What Are Arizona's LLC Tax Filing Requirements?

Arizona's LLC tax filing requirements are as easy as creating an LLC in Arizona. To create an LLC in the first place, you will need to pay the relevant fees to the Arizona Corporate Commission. After that, your LLC will be responsible for income taxes, unemployment taxes, and payroll taxes.

Frequently Asked Questions

Are LLCs responsible for federal income taxes?
All LLCs in Arizona are responsible for their own income taxes. LLCs can opt to be taxed as corporations or as pass-through entities depending on which classification is best for their unique financial situation. 

Do LLCs in Arizona file an annual report with their tax information to the state of Arizona?
No. The Arizona Corporation Commission does not require that you file an annual report with the state, even though other states are required to complete this annual filing. 

Are LLCs required to have an EIN from the IRS for tax filing purposes?
LLCs that have employees are required to have an EIN. However, even LLCs that do not have employees may benefit from having an EIN number. LLCs may need an EIN to open up a business bank account, work with wholesale companies, and to use instead of a sole member's social security number on contractor documents. 

Who is responsible for an Arizona LLC's tax responsibility?
Unless the LLC chooses to be taxed differently, members are responsible for paying income taxes as the responsibility for the taxes is passed through to the members. LLCs can opt to pay federal income taxes as a corporation by filling out the IRS Form 2553. The tax rate varies by year, though the minimum tax is $50.

Does Arizona require LLCs to have corporate records?
There is no legal requirement for LLCs to maintain corporate records, even if the LLC opts to be taxed as one.

Steps to Complete Arizona's LLC Tax Filing Requirements

1. Register your LLC with the State of Arizona and pay applicable fees.

2. Understand what ongoing tax and legal business requirements your LLC is subjected to. 

  • Not all LLCs are subjected to the same tax filing requirements. For instance, LLCs with employees need to file payroll taxes. LLCs without employees do not have this requirement. By understanding which tax filing requirements impact your business, you will be better prepared to complete what is required.

3. If your LLC files taxes as a limited liability partnership, you need to file Form 1065 U.S. Return of Partnership Income. 

  • You must also show the distribution of the business in terms of profits, losses, and credits on an IRS Schedule K-1.

4. If your LLC files taxes as a C corporation, you need to file Form 8832 Entity Classification Election so the IRS will know how your LLC is being taxed. 

  • If you do not file this election with the IRS, you will be taxed as a pass-through entity by default. 
  • You must then file the Form 1120 U.S. Corporation Income Tax Return.
  • Arizona also has a state corporate tax that is a flat rate. You will need to file this with Form 120. 

5. If your LLC files taxes as an S corporation, you will need to file Form 1120S U.S. Corporation Income Tax Return with the IRS.

  • You must include an owner's report about how the profits, losses, and credits were distributed. 

6. If your LLC files taxes as a sole proprietorship, you must report income and expenses on your own income tax filings using form Schedule C Profit or Loss from Business, also referred to as Form 1040. 

7. If your LLC has employees, you will need to withhold employee income taxes and pay them to the Department of Revenue. 

  • If this is your LLCs first time paying employees and withholding taxes, you will need to register your business with the Department of Revenue. 
  • Most businesses opt to pay payroll taxes quarterly using the Form A1-QRT.
  • At the end of each year, you will need to reconcile your quarterly payroll tax payments with Form A1-R. 

8. Register to pay Arizona state unemployment insurance taxes. 

  • You'll need to also pay these taxes quarterly and reconcile these taxes at the end of the year. 

9. If your LLC sells physical products to customers living in Arizona, you also need to pay sales tax. 

If you need help with LLC tax filing requirements in Arizona, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.