How to Start an Aerospace and Defense Subcontracting Business in Arizona: SAM, CAGE and ITAR

Arizona has a large aerospace and defense sector. Davis-Monthan Air Force Base is in Tucson, Luke Air Force Base serves the Phoenix area from Glendale, and Fort Huachuca is near Sierra Vista. Primes and their suppliers across these areas buy machined parts, assemblies, fabrication, testing, and engineering support every year. If you want to know how to start an aerospace business in Arizona, the state side is the simpler part. The federal side is where most of the work is, and it is where new shops lose the most time.

This guide covers the steps in the order you should take them: forming the company with the Arizona Corporation Commission, registering in SAM.gov to get a Unique Entity ID and CAGE code, deciding whether ITAR registration applies to you, building the quality system primes expect, and handling Arizona tax and local licensing.

Informational content, not legal or tax advice. This article explains how the process generally works in Arizona. Federal export control, contracting, and tax rules are technical and change over time. Confirm every fee and requirement with the named agency before you act. Talk to a qualified attorney and a CPA before you sign a subcontract, handle controlled technical data, or choose an entity type.

What You Need Before You Start

Gather these items first. Most delays come from missing information, not from the filings themselves.

• The business name you want, checked in the Commission's business search
• A statutory agent with a permanent Arizona street address, or an entity that can serve in that role
• A principal office address and, if different, a mailing address, both in Arizona
• A federal Employer Identification Number (EIN) from the IRS, which is free
• A business bank account in the company's legal name
• A written capabilities sheet: processes you run, materials, tightest tolerances, machine list, inspection equipment, and facility size
• The NAICS codes you plan to bid under
• A list of target primes and the supplier portals they use
• Written quotes from a quality consultant and a certification body if you plan to pursue AS9100

Step 1: Pick Your Entity Type and Check the Name

Most small shops form an LLC. An Arizona LLC files no annual report, so there is no recurring state filing to keep it in good standing. Its income passes through to the members, who pay Arizona's flat 2.5% individual income tax.

A corporation can make sense if you expect outside investors or want a specific governance structure. It is taxed differently and carries more paperwork. A for-profit corporation files an annual report with a $45 fee each year, due in its anniversary month. An Arizona corporation's income is taxed at 4.9% of net income or $50, whichever is greater. Ask your CPA which structure fits your plans before you file.

Your name has to meet specific rules. An LLC name must contain limited liability company or limited company, or one of the abbreviations L.L.C., L.C., LLC or LC. It cannot contain the words association, corporation or incorporated, or an abbreviation of them. It must be distinguishable from existing entity names, reserved names, and registered trade names on the Commission's record. Names with banking or trust terms, such as bank, trust or credit union, need prior written approval from the Arizona Department of Financial Institutions.

If you need time to finish your paperwork, you can reserve the name through the Arizona Business Center portal for $10. The reservation lasts 120 days.

Step 2: Appoint a Statutory Agent

Arizona calls the registered agent a statutory agent. This person or entity accepts legal papers and official notices from the Commission on your behalf. An individual agent must be a permanent, full-time Arizona resident with a permanent, full-time Arizona address, and any mailing address must also be in Arizona. An entity can serve, including a foreign corporation or LLC authorized to do business in Arizona, but an LLC cannot be its own statutory agent.

The agent must accept the appointment in writing using Statutory Agent Acceptance form M002. Keep a valid statutory agent on record at all times. If you do not, the company can face administrative dissolution. Changing the statutory agent or principal address costs $5 for an LLC.

Many owners use a commercial registered agent service. Confirm that the service has an Arizona address and will sign the acceptance form before you pay for it. Also confirm who receives mail when the service forwards notices, because a missed notice is a common cause of trouble later.

Step 3: File the Articles Through the Arizona Business Center

File the Articles of Organization (Form L010, with instructions in L010i) for an LLC, or the Articles of Incorporation with a Certificate of Disclosure for a corporation. File through the Arizona Business Center. The Corporation Commission's Corporations Division page has current forms and instructions.

The LLC filing fee is $50. Expedited review adds $35, for $85 total. Accelerated service is a separate charge on top of the filing fee: $100 for next-day service (received by 5pm), $200 for same-day service (received by 10am), and $400 for two-hour service (available 8am to 3pm). Accelerated service guarantees an examination within the stated window, not approval. A fast filing can still come back with questions, so a quick filing does not mean a quick start. The corporation filing fee is $60.

