Arizona lesson 5 of 6
Arizona state taxes, licences and the TPT
Arizona has no general statewide business licence, but most LLCs that sell goods or certain services need to register for the transaction privilege tax, which functions like a sales tax charged to the seller.
The transaction privilege tax
TPT is a tax on the vendor for the privilege of doing business in Arizona, commonly passed on to customers like a sales tax. Retail sales, restaurants and bars, transient lodging, commercial leasing and several other activities are subject to it and require a TPT licence from the Arizona Department of Revenue before you start.
Register using the Arizona Joint Tax Application, which also covers use tax and, if you have employees, withholding and unemployment insurance registration, through the AZTaxes.gov portal.
If you do not sell taxable goods or services
Plenty of Arizona LLCs, such as consulting businesses that are not the type of service TPT applies to, never need a TPT licence at all. Check the Department of Revenue's list of taxable activities against what your LLC actually does rather than assuming either way.
Personal income tax on pass-through profit
Arizona taxes individuals at a flat rate on Arizona-source income, which includes an Arizona resident member's share of LLC profit passed through on a federal Schedule K-1. Confirm the current flat rate on the Arizona Department of Revenue's individual income tax page before filing, since rates are set by the legislature and can change.
Key takeaways
- There is no general statewide business licence in Arizona.
- A TPT licence is required only if your activity is on the Department of Revenue's taxable list.
- Arizona resident members pay the state's flat personal income tax on their share of LLC profit.
Frequently asked questions
Is the transaction privilege tax the same as sales tax?
It is legally a tax on the vendor rather than the customer, but in practice it is collected the same way a sales tax would be, and Arizona itself describes it as commonly referred to as a sales tax.
Do I need a TPT licence for an online consulting business?
Generally no, unless your services fall on the Department of Revenue's list of taxable activities. Check the current list rather than assuming.
Official sources
Or let us file your Arizona LLC for you
Everything above is yours to use for free. If you would rather hand it over, we prepare and file the Articles of Organization (Form L010), act as your registered agent, and track your ongoing deadlines.
Last reviewed: September 2026 - reviewed by Gullia Filing Legal & Formation Team