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Articles of Organization

Well Fargo Bank Demands LLC Change its Principal Address

Question:  Client received a letter from Wells Fargo bank that said the client’s new LLC’s principal address on file with the Arizona Corporation Commission cannot be 24 W. Camelback Rd, #467, Phoenix, AZ 85013.  That address is also the mailing address of the LLC’s statutory agent.  Do I have to amend my LLC’s Articles of Organization to change the LLC’s principal address?

Answer: Arizona Revised Statues Section 29-2101.B states:  “The Articles of Organization [of an LLC] must state. . . the [LLC’s] principal address, which may be the same as the mailing address of the company’s statutory agent.”  Arizona Revised Statues Section 29-3102.20 defines Principal Address as “the mailing address of a limited liability company or foreign limited liability company, whether or not located in this state.”

24 W. Camelback Rd, #467, Phoenix, AZ 85013 is a UPS mail box. You are dealing with an idiot banker who is ignorant of Arizona LLC law.  The banker is telling you that your LLC’s principal address stated in its Articles of Organization filed with the Arizona Corporation Commission cannot be the LLC’s statutory agent’s mailing address even though that address is expressly authorized in Arizona Revised Statues Section 29-2101.B. Only an uniformed idiot would say that. In forming 8,700+ LLCs I can only remember one other person whose banker said the same thing. It is very common for businesses to have a PO box or a UPS mail box.

The bank has no legal basis to say that the LLC’s principal address cannot be 24 W. Camelback Rd, #467, Phoenix, AZ 85013, because that is KEYTLaw, LLC’s, mailing address and KEYTLaw, LLC is the LLC’s statutory agent.

Recommendation:  Go to another bank, but never use Wells Fargo, Bank of America or Chase Bank.

2023-04-17T09:04:50-07:00April 16th, 2023|Articles of Organization, Bank Problems, FAQs, Questions People Ask|0 Comments
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Why Your Name in Your LLC’s Articles of Organization Should Be the Name on Your Driver’s License or Passport

Section 326 of the USA PATRIOT Act is a statute that is intended to prevent the funding of terrorism and money laundering.  This federal law requires financial institutions such as banks and credit unions to verify and record the identity of every person who opens an account.  To open a bank account you must be able to verify your name, physical address, mailing address an date of birth.

Here are documents that you can present to a bank to verify:

  • Who you are:  driver’s license, social security card, passport, birth certificate, marriage certificate, divorce decree, legal name change certificate or state issued id.
  • Your Social Security Number (SSN):  social security card.
  • Your Address: driver’s license, state issued ID, a bank statement, a current phone or utility bill that shows your home address, not a P.O. Box.
  • Your Birthday: driver’s license, U.S. passport, birth certificate, or state issued ID

Accounts for an Entity

If an account is being opened for a limited liability company, corporation or partnership the bank or credit union is required to ask for and verify identity information (name, address, date of birth, social security number and identification documents) for:
  • Each individual that has beneficial ownership (25% or more) in the entity; and
  • One individual that has significant managerial responsibility for the entity.

Bottom line:  When you form a new Arizona limited liability company and you are to be named in the Articles of Organization as a member or manager your name in the AOO should be exactly as it reads on your driver’s license, passport, state issued ID or birth certificate.  If your name in your Arizona LLC’s Articles of Organization is not identical to your name on one of those documents a bank may refuse to open a bank account for the LLC.

2020-10-25T10:10:50-07:00October 24th, 2020|Articles of Organization, Forming LLCs|0 Comments
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Same Day Filing & Approval by the Arizona Corporation Commission for Our LLCs

As of April 1, 2020, we changed our Arizona LLC formation service to include same day filing and approval of the LLC’s Articles of Organization by the Arizona Corporation Commission.  We provide this unique service for NO ADDITIONAL FEE.  This mean all LLCs we form can begin doing business, open a bank account and receive income the same day we are hired and paid to form the LLC.