The Commission's processing times sheet, posted December 29, 2025, showed regular LLC processing of about 9 to 11 business days and expedited processing of about 2 to 4 business days. Check the current sheet before you plan a launch date around it.

An LLC must also publish notice of its formation, unless its statutory agent's county is Maricopa or Pima. Confirm the publication rules, the required newspaper, and the cost with the Commission before you file. If you are not in the exception, budget for publication now so it does not surprise you after approval.

Step 4: Get Your EIN and Open the Bank Account

Apply for your federal EIN directly through the IRS website, which is free. Use the EIN and the exact legal name from your Arizona filing when you open the business bank account, when you register in SAM.gov, and when you set up payroll. Mismatched names across these records cause registration rejections and tax notices. If a prime or a bank asks for your company's legal name, give them the name on the Commission's record, not a shortened trade name.

Step 5: Register in SAM.gov for a UEI and CAGE Code

Federal contracting runs through SAM.gov. Registration is free. It produces a Unique Entity ID (UEI) that identifies your company in federal systems, and for U.S. companies it also produces a CAGE code. Primes and federal buyers check both before they award work to a supplier or a subcontractor. Bidding on federal work and most flow-down work requires an active SAM registration.

Have these ready: your EIN, your legal name exactly as filed, your bank information for electronic payments, your NAICS codes, and your business address. Answer the representations and certifications carefully, and have someone who understands federal contracting review them before you submit.

Two cautions. First, third-party services will offer to register you for a fee. You can do the registration yourself on SAM.gov for free, so be skeptical of anyone who charges for it. Second, registration is not permanent. You must renew it on a set schedule, so put the renewal date on your calendar. A lapsed registration can stop a bid or a payment.

Step 6: Decide Whether ITAR Registration Applies

The International Traffic in Arms Regulations (ITAR) control defense articles and related technical data. Manufacturers and exporters of defense articles must register with the State Department's Directorate of Defense Trade Controls (DDTC) at pmddtc.state.gov. Under 22 CFR 122.3, the Tier 1 registration fee for new registrants is $3,000 per year. Confirm the current fee on the DDTC site before you budget for it.

Do not assume that a machine shop that never exports is exempt. A shop that manufactures parts for a defense article can be a manufacturer of defense articles even if every shipment stays in the United States. Many shops that work on military aircraft or defense hardware fall into this category. Ask an export attorney to review your product list, your drawings, and your customers before you decide.

Keep two points separate. An ITAR registration is not an export license. Registering does not authorize you to export anything. If you export defense articles or technical data, you will need the appropriate licenses or authorizations in addition to registration. Also, if your drawings are marked as export-controlled, you may need controls on who can access them, including foreign national employees and visitors.

Step 7: Build a Quality System Primes Will Accept

AS9100 is an aerospace quality management standard. It is an industry standard, not a law, but many primes require their suppliers to hold it or a comparable system. Certification is performed by an accredited third-party registrar after an audit of your processes, not by the state. Get quotes from registrars and a consultant before you commit, because the cost depends heavily on the size and complexity of your shop.

Even before you certify, build the core elements: a quality manual, documented procedures, document control for drawings and revisions, a calibration program for measuring equipment, first article inspection records, nonconformance tracking, and corrective action steps. If a prime needs special process work such as heat treating or nondestructive testing, ask whether it requires accreditation for that process. Nadcap is the common accreditation in aerospace, and a prime's supplier requirements will tell you whether you need it.

Step 8: Handle Arizona Tax and Local Licensing

Arizona issues no single general statewide business license. What most businesses need is a Transaction Privilege Tax (TPT) license from the Arizona Department of Revenue. The license is required for retail sales and other taxable business classifications, and it costs $12 per location. Apply through the Department of Revenue's TPT license page.

Whether a particular sale to a prime, a federal customer, or another business is taxable or exempt depends on the facts, including how the goods are used and who buys them. Do not guess. Ask the Department of Revenue, and ask your CPA how the sales fit your books. Counties in Arizona issue no general business license, but many cities and towns require their own business or TPT license for a shop located in their limits. Check the city where your shop sits, since requirements vary by city.

If your work includes construction or installation that requires a contractor license, such as building out a facility or installing equipment in a structure, the Registrar of Contractors licenses contractors. Ask the Registrar before you take on that kind of work. A machining or fabrication shop often does not need a contractor license, but the answer depends on the scope of the job.

