Arizona taxes LLC profit as pass-through income at a flat 2.5% state rate, on top of federal tax. By default the IRS treats a single-member LLC as a disregarded entity and a multi-member LLC as a partnership, so there is no separate entity-level tax. An S-corp election can cut self-employment tax once net income passes roughly $40,000-$60,000. Non-resident owners of a foreign-owned single-member LLC file Form 5472 each year, and Anonymousllc.co partners with US tax preparers who handle these filings.
Arizona taxes LLC profit as pass-through income at a flat 2.5% state rate, on top of federal tax. By default the IRS treats a single-member LLC as a disregarded entity and a multi-member LLC as a partnership. There is no separate Arizona entity-level income tax at default treatment - profit is taxed once, on the owner's Arizona return. The LLC can elect S-corporation or C-corporation treatment when that lowers total tax. Non-resident owners of a foreign-owned single-member LLC file Form 5472 each year. Anonymousllc.co partners with US tax preparers familiar with these filings. The default pass-through structure suits most Arizona LLCs, and an election is a decision to revisit once profit grows. A founder pays federal income tax plus the flat 2.5% Arizona rate on their share of profit, with no separate tax on the LLC itself.
By default a single-member Arizona LLC is a disregarded entity taxed on Schedule C of the owner's 1040, and a multi-member LLC is a partnership that files Form 1065 and issues K-1s. Neither pays federal entity-level tax. Pass-through treatment means the LLC itself is not a separate taxpayer at default - profit flows to the owners and is taxed on their personal returns. An LLC can change this by electing S-corp status on Form 2553 or C-corp status on Form 8832 when the numbers favor it. The default suits most small and single-owner Arizona LLCs, and the election is a later optimization rather than a formation-day decision. A new LLC can start as a pass-through and elect S-corp status in a later year once profit justifies the added payroll cost.
Arizona applies a flat 2.5% personal income tax to LLC profit that passes through to the owner's personal return. There is no separate entity-level Arizona income tax at default pass-through treatment. The flat rate replaced Arizona's former graduated brackets, so LLC profit is taxed at 2.5% regardless of income level. Only the owner's share of profit is taxed at the state level, and only for owners with an Arizona filing obligation. Non-resident owners with no Arizona-source income handle state tax in their own jurisdiction, so the 2.5% applies to income tied to Arizona, not to every dollar the LLC earns worldwide.
An Arizona LLC should consider S-corp status once net income passes roughly $40,000-$60,000 a year. The election lets the owner take a reasonable salary and treat the remaining profit as a distribution that avoids the 15.3% self-employment tax. The saving is 15.3% on the non-salary portion of profit, which offsets the added cost of running payroll and filing a corporate return. Below roughly $40,000 net, the payroll and compliance cost outweighs the saving. An S-corp election is filed on IRS Form 2553 and does not change Arizona's flat 2.5% state rate, so the benefit is on the federal self-employment side rather than the state income side.
Default Arizona LLC owners pay 15.3% self-employment tax on net business income - 12.4% Social Security up to $168,600 plus 2.9% Medicare. An S-corp election reduces this on the non-salary portion of profit. Self-employment tax funds Social Security and Medicare and applies on top of federal and Arizona income tax. The 12.4% Social Security portion caps at the annual wage base; the 2.9% Medicare portion has no cap. Electing S-corp status shifts part of the profit to a distribution that avoids self-employment tax but adds payroll compliance. That tradeoff is why the election makes sense only once profit is high enough to cover the added filing cost.
Non-US residents who own an Arizona LLC owe US tax only on income effectively connected to a US trade or business (ECI). An LLC with no US ECI files a Form 5472 information return but owes no US income tax. With US ECI, the profit is subject to US income tax and the owner may need an ITIN to file. A foreign-owned single-member LLC is a disregarded entity that files Form 5472 with a pro-forma Form 1120 each year; a multi-member LLC files Form 1065 and issues K-1s. Anonymousllc.co connects non-resident owners with US tax preparers who determine ECI status and handle the filings.
Form 5472 is an IRS information return required for any US LLC that is a disregarded entity with 25% or more foreign ownership. Most non-resident-owned single-member Arizona LLCs must file it annually alongside a pro-forma Form 1120. The form reports transactions between the LLC and its foreign owner or related parties. It carries a significant penalty for non-filing, so non-resident owners treat it as a required annual step. It is an information return, not an income tax return - filing it does not by itself create a US income tax bill. Anonymousllc.co partners with preparers who handle it, so a non-resident founder does not navigate the form alone.
No. An Arizona LLC pays no federal income tax at the entity level under default treatment. A single-member LLC is a disregarded entity taxed on Schedule C, and a multi-member LLC files Form 1065 and issues K-1s. Profit is taxed once, on each owner's personal return, which avoids the double taxation a C-corporation faces. An LLC that elects C-corp status on Form 8832 does pay entity-level federal tax, which suits a minority of owners planning to retain earnings. The default pass-through fits most Arizona LLCs, so entity-level federal tax applies only when an owner deliberately elects it.
Under the March 21, 2025 FinCEN interim final rule, domestic reporting companies are exempt from BOI reporting. An Arizona LLC formed in the US is domestic and currently exempt. Foreign reporting companies formed outside the US remain obligated. The rule narrowed BOI reporting to foreign reporting companies registered to do business in the US. A US-formed Arizona LLC does not file a BOI report under the current rule. Anonymousllc.co files BOI reports at $150 each for entities that still carry an obligation, such as foreign reporting companies, and monitors the rule so clients stay current if it changes.
Arizona's flat 2.5% income tax sits between the zero-income-tax anonymous states and higher-tax states. Wyoming, Nevada, and New Mexico levy no personal state income tax on this kind of pass-through profit at the state's home level. State income tax follows where the owner and income are sourced, not only the state of formation, so forming in a no-income-tax state does not erase Arizona tax on Arizona-source income. Founders who want both low state tax and privacy form a Wyoming anonymous LLC and foreign-qualify into Arizona for local operations. Anonymousllc.co partners with US tax preparers on the structure, which keeps the tax filings aligned with where the income is actually earned. Choosing a formation state for privacy and a registration state for operations are two separate decisions, and the tax follows the operations.
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