2020-04-06T14:23:23-07:00April 6th, 2020|Articles of Organization, Forming LLCs|0 Comments
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Arizona Corporation Commission’s eCorp Website Is Broken

On March 28, 2019, and again on April 1, 2019, I filed Articles of Organization on the Arizona Corporation Commission’s website using its online filing system.  All the data that I entered was displayed correctly on the ACC’s review screen so I paid the $85 expedited filing fee and saved the invoice.  So far so good.  I went to my dashboard and accepted the nomination to be the statutory agent of each LLC.

What should have happened next was the ACC’s system should have approved the Articles of Organization and given me links to the actual Articles of Organization and the ACC’s approval letter so I could download and save the documents.  I got a link to each each document, but when I opened a document it did not contain any information about the newly formed LLC.  Nor could I find the LLC in the ACC’s system when I searched for the LLC by its name.

The Articles of Organization for each of the LLCs looked like this:

When this happened on March 28, 2019, I contacted the ACC and reported the problem.  It notified its website vendor of the problem and the vendor fixed it the following day.

When I got the blank Articles of Organization on April 1, 2019, I notified the ACC of the problem, but as of writing this article the ACC has not approved the Articles of Organization and the LLC is pending.  We’ve sent several email messages to the ACC without any response.  Calling the ACC is a waste of time because we are on hold for 45 – 60 minutes and then get a person who cannot solve the problem.

Bottom line:  The ACC’s online LLC formation system is broken.  Do not use it because you risk having your data lost in cyber-space and not being able to get any help from the Arizona Corporation Commission.

2019-04-03T11:22:05-07:00April 3rd, 2019|Articles of Organization, AZ Corporation Commission|0 Comments
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We Now Offer Same Day LLC Formation & Arizona Corporation Commission Approval

We will form your new Arizona LLC or PLLC and get its Articles of Organization approved by the Arizona Corporation Commission the same day you hire us (including Saturdays and Sundays) if you:

  • Pay the entire fee for your LLC or PLLC plus an additional $97 for same day approval service, and
  • Confirm that the information you submit to us in our LLC Formation Questionnaire is correct.

If you satisfy both of the above requirements before 4 pm Arizona time any day of the week we will form your company and get the ACC approval the same day otherwise we may form the company the next day.  We will also email to your company’s contact person a copy of the ACC approved Articles of Organization the same day we get its approval.

Bottom line:  With same day service it is possible to open a bank account for your new LLC or PLLC the same day you hire us to form your company.

[bctt tweet=”Arizona LLC attorney Richard Keyt who has formed 6,300+ LLCs now offers same day LLC formation and state approval.” username=”azattorney”]

 

2019-03-15T05:35:50-07:00March 15th, 2019|Articles of Organization, AZ Corporation Commission, Forming LLCs|0 Comments
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Arizona Corporation Commission Way Behind on LLC Reviews

Just a few weeks ago the Arizona Corporation Commission was reviewing Articles of Organization filed with the $85 expedited filing fee in 3 – 9 business days.  We had many Articles reviewed and approved in three business days.

That was the good old days.  Since the ACC’s new online filing system went live on May 20, 2018, the ACC is taking 20 – 26 business days to review Articles of Organization filed with the expedited filing fee and 60 – 66 business days to review Articles filed with the regular $50 filing fee.  When the Articles are approved the effective date (birth date) of the LLC is the date the Articles of Organization was received by the ACC unless the Articles provide for a later date.

This delay in approvals creates the following problems:

  • Some banks will not open a bank account for the LLC until its Articles of Organization are approved.  If you can’t wait to open a bank account go to a bank that doesn’t require that the Articles be approved by the ACC before opening a bank account.
  • Real estate closings.  A title insurance company will not issue title insurance when the buyer is an LLC until the ACC approves its Articles of Organization.  Several years ago when the ACC had a 60+ day delay, it had a proceed that enabled a pending LLC to move to the front of the review line and get approved so that a real estate transaction could close.  I don’t know if this procedure is still available, but call me if you need to expedite for a closing.

Moral of this story:  Always pay the additional $35 and file using the $85 expedited filing fee when you form a new LLC or PLLC.

