LLC Taxes In The State Of Arizona

Yearly Tax Requirements For Arizona LLCs

If you’d like to create and then operate an LLC in the state of Arizona, then you need to get a number of documents filed with the state government. This content goes over the most crucial continuing reporting and tax filing requirements for LLCs in the state of Arizona.

 

Arizona LLC Taxes

Annual Reporting

Different from the majority of other states, Arizona has no requirement for LLCs to file mandatory yearly reports.

Arizona’s State Business Tax

In terms of income taxes, the majority of LLCs are actually what are known as ‘pass-through’ tax entities. What that means is that individual members of the LLC are responsible for paying their federal income taxes, as it just passes through the actual LLC. LLCs don’t typically pay any income taxes; this only happens through its members. There are states that impose distinct fees or taxes on LLCs just for the assumed privilege of conducting business in their state. However, Arizona is not among this group.

There are still situations where LLC owners decide to let their business get treated just like a corporation in regards to tax purposes. They do this by using the IRS Form 2553, which is of course filed through the IRS and available at their website. When any LLC decides to be taxed like a corporation, it’s different than the default standard of pass-through taxing, so the LLC has to prepare its own distinct tax return. Arizona is like most states in that it taxes corporate income. The state usually does this with a flat percentage rate. However, that rate is actually different for separate years. 2014 was 6.5 percent, going down to 6 and 5.5 percent respectively for 2015 and 2016 before going to 4.9 percent for years after that. That tax can be paid to the DOR of the state, the Department of Revenue. Pay the tax using the Arizona corporation income tax return. That’s usually one of the Form 120 versions. Consult the department of revenue website for more information and details.

Employer Taxes For The State Of Arizona

If your LLC has any employees, you’ll have to pay the related employer taxes. Some employer taxes get paid via the IRS to the federal government. We’re not covering that here right now. However, keep in mind that federal employer tax responsibilities do begin with getting an EIN, or employer identification number. Arizona employers also have to pay the state taxes.

First, you have to withhold and then pay your employee income taxes to the Arizona DOR. Start by making sure your business is DOR-registered either through a paper form or online. Once that registration is established, file the withholding taxes periodically. Quarterly is a common time period to do this. Once a year, you also need to reconcile the tax withholding your LLC does. Consult the DOR website resources to learn more about online filings.

On top of all this, you’ll also probably have to make state unemployment insurance taxes to the Arizona Department of Economic Security. Fortunately, registration is often mixed in with DOR registrations, simplifying things for you. Again, you have both online and paper options for your filings and reports. The DES website has lots of information about all this, including their online findings.

Transaction Privilege Tax/Sales Tax

Does your LLC sell goods to Arizona customers? If so, you have to collect and then pay the Arizona state sales tax, more formally known as the TPT. Register for this with the DOR and then make routine sales payments for any goods that you sell. Register online, or just mail it in using Form JT-1. Once you register, you will get a license for sales tax. After that, you’ll periodically submit your sales tax returns to Arizona’s DOR Do this online or using Form TPT-1.

Other State Registrations

If you choose to do LLC business in states outside Arizona, then you might have to register in those states. Every state has its own rules about what you have to do. The registration requirements differ in every state, and even the rules for what actually constitutes doing actual business will vary from one state to the next. Some mean having some kind of physical presence, hiring employees, or doing business solicitations, whether online, mail, print, or telephone. Certification of authority and similar documents are usually necessary for registration.

Additional Resources