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FAQs

How Can I Legally Omit My Name as a Member of an Arizona LLC?

Question:  I want to form an Arizona limited liability company.  I understand that Arizona law requires that the names and addresses of all members of an Arizona member managed LLC must be disclosed in the Articles of Organization, which is a public record on the internet.  How can I form an Arizona LLC and avoid having my name and address appear on the Arizona Corporation Commission’s public records?

Answer:  Yes if you do it the right way.  Arizona Revised Statutes Section 29-3201.B requires that the Articles of Organization filed with the Arizona Corporation Commission must contain the name and address of all members if the LLC is member managed or the names and addresses of only those members who own 20% or more of the LLC if the company is manager managed.

There is a simple and relatively inexpensive way to comply with Arizona law, but not disclose your name in the Articles of Organization filed with the Arizona Corporation Commission to form an Arizona LLC.  For the solution and how to keep your name off the records of an Arizona LLC, see my article called “How to Form an Arizona LLC without Disclosing Its Ultimate Owner(s).”

2021-01-03T08:56:17-07:00July 7th, 2010|Ask the KEYTLaw Girl, Asset Protection, FAQs, Forming LLCs|0 Comments
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If My New Business Will Have Start Up Losses, Should It be an LLC or an S Corporation?

Question:  I am considering starting a new business and I anticipate that it will produce losses, rather than profits for the first few years.  Should I form a limited liability company or an S corporation to own and operate the business?

Answer:  People ask this question of me a lot, which is why I wrote a detailed article called “LLCs vs. Corporations:  Which Type of Arizona Entity Should You Form?”  My article explains the many reasons why I believe that the LLC is the entity of choice in Arizona.  People who ask this question are mixing the type of entity formed under state law with a method of taxation under the Internal Revenue Code of 1986, as amended.  When you are thinking of forming an entity in Arizona to operate a business or to own investment real property, the first question is what type of entity should I form under Arizona law?  Almost always the answer is a limited liability company.

After you form your company, the next question is what is the best method of income tax for the entity?  If your tax adviser says that your LLC should be taxed as an S corporation and if it is eligible for that method of tax, then all of the members of company must sign an IRS Form 2553 (the instructions) and file it with the Internal Revenue Service before the deadline for making the S corp election.  An LLC taxed as an S corporation is a “pass through” entity (it does not pay income taxes), which means that losses are passed through to the owners who can deduct the losses on their personal income tax returns (if they have sufficient basis).  Note: An LLC that elects to be taxed as a C corporation, an S corporation, a sole proprietorship or a partnership for federal income tax purposes does not change its character.  The entity always remains an LLC created under Arizona law regardless of the method of federal income tax applicable to the entity.

Bottom line:  If S corp tax treatment is important and your business is in Arizona, form an Arizona LLC and cause it to be taxed as an S corporation by filing an IRS form 2553 in the first 75 days after forming the LLC.

P.S.  I recommend that everybody who forms an LLC consult with a good tax advisor as soon as possible after forming the entity to obtain advice on which of the four federal income tax methods (sole proprietorship, partnership, C corporation or S corporation) is best for the limited liability company.  The election to change the default method of income tax (sole proprietorship or disregarded entity for a single member LLC or partnership for a multi-member LLC) must be filed within 75 days of the date of forming the LLC for the election to be effective from the date of formation.  For a list of the Certified Public Accountants I recommend in Arizona see “Professionals We Like.”

To learn why 9,000+ people have hired me to form their Arizona LLC, see “Contents of Arizona LLC Attorney Richard Keyt’s $597 Complete LLC Package” and Testimonials.

2019-06-15T09:03:55-07:00March 1st, 2010|Ask the KEYTLaw Girl, FAQs, Forming LLCs, LLCs & Corporations|0 Comments
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Should You Reserve a Name with the Arizona Corporation Commission for Your New LLC or Corporation?

Question:  What is your opinion on reserving a name for my new company with the Arizona Corporation Commission?

Answer:  I never reserve a name for a new LLC or corporation unless it would be a big problem if the company did not get the name.  Big problem to me means that the loss of the name would cause my client to pay a lot of money or if you think somebody who knows about your plans for a new company might reserve the name just to prevent you from getting it. In the thirty years I have been a business lawyer in Arizona forming over 2,300 companies, I have reserved a name less than five times.

Think of it this way.  If you check a name with the Arizona Corporation Commission (check it here) and it is available, it means the name has been available from the beginning of time to the moment you checked it.  The chance that somebody is going to get that exact name before you in the near future are slim to none.

When people do reserve a name, it is not a problem for me when we form the limited liability company or corporation if the person or company that reserved the name is a member or manager named in the Articles of Organization of an LLC or named in the Articles of Incorporation of a corporation.  If that person is not named in the Articles, the holder of the name rights must assign the rights to the name to one of the people or entities named in the Articles and the assignment document must be submitted to the Arizona Corporation Commission when you file the Articles.

P.S.  Early in my legal career, I was merging two corporations into one survivor corporation.  I reserved the name of the new corporation.  It was very important that the merger occur on a specific date.  The Arizona Corporation Commission rejected my merger documents because it said correctly that I was not named in the name reservation.  That’s when I learned about the need for the name holder to assign the rights to the name to somebody who is named in the Articles.

2019-06-15T11:28:02-07:00February 25th, 2010|Ask the KEYTLaw Girl, FAQs, Forming LLCs|0 Comments
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Can an Arizona LLC be Owned Entirely by Non-U.S. Citizens Who Do Not Reside in the U.S.?

Question:  Can an Arizona limited liability company be formed and owned by non-United States citizens who do not reside in Arizona or the United States?