2018-05-31T09:10:18-07:00May 31st, 2018|Articles of Organization, AZ Corporation Commission|0 Comments
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How to Determine if an Arizona LLC is Member or Manager Managed

A client sent me an email in which he said, “the “Arizona Department of Real Estate is asking for ‘a copy of the resolution signed by members stating: whether management of LLC is established as manager/member controlled’.”

This is the first time in the 34 years I’ve been forming Arizona LLCs that anybody ever asked that question.  If that is really what the Department of Real Estate wants then it/they are ignorant of Arizona LLC law and are asking for an irrelevant document that does not actually prove the LLC’s type of management.

The type of management of an Arizona LLC is not determined by resolutions signed by the members.  Management type is stated in the Arizona LLC’s Articles or Organization filed with the Arizona Corporation Commission.  Arizona Revised Statutes Section 29-3201.B.4 states:

“The Articles of Organization must state . . . whether the company is a manager-managed limited liability company or a member-managed limited liability company.”

The Articles of Organization filed with the Arizona Corporation Commission to create an Arizona LLC contains a statement that the LLC is manager managed or member managed.  Anybody who wants to verify the type of management of an Arizona LLC should look up the LLC on the ACC’s website (enter the name of the LLC in the search box on the top right) then click on the link to the Articles of Organization and read the management type set forth in the Articles.

2020-08-29T08:36:52-07:00February 15th, 2017|Articles of Organization, Miscellaneous|0 Comments
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Member Fraudulently Amends Articles of Organization to Remove Other Member

From time to time a member of an Arizona LLC calls and tells me that another member of the LLC filed an amendment to the Articles of Organization with the Arizona Corporation Commission that removed the caller as a member of the LLC without the caller’s knowledge or consent.  There was no legal basis to file the amendment.

The caller always asks “what can I do?”  The simple answer is the caller should prepare and file another amendment to the Articles of Organization to correct the removal of the caller as a member.  This solution, however, is only a temporary band aid.  It does not solve the fundamental problem which is the members cannot get along.

Unfortunately this scenario is an all too common problem.  The Arizona Corporation Commission is, in actuality, a mere filing service.  If a person submits a document for filing and it satisfies the ACC’s filing requirements, the ACC will file the document.  The ACC does not confirm or verify that the information set forth in a document is correct.  Many times when members of an Arizona LLC can not agree on the management of the LLC one of the members will file an amendment to the Articles of Organization that removes another member without any legal basis for the removal.

People who file false documents with the ACC are usually unaware that they could be committing a felony.  Arizona Revised Statutes Section 29-613.A states:

“A person who . . . signs any articles, statement, report, application or other document filed with the [Arizona Corporation] commission that is known to the person as false in any material respect is guilty of a class 4 felony.”

The bottom line is that when this happens the members need to consummate a “company divorce,” i.e., a legal termination of their relationship as members of the same LLC.  The best solution occurs if the members agree on the terms and conditions of their company divorce and they sign documents that evidence their agreement.  If the members cannot agree, they have two options:

  • Continue their relationship as members of the LLC, which means ongoing disputes, problems and stress.
  • File a lawsuit in an Arizona Superior Court and ask the court to dissolve the LLC.  This option takes time and causes both members to pay large amounts of money to their lawyers.

As a result of this latest call, I revised my multi-member Operating Agreement (yes I have a single member and husband and wife owned Operating Agreement that is about 20 pages shorter) to include a section that obligates a member who causes a fraudulent amendment to the Articles of Organization to be filed with the ACC to pay each other member liquidated damages in the amount of $10,000.  If the liquidated damages are not paid within 30 days of the filing date the unpaid amount accrues interest at the rate of 10% per annum.  If the entire amount is not paid within one year of the filing date, the offending member’s membership interest in the LLC will be forfeited on the first anniversary of the date the false amendment to the Articles of Organization was filed with the ACC and the unpaid portion of the liquidated damages will be forgiven.

