Arizona Business Taxes
Business taxes are a major source of revenue for Arizona. The state's main business tax is the transaction privilege tax (TPT). Other state taxes include income, property, and employer withholding taxes.
Business taxes are an important part of any company’s operating budget, and the state of Arizona has a number of industry-specific requirements. These include business licensing, workers’ compensation, and sales tax. In addition, companies that choose to have their profits pass through as S-corporations or C-corporations must file a corporate income tax return. Whether you have a business or are considering starting one, it’s important to understand how Arizona taxes businesses. The state’s business tax system is based on laws passed and signed by the governor. The Arizona Department of Revenue (ADOR) is dedicated to working with individual taxpayers to ensure a smooth experience filing and paying state business taxes.
How to File Arizona Business Taxes?
Most companies are required to file Arizona business taxes. The amount of business tax your company pays depends on the type of entity you form. Corporations pay federal and state income tax based on profit, less any allowable deductions or credits. Business owners of pass-through entities (S corporations, limited liability companies, and partnerships) pay tax on business profits, which are reported on their personal income tax returns.
Business owners may also be required to collect and remit Arizona transaction privilege tax (TPT). This is a sales and use tax, but it differs from a traditional sales tax in that it’s imposed on the business rather than on the consumer. To determine if your business is subject to TPT, consider whether it has a significant connection with the state, known as nexus.
How to Register for a TPT license in Arizona?
Some LLCs pay self-employment tax on profits, and others pay federal income tax on profit amounts that are reported on their personal taxes through Schedule K-1 or other forms. If you have an S corp or partnership, you can elect to have your pass-through entity income taxed at the state level in Arizona.
If you sell taxable goods or services in Arizona, you must register for TPT and collect it from your customers. In addition, you must remit the tax to the state once your sales reach the $100,000 threshold. You also need to file a return for the period in which you sold your products or services. You can do so online or by filing a paper return.
