KEYTLaw, LLC serves as statutory agent for $99 per year (free the first year for LLCs we form). Our statutory agent address is 24 W. Camelback Road, Suite 467, Phoenix, AZ 85013, which is in Maricopa County. To hire us, complete our Statutory Agent Questionnaire.

Under A.R.S. §29-3201, if your statutory agent’s street address is outside Maricopa and Pima Counties, the LLC must publish a notice of the filing of its Articles of Organization in a newspaper of general circulation in the county of the agent’s street address. The notice must run three consecutive times, and publication must happen within 60 days after the ACC approves the Articles. Answer the next three questions.

On September 1, 2019, Arizona replaced its old LLC law with the Arizona Limited Liability Company Act. Many of the new default rules can hurt members — and those rules control your LLC unless a signed Operating Agreement overrides them. We believe every Arizona LLC, single-member or multi-member, regardless of when it was formed, needs an Operating Agreement written for the current law.

Read Richard Keyt’s article 19 Ways Members Can Be Harmed if Their Multi-Member LLC Lacks an Operating Agreement. Every LLC we form under our Bronze, Silver and Gold packages includes a custom Operating Agreement signed with DocuSign. If your LLC needs a new or updated agreement, call 480-664-7478.

Ownership percentages control voting, profits and what each member receives when the LLC is sold. Wrong percentages are a lawsuit waiting to happen. Amend the Operating Agreement and have all members sign it. Call attorney and former CPA Richard C. Keyt at 480-664-7472 to hire him to amend your Operating Agreement.

A.R.S. §29-3410 requires every Arizona LLC to keep the following records and to let members and managers inspect and copy them:

1. A current list of the full name and last known address of each member and manager.
2. A copy of the Articles of Organization and all amendments.
3. A copy of all current and prior written Operating Agreements and all amendments.
4. Any record of a member’s obligation to make a capital contribution.
5. The company’s federal, state and local income tax returns and reports, if any, for the three most recent years.
6. The company’s financial statements, if any, for the three most recent years.

If a person or entity is wrongly listed as a manager, or a manager is missing, a manager must file Articles of Amendment with the ACC to correct the error. Paper filings must be accompanied by an ACC cover sheet. Most changes can also be filed online through the ACC’s eCorp online filing system, and online Statements of Change are generally approved automatically.

Arizona LLC law provides these rules for electing a new manager:

1. If the members signed an Operating Agreement, managers are designated, elected, removed and replaced as the Operating Agreement provides.
2. If there is no Operating Agreement and every manager has resigned or stopped serving, a majority of the members elects the new manager(s). With three members a majority is two; with four members a majority is three.

If neither situation applies, Arizona law is silent. The best practice is for the members to vote on the addition or removal and document the vote in a resolution signed by the members.

After the change is properly approved, a manager must file Articles of Amendment with the ACC. Paper filings must be accompanied by an ACC cover sheet. Most changes can also be filed online through the ACC’s eCorp online filing system, and online Statements of Change are generally approved automatically.

A former member must sign a document that transfers a specified percentage of the LLC to the person or entity receiving it, as of a specific date. To document a transfer yourself, use Richard Keyt’s editable Assignment of Membership Interest Agreement from our Keyt Forms website. Learn more in our article How to Add or Remove a Member of an Arizona LLC.

Death is inevitable. A member who does not plan ahead lets Arizona law — not the member — decide who inherits the LLC interest. A will alone does not avoid probate, which can take months and cost thousands of dollars.

Two better options: a revocable living trust that owns the membership interest, or Richard Keyt’s Transfer of Membership Interest Testament, which passes the interest automatically at death without probate. See our Arizona Wills, Trusts & Estate Planning Articles and the 36 documents and services included in a KEYTLaw estate plan.

Without a Buy Sell Agreement, the death of a member can leave you in business with the member’s spouse or children. Read Richard Keyt’s article on the Arizona LLC Buy Sell Agreement.

Fees: $1,294 if your LLC was formed within the last 90 days or KEYTLaw prepares your Operating Agreement at the same time; $1,994 for all other Arizona LLCs. Each fee includes up to one hour of attorney time for consultation and custom provisions. To hire us, complete our Buy Sell Agreement Questionnaire or call Richard Keyt at 480-664-7478 or Richard C. Keyt at 480-664-7472.