For more on this topic read my blog post called “Can One Member of an Arizona LLC Expel Another Member?“

2017-01-15T11:00:19-07:00June 23rd, 2016|Articles of Organization, AZ Corporation Commission, Lawsuits, Member Disputes|0 Comments
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New Arizona Law Exempts LLC Organizers from Arizona Securities Laws

Arizona House Bill 2303 signed into law by Governor Doug Ducey contains a significant change to Arizona’s securities laws.  The new law allows the issuance of LLC membership interests to as many as ten LLC “organizers” to be exempt from Arizona securities laws.

Arizona Revised Statutes Section 44-1844.A was amended to read (new language is in bold red text):

“sections 44‑1841 and 44‑1842, section 44‑1843.02, subsections B and C and sections 44‑3321 and 44‑3325 do not apply to any of the following classes of transactions: . . .

10.  The issuance and delivery of securities of a corporation, limited liability company or limited partnership to the original incorporators, organizers or general partners, not exceeding ten in number, where the securities are not acquired by the incorporators, organizers or general partners for the purpose of sale to others and are not directly or indirectly sold to a third party within twenty-four months unless an incorporator, organizer or general partner experiences a bona fide change of financial circumstances within such time period, providing original incorporators, organizers or general partners are notified of their right pursuant to title 10 or 29 to review the financial books and records of the corporation, limited liability company or limited partnership at reasonable times.”

The term “organizer” is not defined in any Arizona statutes.  The Arizona Corporation Commission’s hard copy form Articles of Organization contains the following statements in Section 9 of the document:

“ORGANIZERS and SIGNATURE – the individual or pre-existing entity submitting this document is the Organizer – list the name of the Organizer below. If the Organizer is an individual, that individual must sign below. If the Organizer is a pre-existing entity, provide the signature of the individual acting for that entity, then print the individual’s name.”

Without any statutory reference that supports the statements, the first paragraph of the ACC’s instructions for its hard copy Articles of Organization states:

“One or more persons can form an Arizona LLC by signing and filing Articles of Organization with the Arizona Corporation Commission. . . . These persons are called “organizers.” “Person” includes individuals and entities.”

Significance of the New Law

This change in Arizona law is very important for every Arizona LLC that will issue membership interests that the securities regulators would designate as a security.  If you think an LLC must issue stock to investors before it is considered issuing a security you are wrong.

If the promoters of the LLC say to an investor give me your money for an X% membership interest in our LLC and the LLC will make a profit for you the LLC is issuing a security to the investor.  This is an example of an “investment contract,” which is a type of security under federal and state securities laws.

When securities laws apply to the issuance of membership interests in an LLC the LLC must comply with federal and applicable state securities laws or the promoters and the LLC become guarantors of the investors’ investments.  Promoters who cause an LLC to issue membership interests that are securities the issuance of which does not comply with applicable securities laws will have substantial liability to the investors and to the securities regulators.

To learn more about securities laws and how they can affect LLCs read the article my son and I wrote called “California LLCs & Securities Laws.”  Although the article is about California LLCs, many of the concepts apply to Arizona LLCs.

Bottom Line

If your to be formed Arizona LLC will be issuing membership interests to people or entities that are investing substantial amounts of money to purchase their membership interests, you must have EVERY INVESTOR (without exception, but no more than ten) sign the Articles of Organization as an organizer so the LLC can claim the exemptions provided from Arizona securities laws by Section 44-1844.A.10.

If you need your LLC to be able to use the ten exemptions provided in Arizona Revised Statutes Section 44-1844.A.10 hire us to form your LLC.  Our Articles of Organization for LLCs that want to take advantage of Section Section 44-1844.A.10 contain special Section 44-1844.A.10 language.

2019-07-04T10:40:31-07:00April 8th, 2016|Articles of Organization, Forming LLCs, LLCs & Securities Laws|0 Comments
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How Can I See If My Desired LLC Name is Available?

Question:  I intend to form a new Arizona limited liability company.  I know that the Arizona Corporation Commission will reject my Articles of Organization if my desired LLC name conflicts with the name of an existing Arizona entity or an Arizona trade name issued by the Arizona Secretary of State. How can I insure that my desired LLC name will not be rejected by the ACC?

Answer:  Actually, the latest version of the ACC’s online database has an easy to use name checker that will tell you if your desired name will be accepted or rejected.  Here’s how to check a prospective LLC name.

