Payroll Taxes Explained for Arizona Small Business Owners

If you have employees in your Tucson or Arizona-based business, payroll taxes aren’t optional—they’re a legal requirement. Many business owners focus on paying their team but overlook the importance of accurate payroll tax management. The result? Unwelcome letters from the IRS and the Arizona Department of Revenue.

What Are Payroll Taxes?

Payroll taxes are mandatory taxes withheld from an employee’s paycheck and paid by the employer to fund programs like Social Security and Medicare. In Arizona, you’ll also need to account for state income tax withholding and, in some areas, local taxes.

Who Pays Payroll Taxes?

• Employers: Pay the employer’s portion of Social Security and Medicare taxes, plus federal and state unemployment taxes.

• Employees: Pay their share of Social Security, Medicare, and income taxes through paycheck withholding.

Key Deadlines for Tucson Business Owners

• Federal Payroll Taxes: Often due semi-weekly or monthly, depending on your payroll size.

• Arizona Withholding Taxes: Typically due monthly or quarterly.

• Quarterly Payroll Reports: Federal Form 941 and Arizona withholding returns must be filed on time to avoid penalties.

Why Compliance Matters

Missing payroll tax deadlines can lead to steep fines—and in severe cases, personal liability for unpaid taxes. For small business owners in Tucson, this can derail cash flow and hurt your reputation.

Best Practices for Payroll Tax Management

• Use a trusted payroll service (we recommend Gusto) to handle calculations, filings, and payments automatically.

• Keep detailed payroll records for at least four years.

• Review tax rates annually, as Arizona withholding tables can change.

Final Thoughts

Payroll taxes don’t have to be a headache. With the right systems in place, Tucson small businesses can stay compliant, avoid penalties, and focus on growth.