Income tax is a separate question. An LLC's income passes through to its members, who pay the 2.5% flat individual rate. A corporation has its own tax picture. Schedule a conversation with a CPA before your first year closes.

Step 9: Choose a Location and Use Regional Support

Aerospace and defense work clusters in a few Arizona areas. Tucson has Davis-Monthan Air Force Base. The Phoenix area, including Glendale, has Luke Air Force Base. Sierra Vista sits beside Fort Huachuca. Being near your primes and their engineering teams can make it easier to win and keep work, but it also means more competition, higher rents, and tighter labor markets. Compare those tradeoffs against your customer list.

Before you sign a lease, check the zoning for the specific address with the city, confirm the city business license requirement, and confirm the building can support your equipment and any inspection or cleanroom needs.

Arizona has public support you can use. The Arizona Commerce Authority offers business support programs, but the programs change, so check azcommerce.com for the current options before you plan around any of them. The Arizona Small Business Development Center Network offers advising, and the SBA Arizona district office can point you to federal programs. We did not find an Arizona-specific registration for defense subcontractors. The federal registrations in SAM.gov and, where they apply, DDTC are the registrations primes will check.

Key Registrations at a Glance

Requirement	Agency	Cost	When it applies
Articles of Organization (LLC), Form L010	Arizona Corporation Commission	$50 (expedited review adds $35)	Every LLC
Name reservation	Arizona Corporation Commission	$10 for 120 days	Optional, to hold a name
Articles of Incorporation, with Certificate of Disclosure	Arizona Corporation Commission	$60	If you form a corporation
Annual report	Arizona Corporation Commission	None for LLCs; $45 for for-profit corporations	Corporations only
Trade name registration	Arizona Secretary of State	Confirm on the trade name page	Optional
SAM.gov registration (UEI and CAGE code)	SAM.gov	Free	Federal bids and flow-down work
ITAR registration	State Department DDTC	Tier 1: $3,000 per year for new registrants (confirm current fee)	Manufacturers or exporters of defense articles
Transaction Privilege Tax license	Arizona Department of Revenue	$12 per location	Taxable sales

Tips for a Faster Start

• Start SAM.gov registration early, in parallel with your state filing, so your UEI and CAGE code are ready when you need them.
• Write your capabilities sheet as if a buyer will read it cold. Include materials, tolerances, machines, and certifications in plain terms.
• Ask each target prime for its supplier quality requirements before you spend money on certification.
• Keep your legal name identical across the Commission, the IRS, your bank, and SAM.gov.
• Set calendar reminders for SAM.gov renewal, statutory agent compliance, and any annual report if you form a corporation.

Common Mistakes to Avoid

• Paying a third party to register you in SAM.gov. The registration is free on the official site.
• Assuming a state license covers you. Arizona has no general state business license, so your federal and tax registrations do the heavy lifting.
• Treating ITAR as optional without a review. Make the decision with an export attorney, and document why you reached it.
• Confusing ITAR registration with an export license. Registration alone does not authorize any export.
• Naming the LLC without the required words. A name that lacks an approved ending or includes a restricted word can delay your filing.
• Letting the statutory agent lapse. The Commission can dissolve the company for it, which puts your contracts and bank relationships at risk.
• Skipping the city license. A state filing does not satisfy a city business license requirement.

Expected Results

Completing these steps may put your company in a position to respond to federal solicitations and supplier requests. A complete SAM.gov registration with a UEI and CAGE code is a prerequisite for many federal and flow-down opportunities, but it does not guarantee that you will receive a bid invitation or an award. Primes make their own supplier decisions based on capability, past performance, pricing, schedule, and quality records.

Most owners find that the first year is spent building credibility: documented processes, a clean inspection record, and a few reliable deliveries. An AS9100 certificate, if you pursue it, may help you qualify with more primes. It can also take months to complete, and the audit may find gaps you need to close before you pass. Plan your timeline with those possibilities in mind.

When to Get Professional Help

Get a qualified attorney involved if you handle controlled technical data, export parts or drawings, or are unsure whether ITAR applies. Get a CPA involved before you choose between an LLC and a corporation, and before you set up sales tax treatment for prime and federal customers. Use the Arizona SBDC for planning help if you are early in your business plan.

Next Steps

Start with the name check and the statutory agent, file your Articles, and begin your SAM.gov registration as soon as you have your EIN. Then work through the ITAR decision, the quality system, and your city and TPT licenses. Confirm every fee and deadline on the agency page before you pay, because the figures above reflect agency information as of October 2026.