Arizona’s LLC Tax Filing Requirements

An Arizona Limited Liability Company (LLC) offers a flexible business structure with liability protection. Operating an LLC in Arizona involves federal, state, and local tax filing duties. These obligations are determined by the LLC’s structure and its business activities within the state.

Federal Tax Classification for Your Arizona LLC

The Internal Revenue Service (IRS) determines how an Arizona LLC is taxed federally, which influences state obligations. By default, a single-member LLC is a “disregarded entity,” and its financial activity is reported on the owner’s personal tax return. This structure is identical to a sole proprietorship, with the owner using Schedule C of Form 1040 to report business income and losses.

When an LLC has two or more members, the default federal classification is a partnership. The LLC itself does not pay income tax but must file an informational Form 1065, which reports the LLC’s income, deductions, gains, and losses. The profits and losses are then “passed through” to the members, who each receive a Schedule K-1 detailing their share to report on their personal tax returns.

An Arizona LLC can elect to be taxed differently than its default status by filing Form 8832, Entity Classification Election. An LLC can choose to be treated as a C Corporation, which subjects its profits to the corporate income tax rate. The LLC files Form 1120, but this structure can lead to double taxation, where income is taxed at the corporate level and again when distributed as dividends.

Alternatively, an LLC can file Form 2553 to elect taxation as an S Corporation. This election allows profits and losses to be passed directly to the owners’ personal income without being subject to corporate tax rates. The LLC files an informational Form 1120-S, and owners report their share of income on their personal returns. This can offer tax savings for businesses with consistent profits.

Required Information and Registrations

Before filing taxes, an Arizona LLC must secure certain registrations. A primary requirement is obtaining a Federal Employer Identification Number (EIN) from the IRS. An EIN is necessary for any LLC with employees, multiple members, or that elects to be taxed as a corporation. While a single-member LLC without employees can sometimes use an SSN, an EIN is required for most business bank accounts and for a Transaction Privilege Tax license.

Businesses selling goods or providing taxable services must register for an Arizona Transaction Privilege Tax (TPT) license. If an LLC hires employees, it must also register for withholding tax and unemployment insurance (UI) tax. Registration for all of these is handled through the Arizona Joint Tax Application (JT-1). This application registers the business with the Arizona Department of Revenue (ADOR) for TPT and withholding tax, and with the Arizona Department of Economic Security (DES) for UI tax. The JT-1 requires the LLC’s legal name, EIN, business location, and owner details.

Arizona State and Local Tax Obligations

Arizona does not impose a separate income tax on LLCs, as the liability flows through to the owners based on the federal classification. Profits and losses are passed to members, who report this income on their personal Arizona Form 140. Multi-member LLCs file an informational Form 165, and S corporations file Form 120S. Arizona also offers an optional Pass-Through Entity (PTE) tax, allowing the LLC to pay tax at the entity level as a workaround to federal deduction limitations.

A significant obligation for many Arizona LLCs is the Transaction Privilege Tax (TPT). This is a tax on the business for the privilege of operating in specific taxable business classifications, not a direct sales tax on the consumer. The business collects the tax from customers and remits it to the ADOR. TPT rates combine state, county, and city rates, so the total tax varies by location and activity.

LLCs with employees must manage payroll taxes by withholding state income tax from employee wages and remitting these funds to the ADOR. For 2025, the amount withheld is calculated by selecting a percentage of gross taxable wages—1.8%, 2.7%, 3.6%, or 4.2%—or by using state withholding tables. The LLC must also pay state unemployment insurance (UI) taxes to the Department of Economic Security.

The Filing Process for Arizona Taxes

Remitting the Transaction Privilege Tax (TPT) is managed through the Arizona Department of Revenue’s AZTaxes.gov portal. Businesses file Form TPT-2, which consolidates reporting for state, county, and city taxes. The filing frequency is assigned as monthly, quarterly, or annually based on liability. Payments must be submitted electronically if the liability exceeds a certain threshold, with a due date of the last business day of the month following the reporting period.

State income tax filings for pass-through entities are primarily informational. Multi-member LLCs submit Form 165 and S corporations file Form 120S, by the 15th day of the third month after the tax year ends. Owners pay the actual income tax on their personal Form 140 returns by the April 15 deadline. An LLC taxed as a C corporation files Form 120 and pays corporate income tax by the 15th day of the fourth month after its fiscal year ends.

Payroll tax submissions follow a distinct process. Employers file Form A1-QRT quarterly to report state income tax withheld from wages, with payments due by the last day of the month after the quarter ends. Larger employers may have more frequent deposit schedules. An annual reconciliation, Form A1-R, is required by January 31 of the following year, and unemployment tax reports are filed quarterly with the Department of Economic Security.

Annual Report and Publication Requirements

Unlike in most states, Arizona does not require LLCs to file an annual report or pay an annual fee to the Arizona Corporation Commission (ACC). This reduces the administrative burden for LLCs operating in the state. However, an LLC must file an amendment with the ACC if key information changes, such as its name, address, or statutory agent.

A unique requirement for new Arizona LLCs is the publication rule. Within 60 days of the ACC approving the Articles of Organization, the LLC must publish a notice of its formation in a newspaper. This notice must run for three consecutive publications in the county of the LLC’s known place of business. The publication must include the LLC’s name, the statutory agent’s details, and the names and addresses of its members or managers.

This publication is a one-time action, but LLCs with a statutory agent in Maricopa or Pima County are exempt from this requirement. After publication, the newspaper provides an Affidavit of Publication. The LLC should keep this document with its permanent records, and it is recommended to file the affidavit with the ACC to create an official record of compliance.