Considering the move to Arizona?
Arizona is a wonderful state to do business as an Education Service Provider. Arizona consistently boasts a healthy, growing economy and a competitive cost of living. Arizona was ranked the 4th fastest growing state and in the top four best states for business. Every year families move to our state to work, enjoy our unique climate, and build a happy life. Businesses niche and large will flourish in Arizona because of our diverse customer base and talented workforce.
Arizona is welcoming to new ESPs from out of state. First, launching a new venture into Arizona is simple. Arizona consistently strives to streamline licensing and help businesses launch well. Last year Arizona launched Business One Stop, an all-in-one portal for all your tax, licenses, and regulation needs.
You won’t find a healthier customer base than Arizona. Arizona families have led the nation for years in their willingness to try innovative education options for their children. Additionally, over 50,000 students are enrolled in Arizona’s Empowerment Scholarship Account program. This program is the most expansive education savings account in the nation bar none.
You won’t find a healthier customer base than Arizona. Arizona families have led the nation for years in their willingness to try innovative education options for their children.
So really, what are you waiting for?
You should take a shot at expanding to Arizona. If you’re going to translate your business to Arizona, you’ll need to navigate what the State of Arizona requires of businesses like yours and what makes the ESP market in Arizona unique.
Here’s what you need to know:
1. To receive payments from an ESA digital wallet you must register your business with ClassWallet, the current third party processing vendor for the ESA program. Note: you can choose to forgo this step and accept ESA debit cards or parents can get reimbursed, too.
Before the ESA program, Arizona had a robust private education environment teaching tens-of-thousands of students. Though not all of your clients will be ESA recipients, many will be. You can register here to start receiving ClassWallet payments if you decide you want to be a vendor on the platform. Once you register, your form and (as applicable) credentials will be given to Arizona’s ESA program manager for review. They’ll send you an email with instructions. Alternatively, you can give your credentials to parents if they are using an ESA debit card or you can require them to pay, and then they submit a reimbursement from their ESA account.
2. ESA funds are deposited quarterly by the Arizona’s Treasurer’s office into a parent’s digital wallet.
If parents use their ESA debit card to spend their ESA dollars, they’ll pay and upload the invoice in their online portal. If parents use the “pay vendor” option, they take your invoice, upload it, and Class Wallet pays you directly. Note: there is a 2.5% processing fee that you’ll want to add onto your invoices if a parent is paying with “pay vendor”.
3. Parents can apply for ESAs at any point during the year. Depending on when they apply, however, determines what quarter they’re eligible to receive funds.
As your clients depend on ESA funds to purchase your service, your business depends on your clients successfully renewing their application each year. Renewals come in May – June for current ESA families. New ESA participants will want to remember they are funded in the quarter they apply. Funds are pro-rated and split over the year.
| Quarter | Dates | Application Deadline | Funds Disbursed | Receipt Deadline |
| 1 | July 1 – September 30 | June 1 | July 15 – 30 | October 31 |
| 2 | October 1 – December 31 | September 1 | October 15 – 30 | January 31 |
| 3 | January 1 – March 31 | December 1 | January 15 – 30 | April 30 |
| 4 | April 1 – June 30 | March 1 | April 15 – 30 | July 31 |
4. Arizona has limits on where ESA funds can be spent.
Arizona’s ESA funds can be spent on many of the things you’d expect: K12 tuition and school fees, textbooks, tutoring and teaching services (online or in person), standardized testing, postsecondary tuition and fees, individual classes and extracurricular programs at public schools, uniforms, public transportation services, computer hardware (primarily used for an educational purpose), curricula, supplemental materials (which encompasses a lot of educational supplies needed for curriculum), and if a child has a disability parents have further options to address their child’s specific needs. Arizona published a list of allowable expenses and disallowable expenses for ESA students. The list is not exhaustive, and many families purchase items not on this list with approval from the Arizona Department of Education. Before committing to launching your business in Arizona, make sure your business is eligible to receive ESA funds or can succeed without ESA funds. Please connect with us if you have questions or are unsure about whether you can qualify for ESA approved expenses. We’d love to help!
5. Like every state, Arizona has our own licensing and business requirements for businesses.
Arizona’s Commerce Authority has a fantastic guide for out-of-state businesses that’ll help you identify what licenses (if any) you’re required to apply for or prove that you’ve already received from another state. We recommend that you consult with a legal expert to ensure you’re following Arizona law.