Your accountants here at Royce CPA Firm want to make all of you Arizona business owners aware of changing tax laws. We understand that business tax law can be complicated, and most small business owners simply do not have the time to be monitoring every new development. That is why we do our best to keep track of policy changes and notify our clients of how new laws may affect them.
On July 1st Arizona passed a new Small Business Income Tax. As a resident of Arizona, you have the option of paying a flat 3.5% tax on your “Small Business Income,” instead of paying a personal income tax on it.
Small Business Income is much more inclusive than it sounds. In addition to profits, it includes:
- Interest & Dividend Income
- Farm Income
- Income from Rental Properties
- Profits from Small Businesses
- Some types of Capital Gain Income
Is This a Good Thing?
If you’re in a low percentage bracket, not much may change for you. But if you’re in a higher bracket than 3.5%, you have a huge opportunity to drastically reduce your Arizona tax liability.
Let’s say you own a business and have $200,000 of profits. Additionally, your spouse works and earns a wage of $70,000 per year. If you don’t opt in to the new AZ Small Business Income Tax Return, you will overpay your AZ taxes by more than $750. As your income increases, the risk of missing this opportunity becomes even larger, to the tune of thousands of dollars.
How Can Tucson CPAs Help Make Sure I’m Safe?
Our team of accountants here in Tucson will monitor your eligibility as more information about the new law is released. We would also advise you to sign up for our new Proactive Plan with 3 pre-scheduled meetings per year. This ensures you know well in advance if this option is a viable one for you. It also protects you from having to go on extension, since we can deep dive on your situation before tax season.
Contact us now for more information about our Proactive Plan, or to find out how we can help you manage your business taxes to avoid costly surprises.