LLC Annual Report and Tax Filing Requirements in Arizona

If you've formed an Arizona limited liability company (LLC), you'll need to follow Arizona's laws for maintaining and running your LLC. While you're not required to submit an annual report for your LLC, you're required to obtain any required licenses and permits and pay applicable business taxes.

No Arizona LLC Annual Report

Unlike most other states, Arizona doesn't require LLCs to file annual reports.

State Business Taxes in Arizona

Arizona LLCs, by default, are treated as pass-through tax entities. The responsibility for paying income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves don't pay income taxes, only their members do.

No franchise tax. Some states impose a separate tax or fee—often called a "franchise tax"—on LLCs for the privilege of doing business in the state. Arizona, though, isn't one of those states.

Electing corporate tax status. Some LLC owners elect to have their business taxed as a corporation instead of a partnership. To make this election, you file IRS Form 8832 with the federal government. If you elect to be taxed as a corporation, you must pay Arizona's corporate income tax. Corporations will file some version of Form 120 with the Arizona Department of Revenue (ADOR).

Arizona Employer Taxes

Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and aren't covered here. In addition to federal taxes, Arizona employers must pay taxes to the state.

Withholding employee wages. Employers must register their employer identification number (EIN) with the ADOR to file their withholding returns. You must first create an account with your email on AZTaxes. After you've created an account, you can register for this tax and other taxes by submitting an Arizona Joint Tax Application (Arizona Form JT-1).

Depending on how much income tax your company withholds, you'll need to make tax payments either annually, quarterly, monthly, semiweekly, or the next business day. You'll also need to file either quarterly (Form A1-QRT) or annual (Form A1-APR) returns. Every business must also file an annual reconciliation return. The ADOR provides details on how to register for a tax account, which tax forms to file, and how to make tax payments on its employer withholding filing obligations webpage.

Unemployment insurance (UI) tax. The Arizona Department of Economic Security (DES) handles the state UI tax, called "SUTA." As with the income withholding tax, you can register for this tax by filing an Arizona Joint Tax Application. Every quarter, you must submit unemployment tax and wage reports and pay the taxes owed. The DES has an extensive section on an employer's unemployment obligations.

Arizona Sales Tax (Transaction Privilege Tax)

Arizona imposes a transaction privilege tax (TPT)—commonly called a "sales tax"—on vendors for the privilege of doing business in the state. If your business is subject to TPT, then you'll need to apply for a TPT license. Some of the business activities that are subject to the TPT include:

• retail sales
• restaurants and bars
• hotels and motels
• commercial lease
• amusements (including flea markets, carnivals, festivals, circuses, craft shows, and trade shows)
• contracting
• publishing
• transporting, and
• utilities.

You'll use the same application to apply for a TPT license that you used to register for withholding and UI taxes: the Arizona Joint Tax Application. You can mail the application to the DOR or submit it online through AZTaxes. After receiving your license, you must make annual, quarterly, or monthly tax payments.

You can find out more on the DOR's transaction privilege tax webpage.

In addition to the state sales tax, you might be responsible for reporting and paying sales and use tax to your city or county. Make sure you check with your local taxing authorities for your reporting responsibilities.

LLC Registration in Other States

If you plan to conduct business in states other than Arizona, you might need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved. Every state has rules for what constitutes doing business and whether registration is necessary. Typically, activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes.

For more information regarding foreign registration, see our state guide to qualifying to do business outside your state.