The most common cause of member disputes is the LLC taking action without the other members’ prior knowledge. Call a meeting to discuss every proposed major action, have the members vote and document the vote with minutes or a resolution signed by the members.

Editable minutes and resolutions forms are available from Keyt Forms.

To be taxed as an S corporation from day one, file IRS Form 2553 no later than two months and 15 days after the LLC’s formation date. See the Instructions for Form 2553. If you miss the deadline, your tax advisor may be able to request late-election relief. For later years, the election is generally due within the first two months and 15 days of the tax year in which it is to take effect.

Every business — even a home-based business — needs liability insurance. It pays defense costs and damages if the LLC, its employees, or its products or services cause, or are accused of causing, bodily injury or property damage to someone else.

If the LLC owns buildings or business personal property — computers, office equipment, inventory or tools — insure it against fire, theft, vandalism, smoke damage and other losses. Ask about adding business interruption coverage to the policy.

A BOP packages the coverage most small businesses need — typically liability, property and business interruption, with options such as vehicle and crime coverage — into one policy. A BOP usually costs less than buying each policy separately.

Commercial auto insurance covers the LLC’s cars, SUVs, vans and trucks. If employees drive their own cars on company business, the LLC should carry non-owned auto liability coverage in case the employee’s insurance is missing or inadequate. Non-owned coverage can often be added to a BOP.

We recommend at least $1,000,000 of umbrella coverage. Additional coverage in $1,000,000 increments up to $5,000,000 is often relatively inexpensive. Ask your agent to price several amounts.

Professional liability, also called errors and omissions insurance, pays defense costs and damages for failing to render, or improperly rendering, professional services. A general liability policy does not cover these claims. Lawyers, accountants, consultants, notaries, real estate and insurance agents, salons and technology providers all need it.

D&O insurance protects the people who manage the company if they are sued over decisions that affect the company’s profitability or operations. It pays defense costs and damages resulting from covered lawsuits.

Any LLC that stores sensitive or non-public information about employees or clients — digitally or on paper — is responsible for protecting it. Data breach insurance covers losses from a breach. Warning: under A.R.S. §18-552, Arizona can impose civil penalties of up to $500,000 on a business that suffers a breach and fails to follow the law’s notice requirements.

If a fire, flood or other catastrophe shuts down your location, business interruption insurance replaces lost income while you can’t operate. It is especially important if your LLC needs a physical location to do business.

If your LLC manufactures or sells products, products liability insurance is a must. Even a careful business can be sued over injuries caused by its products. Coverage can be tailored to your specific products.

A.R.S. §23-722.01 requires every employer doing business in Arizona to report new hires, rehires and employees returning to work within 20 days. Report every employee who lives or works in Arizona, even one who worked only a day.

Report online through the Arizona New Hire Reporting Center, or let a payroll service or your CPA handle it.

If you employ Arizona employees, read our article Arizona Employment Law, which includes links to the posters Arizona employers must display.

Arizona requires employers to provide workers’ compensation coverage for their employees. Knowingly failing to comply with Arizona’s workers’ compensation law can be a class 6 felony under A.R.S. §23-932.

Workers’ compensation is a no-fault system: an employee injured on the job receives medical and wage benefits no matter who caused the accident. Buy coverage from an insurer licensed in Arizona. For more information see the Industrial Commission of Arizona and the Arizona Department of Insurance and Financial Institutions.

Employers are frequent lawsuit targets, and employees with a signed agreement that spells out the terms of employment are less likely to sue. Any manager who is employed by the LLC should always sign an employment agreement.

For an employment agreement, call Richard C. Keyt at 480-664-7472 or email rck@keytlaw.com.

Without a written agreement, a court and the IRS are more likely to treat the worker as an employee. The agreement should spell out the contractor’s duties and state that the contractor is responsible for all income and employment taxes on what the contractor earns.

For an Independent Contractor Agreement, call Richard C. Keyt at 480-664-7472 or email rck@keytlaw.com.