  • Go the the Arizona Corporation’s name checker website.
  • Enter the desired name in the field called Entity Name:
  • Click on the Name Availability Check icon on the bottom center of the page to start the search.

The ACC’s database will then tell you if the desired name is available.

Name Reservation Warning:  I don’t recommend that you waste $45 to reserve a name unless there is a lot of money riding on the name.  Before purchasing a name reservation ask yourself this question:  Given that the desired name has been available from the beginning of time up to the moment you checked the name, what are the chances somebody will use your desired name before you file your Articles of Organization?

Hire Us to Form an LLC

We’ve formed 9,000+ and have 349 five star reviews on Google and Birdeye because people love our low-priced LLC formation services.  See the prices and contents of our three LLC packages.  To hire us submit our online LLC formation questionnaire.

For free answers to questions about forming and operating Arizona LLCs and PLLCs call LLC attorneys Richard Keyt (the father) at 480-664-7478 or his son Richard C. Keyt at 480-664-7472.

2020-06-06T10:14:03-07:00January 28th, 2016|Articles of Organization, AZ Corporation Commission, FAQs, Forming LLCs, How Do I|0 Comments
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Arizona LLCs Can Now Be Formed Online

The following is the text of a September 30, 2015, press release issued by the Arizona Corporation Commission:

Creating an LLC in Arizona just got a lot easier. The Arizona Corporation Commission is accepting online filings for the first time. Before the online efiling became available earlier this month, someone wishing to create a limited liability company had to either come to a Commission office or mail in the paperwork.

LLC formation is one of the commission’s most important missions, Commission Chairman Susan Bitter Smith said. Shortening the amount of time it takes to file the paperwork and making sure all necessary information is submitted up front allows a business to start functioning sooner.

‘I’m proud the commission now allows for a secure and easy way to create an LLC,’ Bitter Smith said. ‘This innovation makes it faster for people to start the businesses of their dreams.’

Last year, more than 52,000 Arizona businesses were formed as LLCs, many of those coming from people who drove to a commission office to submit paperwork. Filing for an LLC online can be done here http://ecorp.azcc.gov/Entity or by going to the commission’s home page www.azcc.gov

The ability to create an LLC through online filings won praise from the business community.

‘Electronic filing of LLC documents has been long awaited by the business community and I applaud the Commission for taking this bold step. Innovation such as this will make starting businesses in Arizona easier, more efficient, and timely,’ Greater Phoenix Chamber of Commerce President and CEO Todd Sanders said. ‘We look forward to the Commission expanding electronic services even further in the future.’

Commissioner Doug Little said the Commission is sending an important message to the business community.

‘I believe this innovation by the Commission will dramatically improve and streamline the process of establishing an LLC in Arizona,’ Little said. ‘This is exactly what we need to be doing to support Governor Ducey’s initiative to let people know that Arizona is ‘open for business.’”

2018-05-31T16:52:03-07:00October 4th, 2015|Articles of Organization, AZ Corporation Commission, Forming LLCs|0 Comments
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Can One Member of an Arizona LLC Expel Another Member?

Question:  I am named in the original Articles of Organization of an Arizona limited liability company as a member.  Another member of the LLC signed an amendment to the Articles of Organization that removed me as a member.  Is that legal and does it terminate my membership in the LLC?

Answer:  No and no unless the member who signed the amendment had a contractual right to sign and file the amendment that removes you as a member of the LLC.  Arizona LLC law does not give a member of an Arizona LLC the right or power to unilaterally terminate the membership interest of another member.

As an Arizona limited liability company attorney who formed my first AZ LLC in October of 1992 and who has formed 9,000+ LLCs since then I must say that this is a very common scenario.  People think that the mere fact they file an amendment to the Articles of Organization that removes a member that the filed document has legal significance, i.e., that the person or entity that was a member yesterday is suddenly no longer a member today merely because the Articles were amended.

