona Liquor License
Arizona liquor licenses are issued by the Arizona Department of Liquor Licenses and Control (DLLC). Arizona operates a quota-based license system for Series 12 (restaurant) licenses, which means licenses have real secondary market value -- particularly in Phoenix, Scottsdale, and Tucson.
A Series 12 restaurant license in the Phoenix metro has sold for $10,000 to $30,000 on the secondary market depending on the location and current quota availability. When you close, you can either surrender the license to the DLLC or transfer it to a buyer. The transfer process requires DLLC approval and takes 60 to 90 days. If you are selling the business or the space, initiating the transfer process early is critical.
If you surrender the license, you receive no compensation. Contact the DLLC at least 30 days before your planned closing date. Arizona also requires you to account for all on-hand liquor inventory -- you can return it to the distributor, transfer it to another licensee with DLLC approval, or have it destroyed.
Arizona Final Paycheck Law
Under Arizona Revised Statutes 23-353, if you discharge an employee, final wages are due within 7 business days or the next regular payday, whichever is sooner. The Arizona Industrial Commission enforces wage claims. Penalties for late payment include the unpaid wages plus up to three times the amount owed in damages.
Arizona does not require payout of accrued vacation unless your written policy explicitly promises it. However, if your employee handbook states that vacation accrues and is payable, you are bound by that policy.
Arizona WARN Act
Arizona does not have a state WARN Act. You are subject only to the federal WARN Act, which applies to employers with 100 or more employees. The Arizona Department of Economic Security administers federal WARN Act notifications in Arizona. Most independent restaurants are well below the federal threshold.
Arizona Sales Tax (Transaction Privilege Tax)
Arizona's sales tax is called the Transaction Privilege Tax (TPT). File a final TPT return with the Arizona Department of Revenue. Close your TPT license through the Department of Revenue's AZTaxes online portal. Arizona's combined state and local TPT rate for restaurants is typically 8-10% depending on the city. Phoenix restaurants pay a combined rate of approximately 8.6%.
Arizona Corporation Commission Dissolution
To dissolve an Arizona LLC, file Articles of Termination with the Arizona Corporation Commission. For a corporation, file Articles of Dissolution. The filing fee is $35 for an LLC and $60 for a corporation. Arizona requires publication of the dissolution notice in a newspaper of general circulation in the county where the company was formed -- this is a step many owners miss and it can leave the entity technically active.
Phoenix and Scottsdale Considerations
Both Phoenix and Scottsdale require a separate city business license. Notify the City of Phoenix Finance Department or the City of Scottsdale Tax and License Division to close your local license. Maricopa County also has a separate health department food service permit that must be cancelled.
For the equipment side of closing, see Restaurant Equipment Liquidation: What Your Kitchen Is Actually Worth. If you are weighing whether to sell instead of close, Sell vs. Close: How to Decide What to Do With a Restaurant That Is Not Working walks through the decision.
The Correct Sequence
Pay final wages within 7 business days of discharge, file final TPT return with the Department of Revenue, close city business licenses, surrender or initiate transfer of DLLC liquor license, publish dissolution notice in a newspaper, file Articles of Termination with the Arizona Corporation Commission.