Highlight In Legal Arizona Partnerships Forms For Free

Arizona law does not restrict the number or type of partners. A corporation or other business entity may be a partner. The partnership is liable for the acts of each partner in the ordinary course of business, and each partner is jointly and severally liable for all obligations of the partnership.

In Arizona, partnerships are considered pass-through entities for tax purposes. This means that if you form a partnership, your share of the partnership's income is reported on your personal state and federal tax returns. The partnership itself doesn't pay any taxes on this money, it is considered your personal income.

Effective January 1, 2022, establishes an entity-level tax for a partnership or S corporation, commonly referred to as pass-through-entities (PTEs), and allows the partners or shareholders of a PTE to elect to be taxed at the entity level at a rate of 4.5 percent of the applicable taxable income of the PTE for that TY.

File Arizona Form 165 for every domestic partnership including syndicates, groups, pools, joint ventures, and every foreign partnership (syndicate, pool, etc.) required to file an Arizona Partnership Income Tax Return.

Arizona LLCs have a default tax status as pass-through entities, which means the LLC's income is reported on the members' individual tax return. LLC members are taxed at a 15.3% rate, while LLCs that choose C-corp status are taxed at 4.9%.

Arizona has a 4.90 percent corporate income tax rate, a 5.60 percent state sales tax rate, a max local sales tax rate of 5.30 percent, and a 8.37 percent combined state and local sales tax rate. Arizona's tax system ranks 19th overall on our 2023 State Business Tax Climate Index.