When a person or an entity acquires a membership interest in an Arizona LLC that person or owner has a property right recognized by Arizona law.  The owner of a property right cannot be divested of the property merely because somebody files a false document.  Example:  Homer Simpson owns a parcel of Arizona land.  Ned Flanders signs a deed that says Homer Simpson conveys the land to Ned and then records the deed.  This false deed does not transfer title to the property to Ned.  Ned’s deed is a legal nullity because it was not signed by the owner of the property.

The same concept applies to the property right that attaches to the member of an Arizona LLC.  If Ned Flanders signs and files an amendment to the Articles of Organization that removes Homer Simpson as a member that document does not cause Homer to cease to be a member.  There are four ways that Homer can cease to be a member of the company:

  • Homer dies.
  • Homer signs a document by which he assigns his membership interest to the LLC or one or more other people or entities.
  • Somebody has a legal or contractual right to terminate Homer’s membership interest.
  • A court terminates the membership.

Warning:  Arizona Revised Statutes Section 29-613.A states: “A person who . . . signs any articles, statement, report, application or other document filed with the commission that is known to the person as false in any material respect is guilty of a class 4 felony.”

2019-06-15T07:38:05-07:00March 12th, 2014|Articles of Organization, FAQs, Member Disputes|0 Comments
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Should I Pay the $50 or $85 Arizona LLC Filing Fee?

Question:  I know the fee to file Articles of Organization to create a new Arizona limited liability company is $50 or $85.  Why would I pay the $85 filing fee?

Answer:  The main reason to pay the $85 expedited filing fee is because the Arizona Corporation Commission will review the new LLCs Articles of Organization and approve it (hopefully approve rather than reject) within 5 – 8 business days rather than the 30 – 35 business days that applies to the standard $50 filing fee.  You should pay the $85 fee if any of the following apply to your LLC:

  • You need to open a bank account and your bank requires a copy of the LLC’s approved Articles of Organization and you can’t wait 30 – 35 business days.
  • You want the LLC to be able to take title to real estate and you can’t wait 30 – 35 business days.  Escrow companies will not close a real estate purchase escrow if title insurance is to be issued to the new LLC until the ACC approves the Articles of Organization.
  • The LLC is to sign an important contract and the other party won’t sign the contract until the ACC approves the Articles of Organization.

To see the exact number of days for the ACC to review regular filings and expedited filings go to its document processing times webpage.

2019-07-04T07:58:36-07:00March 12th, 2014|Articles of Organization, AZ Corporation Commission, FAQs, Forming LLCs|0 Comments
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When Will the Arizona Corporation Commission Review My LLC’s Articles?

Question:  When will the Arizona Corporation Commission review the Articles of Organization of my new Arizona limited liability company?

Answer: The amount of time the ACC takes to review Articles of Organization filed to create a new Arizona LLC depends on the whether the filing fee paid to the ACC was the $50 standard fee or the $85 epedited filing fee.  In general the ACC will review new Articles of Organization as follows:

  • If the filing fee is $50: ACC review is normally 4-6 business days after filing.
  • If the filing fee is $85: ACC review is normally 25- 30 business days after filing.

Go to the ACC’s document processing time web page to see exactly the filing date of documents that the ACC is currently reviewing.  Compare the Expedited ($85 filing fee) or the Nonexpedited Filing ($50 filing fee) processing times in business days for new LLCs with the received date stamped on the first page of the Articles of Organization that we emailed to you.

One of the advantages of purchasing our Silver or Gold LLC formation packages is that both of these packages include our payment of the $85 expedited filing fee.  Our Bronze LLC formation package Articles of Organization are filed using the standard $50 filing fee, which results in the much longer ACC review and approval.

2019-07-04T07:58:36-07:00February 27th, 2014|Articles of Organization, FAQs|0 Comments
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What is the Difference between the Silver & Gold LLC Formation Packages?

Question:  Why would I purchase your $1,297 Gold LLC formation package instead of your $797 Silver LLC formation package?

Answer:  The primary reason people purchase our Gold LLC formation package is confidentiality by keeping your name and address off the publice records of the Arizona Corporation Commission. Arizona LLC law requires that the Articles of Organization filed with the Arizona Corporation Commission (ACC) to create the LLC state the following information:

  • If the LLC is member managed, the names and addresses of all members, or
  • If the LLC is manager managed, the names and addresses of all members who own 20% or more of the LLC and all managers.

