What You Need to Know About Arizona Business Taxes as a New Entrepreneur

Taxes Don’t Have to Be Scary

Starting a business in Arizona? Congratulations! While you’re probably excited about the journey ahead, there’s one thing every new business owner needs to tackle early — taxes.

Don’t worry. You don’t need a finance degree to understand Arizona’s business tax system. With the right info, you’ll be on your way to compliance and confidence in no time.

Let’s break it down.

1. Do You Need a Transaction Privilege Tax (TPT) License?

In Arizona, most businesses that sell products or services must pay a Transaction Privilege Tax (TPT) — which is Arizona’s version of sales tax. Unlike traditional sales tax, the TPT is a tax on the seller, not the buyer. But you’ll still collect it at the point of sale.

To collect and pay TPT, you’ll need a TPT license from the Arizona Department of Revenue (AZDOR). Some cities also require a separate license.

2. What Types of Taxes Might Your Business Owe?

Depending on your business type and industry, here are a few Arizona taxes you might encounter:

Transaction Privilege Tax (TPT) — mentioned above.

Corporate Income Tax — if you operate a C corporation.

Withholding Tax — if you have employees.

Unemployment Tax — through the Arizona Department of Economic Security.

Self-Employment Tax — if you're a sole proprietor or part of a partnership.

Make sure to check with both the AZDOR and your city or county to know exactly what you need.

3. How to Register for Arizona Business Taxes

Getting started is easier than you might think:

Step 1: Visit AZTaxes.gov

Step 2: Click on “Register” and follow the prompts for a business.

Step 3: Register for your TPT license and any other applicable tax accounts.

You may also need an EIN (Employer Identification Number) from the IRS.

4. When and How Do You File Taxes in Arizona?

Most Arizona business taxes, especially TPT, are filed monthly, quarterly, or annually, depending on your business size and revenue. AZDOR will tell you your filing frequency when you register.

You can file and pay your taxes online at AZTaxes.gov — quick, secure, and easy.

5. Don't Forget About Deductions

Good news: Arizona allows many business tax deductions, similar to federal tax rules. These may include:

Office supplies

Equipment purchases

Vehicle expenses

Rent

Business meals

Keep clean records so you can take full advantage of what you’re allowed to deduct.

6. Tips to Stay Compliant

Mark your calendar for due dates — late filings come with penalties.

Keep every receipt and maintain organized books.

Consider hiring a tax professional — especially during your first year.

Check local regulations — many cities in Arizona have extra rules and requirements.

7. Common Mistakes to Avoid

Forgetting to register for TPT

Filing taxes late

Misclassifying employees

Ignoring city-level tax requirements

One small mistake can lead to big penalties — so it's better to stay ahead.

Tax Time Doesn’t Have to Be Terrifying

Taxes may not be the most exciting part of running a business — but they’re one of the most important. By understanding Arizona’s tax system early, you’ll save time, money, and stress down the line.

So, if you're just starting out, keep this guide handy. Got questions? Reach out to a local tax advisor or your city's business office — they’re there to help.