There are a wide variety of business taxes that your Arizona LLC will need to pay. These include tax that’s payable to the Arizona government, like Arizona sales taxes and Arizona state tax. You will also need to pay federal, self-employment and possibly payroll tax to the IRS.
If you want help with your taxes, Incfile provides a complete Business Tax Filing service.
The profits of an Arizona LLC are not taxed at the business level like those of C Corporations. Instead, taxes for an Arizona LLC work as follows:
Items 1, 2 and 3 are taxed as “pass-through” income for any LLC owners, managers or members who receive profits from the business. Any profits are reported on federal and Arizona personal tax returns, and that’s where you will pay those taxes.
There are two main types of tax that you will pay to the Arizona Department of Revenue: Arizona state income tax and Arizona state sales tax.
As an Arizona business owner, you will need to pay AZ state tax on any money you pay to yourself. These earnings flow through to your personal tax return, which is where you will pay Arizona income tax. You will be taxed at the standard rates for Arizona state taxes, and you will also get to apply regular allowances and deductions.
Any salaried employees will also need to pay personal Arizona state taxes.
The Arizona state tax rates run between 2.59 percent and 4.54 percent, depending on income.
Get details on the Arizona state tax online here.
If you sell physical products or certain types of services, you may need to collect sales tax (known in Arizona as a Transaction Privilege Tax) and then pay it to the AZ Department of Revenue. Arizona sales tax is collected at the point of purchase. Arizona sales tax rates do vary depending on the region, county or city where you are located.
You will typically need to collect Arizona sales tax on:
Most states do not levy sales tax on goods that are considered necessities, like food, medications, clothing or gas.
Get details on the Arizona Transaction Privilege Tax online here.
There are a couple different federal taxes that every LLC will need to pay, including Arizona LLCs. These are self-employment tax and federal income tax, which are taxed as “pass-through” income via your tax return forms.
All Arizona LLC business members or managers who take profits out of the LLC will need to pay self-employment tax. This tax is also known as FICA, Social Security or Medicare tax. It applies to all the earnings you withdraw from your Arizona business. The current self-employment tax rate is 15.3 percent.
You will be able to deduct your business expenses from your income when working out how much self-employment tax you owe. Here are some examples of how much self-employment tax you may need to pay, depending on your earnings:
The Internal Revenue Service allows LLCs to ask to be treated as an S Corporation for tax purposes. This can help you reduce the amount of self-employment tax that you pay by declaring some of your income as salary and other income as distributions or withdrawals.
You can do this by making an “S Corporation Tax Election” with the IRS using a form known as Form 2553. We can file your Form 2553 with the IRS on your behalf.
Incfile Form 2553 S Corporation Tax Election for an LLC service
Speak to your accountant for more information on reducing your Arizona LLC self-employment tax through an S Corporation tax election.
You must also pay regular federal income tax on any earnings you take out of your Arizona LLC. The amount of income tax you pay depends on your earnings, current income tax brackets, deductions and how you file.
You only pay federal income tax on your Arizona LLC profits that you take out of the business, less certain deductions and allowances. This includes your tax-free amount, plus LLC business expenses and other deductions for areas such as healthcare and some retirement plans. Speak to your accountant for more information.
If you pay employees, there are some slightly different tax implications. Speak to your accountant to get clear guidance for your own unique situation.
All employers must collect and withhold payroll tax from their employees when they receive their salaries. You would normally withhold 7.65 percent of the taxable salary that you pay to your employees.
You may also choose to withhold federal and Arizona state income tax on the wages you pay to employees. Speak to your accountant for more information.
Regardless of whether you withhold federal and Arizona state income tax, your employees may need to file their own tax returns.
You may also need to pay insurance for any employees, like workers compensation insurance or unemployment tax. There will also be other requirements you have for employees.
Get more requirements from the Arizona Labor Department website.
Most Arizona LLCs will need to pay estimated taxes throughout the year, depending on the amount of income and profit you expect to make. The most common types of estimated tax are:
Most Arizona LLCs will pay estimated taxes four times a year. Speak to your accountant for more information.
Depending on the industry you are in, your Arizona LLC may be liable for certain other taxes and duties. For example, if you sell gasoline, you may need to pay a tax on any fuel you sell. Likewise, if you import or export goods, you may need to pay certain duties. Speak to your accountant about any other taxes you may need to withhold or pay.
Yes. Arizona does have a sales tax, which may vary among cities and counties. You can find more information above.
Yes. Arizona does have a general state income tax. You can find more information above.
Yes. In most cases you must pay estimated taxes on your Arizona tax, federal income tax and self-employment tax. Speak to your accountant for more information.
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The state charges this amount to file a new business entity. This fee goes directly to the Secretary of State.
State Fee | State Filing Time | Expedited Filing Time |
$85 | 4 Weeks | 12 Business days |
This report is mandatory and must be filed within the specified time frame in order for the entity to remain in good standing with the state. Failure to file this report can lead to the company being revoked or administratively dissolved.
Frequency: No Annual Report is due for LLCs at this time.
Important: Arizona requires that you publish a notice of filing of your Articles of Organization or alternatively, you may publish the Articles of Organization in their entirety. The publication must be in a newspaper in general circulation in the county of the known place of business in Arizona for 3 consecutive publications. The publication must be filed within 60 days of the date of organization. The LLC may be subject to administrative dissolution if it fails to publish.
Where do I publish the document? The A.C.C. does not endorse any particular newspaper, but, as a courtesy they provide a list of newspapers that have attested to the A.C.C. that they meet the statutory criteria for publishing documents. Upon publishing you will receive an Affidavit of Publication. It is not required, but you may send the Affidavit of Publication you receive from the newspaper to the A.C.C. for placement into the entity’s public record. If you do not submit the Affidavit of Publication to the A.C.C. you should retain it as part of your entity’s permanent record.
(We do not assist in the filing of the Publication Requirement)
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