If you do not want your name as the owner of your LLC and your address to appear on the ACC’s public searchable internet database then you need to purchase my Gold LLC formation package.  The Gold package includes a Confidential Trust that will be the legal owner of the LLC.  A Confidential Trust is a revocable living trust in which the ultimate owner of the LLC is the trustmaker, trustee, and beneficiary.

For example, if the name of your Confidential Trust is the Laguna Beach Trust then the owner/member shown in the Articles of Organization filed with the ACC is the Laguana Beach Trust, c/o KEYTLaw, LLC, 7373 E. Doubletree Ranch Road, Suite 135, Scottsdale, AZ 85258.

Note: The Gold LLC formation package includes our address service for one year.

Second Reason to Buy Our Gold LLC Package

The second reason people buy our Gold LLC package is to avoid probate on the death of the ultimate owner or owners.  All assets owned by the trust, including the LLC, will pass automatically to the heir(s) named in the trust agreement without the need for a probate when the initial beneficiary or beneficiaries die.  Probate avoidance can save the heir(s) $3,500+ in attorneys fees that can be generated by a superior court probate.

Learn about the contents of our three LLC formation packages.

2023-11-03T07:41:15-07:00February 15th, 2014|Articles of Organization, FAQs, Forming LLCs|0 Comments
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How Do I Change the Purpose of My Arizona LLC?

Question:  I’ve used my Arizona LLC to sell widgets.  I now want to use it to provide marketing services.  How do I make the change?

Answer:  An Arizona LLC can engage in any lawful activity unless its activities are limited by language in the Articles of Organization.  Unless your AOO prohibits the LLC from engaging in marketing services the LLC is free to begin providing those services at any time, subject to any state, county or city licensing requirements.

When I form an Arizona LLC is do not normally include any language in the Articles of Organization that limits the LLC’s activities unless the LLC is a professional LLC (PLLC).  PLLCs by definition must limit their activity to practicing the applicable profession.

2014-02-23T11:56:38-07:00February 2nd, 2014|Articles of Organization, FAQs, How Do I|0 Comments
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Why is My Spouse Named as a Member in the Articles of Organization?

Question:  Why did you list my spouse as a member of my Arizona LLC in its Articles of Organization?

Answer:  Arizona is a community property state.  Arizona law provides that all property acquired while married by either spouse who is an Arizona resident is community property unless it is acquired by gift or inheritance.  This means that if one spouse of a married couple who reside in Arizona acquires a membership interest in an Arizona by then both spouses automatically own the interest as community property unless the non-owner spouse signs a disclaimer in which the non-owner spouse disclaims all ownership of the membership interest.

Because you told me that you wanted to own your membership interest in the LLC as community property I named both spouses as members of the LLC in its Articles of Organization.  Arizona law provides that it is a felony to file Articles of Organization with the Arizona Corporation Commission if contains known factual misrepresentations.  If one spouse owns his or her membership interest as separate property then the non-owner spouse should not be named as a member in the Articles of Organization.

2013-09-20T07:17:39-07:00September 20th, 2013|Articles of Organization, FAQs, Forming LLCs|0 Comments
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Can an Arizona LLC’s Address be a Post Office Box?

Question:  I know that all LLCs formed in Arizona must file Articles of Organization with the Arizona Corporation Commission in which the LLC notifies the ACC of its known place of business in Arizona.  Can the LLC’s address be a U.S. post office box?

Answer:  No.  The ACC used to allow LLCs to use a PO box for the LLC’s address, but it burped last year and decided to outlaw U.S. post office boxes for the LLC’s Arizona address.  US post office boxes are fine for members and managers, but if you try to file Articles of Organization that state that the LLC’s address is a US P.O. box the ACC will reject the Articles.

