Learn about the annual report and tax filing obligations for Arizona limited liability companies.
You’ll need to prepare and submit many paperwork with the state if you wish to form and maintain an Arizona limited liability corporation (LLC). This article discusses the most significant continuing reporting and state tax filing obligations for Arizona limited liability companies.
Table of Contents
Report Annual
Arizona, unlike most other states, does not require LLCs to produce annual reports.
State Corporation Tax
Most LLCs are pass-through tax corporations when it comes to income taxes. In other words, the burden for paying federal income taxes is passed via the LLC to the individual LLC members. LLCs do not pay income taxes by default; only its members do. Some states charge LLCs a separate tax or fee for the privilege of conducting business in their jurisdiction. Arizona, on the other hand, is not one of those states.
However, in certain situations, the owners of an LLC elect to have their firm taxed as if it were a corporation. This decision is made by submitting IRS Form 2553 to the IRS. (The form is available on the IRS website.) When an LLC elects to be taxed as a corporation rather than as a pass-through entity, the firm must submit a separate tax return. Arizona, like practically every other state, taxes corporate revenue. The company income tax in Arizona is normally computed at a flat percentage rate. However, the rate now varies by year (6.5% in 2014, 6% in 2015, 5.5% in 2016, and 4.9% following 2016). The tax is due to the Department of Revenue in the state (DOR). To pay the tax, use the state’s company income tax return (usually some variant of Form 120). Check out the DOR website for further information.
Employer Taxes in the State
Do you have workers in your LLC? If this is the case, you must pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not addressed in this section. (However, it is important to understand that federal employer tax duties begin with getting a federal employer identification number (EIN).) Employers in Arizona, on the other hand, must pay state taxes.
To begin, you must withhold and pay employee income taxes to the DOR. Begin by registering your company with the DOR, either online or on paper (Arizona Joint Tax Application, Form JT-1/UC-001). Once enrolled, you must submit withholding taxes on a regular basis, such as quarterly using Form A1-QRT. Each year, you’ll also need to utilize a form of Form A1-R to reconcile your LLC’s tax withholding. Check the DOR website for further information, including on online filings.
You’ll also need to register to pay state unemployment insurance (UI) taxes. The Arizona Department of Economic Security is in charge of these levies (DES). Registration, on the other hand, is merged with other registrations via the DOR. You may register either online or on paper using Form JT-1/UC-001. Then, each quarter, utilize Forms UC-018FF and UC-020FF to record your salary and pay your unemployment insurance taxes. Check out the DES website for further information, including on online filings.
The sales tax (Transaction Privilege Tax)
If your LLC sells items to clients in Arizona, you must collect and remit sales tax to the state (which Arizona technically refers to as the Transaction Privilege Tax or TPT). This implies you’ll have to register with the Department of Revenue for this reason and then make periodic sales tax payments for products sold. You may register online or by submitting Form JT-1 by mail. After you register, you will get a sales tax license. Then, on a regular basis, you must file sales tax returns with the DOR. This may be done on paper (Form TPT-1) or online. Visit the DOR website for additional information.
Other States Registration
If you want to do business in states other than Arizona, your LLC may need to be registered in any or all of those states. The exact states concerned will determine if you are needed to register: each state has its own regulations for what defines conducting business and whether registration is required. For registration reasons, having a physical presence (a business location) in a state, recruiting personnel in a state, or soliciting business in a state (through telephone, print advertisements, mail, or the Internet) are sometimes considered conducting business. Obtaining a certificate of authority or comparable document is normally required for registration.