New Arizona LLCs start simple but face federal pass-through taxes, state income at 2.5%, and TPT on sales right away. Get EIN, register with ADOR via JT-1, and track expenses from day one to claim deductions and avoid penalties. This playbook covers setup through the first April 15 filing.
LLC Formation and Immediate Tax Steps
File Articles of Organization with Arizona Corporation Commission online ($50-85 fee, instant approval). No annual report required, unlike corps. Get EIN free from the IRS website—15 minutes online if US resident with SSN; needed for bank account, even no employees.
Submit Arizona Joint Tax Application (JT-1) on AZTaxes.gov ($12 fee) for TPT license, withholding, unemployment accounts. Covers most taxes; new employers get a 2% UI rate the first two years. Single-member LLCs default sole prop (Schedule C); multi-member partnership (1065 + K-1s).
Separate business bank account immediately. Track all transactions—revenue, startup costs (legal fees, marketing deductible if ordinary/necessary).
Federal Tax Basics for Year One
Profits pass through to owners’ 1040s—no entity-level tax default. Single-member: Schedule C reports income/expenses; multi: Form 1065 informational, K-1s to members. Self-employment tax 15.3% on net earnings over $400 (half deductible).
Startup costs: deduct $5,000 first year (phaseout over $50k), amortize rest over 180 months via Form 4562 . Home office if principal place: simplified $5/sq ft max 300 sq ft.
Elect S-corp (Form 2553) by March 15 for year-one benefit if profits expected—salary subject to payroll tax, distributions not. C-corp election (8832) rare for new LLCs due double tax.
Quarterly estimates via 1040-ES if owe $1,000+ federal: April 15, June 16, Sept 15, Jan 15.
Arizona State Tax Obligations
Flat 2.5% personal income tax on pass-through income, Form 140 April 15. Small Business Income tax option: elect 2.5% on qualified gross income via 140-SBI alongside 140 .
TPT on gross receipts for retail (5.6% state + local 2-3%, e.g., Phoenix 8.6% total)—monthly Form TPT-2 by 20th if $8k+/quarter. Services often prime contracting or non-TPT; check ADOR classifications.
No franchise tax. Property tax if own assets—county assessed.
Employment and Payroll Taxes
Hire first employee? Withhold AZ income (Form A4 from employee), remit quarterly/monthly. UI quarterly Form UC-018, new rate 2%. Federal: 941 quarterly, FUTA 940 annual, new employer 2.7% effective.
1099 contractors over $600 by Jan 31. Gusto or ADP automates ($40/mo base).
Quarterly and Annual Deadlines
| Period | Federal | Arizona |
| Q1 (Apr 15) | 1040-ES est., 941 payroll | TPT-2 monthly, withholding Q |
| Q2 (Jun 16) | 1040-ES | TPT-2 |
| Q3 (Sept 15) | 1040-ES | TPT-2 |
| Q4/Annual (Jan 31) | 940 FUTA, W2/1099 | UI Q, annual recon |
| Apr 15 | 1040 + Sched C/E/SE | 140/140-SBI |
E-file mandatory for corps/1065s.
Deductions and Credits for New LLCs
Mileage 67¢/mile, actual vehicle, supplies, insurance, professional fees. QBI 20% deduction if under phaseouts.
Incentives: Quality Jobs credit for new hires ($9k/job avg), R&D refundable up to 24%. ACA grants training reimbursement.
Retirement: SEP up to 25% compensation, Solo 401k $23k +25%.
Bookkeeping and Software Setup
QuickBooks Online ($30/mo) categorizes TPT liabilities separate from income. Reconcile monthly, scan receipts via app. CPA $1-3k first year prevents errors.
Common pitfalls: mixing personal/business, missing TPT registration (5-15% penalty), no mileage log.
Year-End Planning
Defer income (Dec invoice Jan), accelerate expenses (prepay rent). Review entity election. Amended returns within 3 years.
Conclusion
Follow this playbook—EIN, JT-1, separate books, quarterly pays—and your new Arizona LLC files cleanly first year. Claim deductions, grab credits, elect wisely for savings