2013-08-22T20:04:48-07:00August 22nd, 2013|Articles of Organization, FAQs, Forming LLCs|0 Comments
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Don’t File a False Document with the Arizona Corporation Commission

A client called and said his banker refused to open a bank account because the Articles of Organization filed with the Arizona Corporation Commission does not list the name of a person who owns 10% of the LLC.  The banker insisted that my client file an amendment to the Articles of Organization that names the 10% owner as a member.  Here is the text of an email message I sent to my client about the bank’s unreasonable and ignorant request:

I understand that your bank wants you to commit a felony and file a false document with the Arizona Corporation Commission that misrepresents the ownership of your LLC. Specifically your bank wants the Articles of Organization of <name omitted>, LLC, to show that Homer and Marge Simpson are members of the LLC despite the fact they together own only 10% of the company.

Arizona Revised Statutes Section 29-3502.D states: ‘A person that signs a record, or causes another to sign it on the person’s behalf, knowing that the record contains inaccurate information at the time it is signed, is liable to the limited liability company and to each member of the company for damages resulting from the inaccurate information.

ARS Section 13-2702 states: “A person commits perjury by making either: 1. A false sworn statement in regard to a material issue, believing it to be false. 2. A false unsworn declaration, certificate, verification or statement in regard to a material issue that the person subscribes as true under penalty of perjury, believing it to be false.  Perjury is a class 4 felony.

Your LLC is manager managed therefore Arizona LLC law prohibits naming anybody as a member of the LLC unless the member owns 20% or more of the LLC. I understand that your banker wants you to file a false document with the Arizona Corporation Commission that names Homer and Marge Simpson as members of the LLC. You should not do that because it is a felony to file a document with the Arizona Corporation Commission that you know contains a misrepresentation of the facts.

Because of this law knowledgeable bankers and others always ask to see the Operating Agreement of a manager managed Arizona LLC because an Operating Agreement signed by all of the members is the only way to verify all of the owners of a manager managed Arizona LLC and their percentage ownership of the LLC.

Bottom Line:  Do not file documents with the Arizona Corporation Commission that contain false statements.

2021-01-02T15:54:01-07:00August 12th, 2013|Articles of Organization, AZ Corporation Commission, FAQs, Members|0 Comments
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Can I See Your LLC Documents before You Form My LLC?

This week a man inquired about my LLC formation services.  He asked if he would see the Articles of Organization and Operating Agreement before I formed the LLC.  I said normally I prepared and filed the Articles of Organization and prepared the Operating Agreement without first sending the documents to my client.

The man said “I am appalled.” He added that he was offended that I would have the gall to prepare LLC documents without his prior input.

I said that in forming 9,000+ Arizona LLCs not once had I ever sent both of these documents to the owner of the LLC before forming the company.  Nor had anybody ever asked me to see either document before I filed the Articles of Organization with the Arizona Corporation Commission.  When I send the Operating Agreement to an LLC member I ask the member to review the document and to let me know if he or she wants to modify the Operating Agreement.

I also said that I would be happy to send the man both documents before I formed the company to get his input and make changes if necessary.  Despite my offer, the man was too offended by my long-time practice and he declined to hire me to form his LLC.

The whole discussion was surreal.  I could not imagine why a person who had never seen Articles of Organization or an Operating Agreement and had never owned an LLC would think that he or she needed to review the documents before I filed the Articles of Organization.  I cannot remember anybody ever asking me to modify my three page custom drafted Articles of Organization (before or after I filed the document).

From time to time people do want to make minor modifications to my Operating Agreement. Sometimes people even want to make major changes to my Operating Agreement.  In fact, the day after the angry would-be LLC expert declined to hire me to form his LLC another person hired me to form an LLC and gave me six pages of text that the members of her new LLC wanted included in my Operating Agreement.  I was happy to include the client supplied provisions, subject to charging for attorney time to revise the document.

Bottom line:  As you can imagine, after forming 9,000+ Arizona LLCs my documents are excellent, but if you want to modify my Articles of Organization or Operating Agreement, I am happy to do so unless I believe a change would be inappropriate.

2019-06-15T07:29:27-07:00August 4th, 2013|Articles of Organization, Forming LLCs, Operating Agreements|0 Comments
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