Answer:  Yes.  Arizona limited liability company law does not require that any owner of an Arizona LLC be a U.S. citizen or a resident of the United States.  I have formed many Arizona LLCs for people who live outside the U.S. and who are not U.S. citizens.

LLC’s Need a Federal Employer Tax ID Number:  It is also possible for an LLC owned only by non-U.S. citizens to get a federal employer identification number from the Internal Revenue Service.  An LLC needs  an EIN to open a bank account in the United States and to put on federal income tax returns and forms.

U.S. Bank Account:  As for opening a bank account in the U.S., it is best if at least one owner or the manager is in the U.S. to open the account in person in the United States.  U.S. bank laws require that the bank know and verify who is it dong banking business with.    If that is not possible, I recommend that LLCs owned solely by non-U.S. citizens coordinate opening an account in the U.S. with the branch office of a bank in their county of residence that has one or more bank branches in the U.S.

2019-06-15T11:50:13-07:00December 14th, 2009|Ask the KEYTLaw Girl, FAQs, LLCs & Corporations, Members|0 Comments
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How to Change the Name of a Limited Liability Company

Question:  Can I change the name of my Arizona limited liability company?

Answer:  Yes.  Assuming the members approve the name change, an Arizona limited liability company can change its name by amending its Articles of Organization on file with the Arizona Corporation Commission.  For a detailed explanation of how to change the name, see my article called “How to Change the Name of an Arizona LLC.”

2011-07-14T14:45:57-07:00October 13th, 2009|FAQs, LLCs & Corporations, Operating LLCs|0 Comments
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Why Not Form a New Business as an LLC?

Question:  What is the best type of entity to form to own and operate an Arizona business or to own investment real estate?

Answer:  The Arizona limited liability company, except in limited circumstances.

Two business law attorneys wrote a paper published in The Practical Tax Lawyer periodical that describes many of the reasons that an LLC is the right choice of entity for most new businesses, and advises that a new business choosing a legal form should first consider an LLC. The authors present a series of simple examples to illustrate the advantages that LLCs often have over both C corporations and S corporations.  The article begins:

“An LLC is the right choice, however, in a majority of cases. Accordingly, an LLC should be the first form to consider for a new business. . . . An LLC has nearly unlimited flexibility in the types of equity and debt interests that it may issue to its members. An LLC may issue all manner of common interests, preferred interests, vested or unvested interests, debt, and options to acquire any of the above.”

As an Arizona lawyer who has been practicing business law in Arizona since 1980 and who has formed 9,000+ Arizona LLCs, I agree with the authors that the limited liability company is almost always the best type of entity to form to operate a business or own real estate in Arizona.  People form Arizona LLCs 12 times more often that they form Arizona corporations.  See “ACC Entity Formation Statistics.”

2019-06-15T08:35:37-07:00October 6th, 2009|FAQs, Forming LLCs, LLCs & Corporations|0 Comments
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Can My Arizona LLC Do Business in Another State?

Question:  If I form an Arizona limited liability company, can it do business in a state other than Arizona?

Answer:  Yes.  An entity formed in one state can do business in any other state in the United States.  Usually, if an entity formed in State A does business in State B, the entity must register or qualify to do business in State B, which means filing some papers and paying a fee to State B.  If State B has an income tax and the entity formed in State A does business in State B and derives income from within State B, the entity must file a state income tax return in State B and pay State B the tax on the income derived from within State B.

Two Easy Ways to Hire Richard Keyt to Form Your Arizona LLC for $497 (Bronze), $797 (Silver) or $1,297 (Gold)

To learn about what is included in each of our three LLC formation packages see our Bronze ($497), Silver ($797) & Gold ($1,297) LLC Formation Packages Comparison page.

We’ve made it very easy to hire Richard Keyt (9,000+ LLCs formed) and KEYTLaw, LLC, to form your new Arizona LLC.  It’s a simple 5 – 10 minute process.  To hire Richard to form your new LLC select one of the following two options:

Option 1 – Telephone

Call any of the following KEYTLaw people and give your LLC and credit card information over the phone:

  • Richard Keyt (father) – 480-664-7478
  • Richard’s son and former CPA Richard C. Keyt – 480-664-7472
  • KEYTLaw LLC legal assistant Amanda Duran - 480-664-7846

Option 2: Online – Available 24/7

100% Satisfaction Guaranteed

If you are not happy with the formation service we provide, you may ask for a refund in writing within thirty days after the date we file your LLC’s Articles of Organization and we will refund your LLC formation fee less the $85 filing fee.

2023-05-20T11:14:50-07:00October 2nd, 2009|Ask the KEYTLaw Girl, FAQs, Operating LLCs|0 Comments
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What to do if the Holder of a Name Reservation is not a Member?

Question:  A person who is will not be a member or manager of my Arizona LLC reserved the company’s name with the Arizona Corporation Commission. Will the ACC reject the Articles of Organization?

Answer:  Yes unless you take appropriate action to prevent the rejection.

Recently we were asked to form an Arizona limited liability company under a name that was reserved by the CPA of the to be formed LLC.  The CPA was not going to be a member or a manager of the new LLC.  The Arizona Corporation Commission will reject the Articles of Organization of a new Arizona LLC if a valid name reservation exists and the holder of the name reservation is not a member or manager of the new LLC.

Solution:  I called the Corporations division of the Arizona Corporation Commission and asked how to solve the problem.  The simple solution is to name the holder of the name reservation as the organizer of the LLC and have the organizer sign the Articles of Organization.  Arizona law does not require that a member or manager sign the Articles of Organization as the organizer.  Anybody with capacity and authorization can sign the Articles of Organization of an Arizona LLC.

We submitted the Articles of Organization signed by the organizer to the Arizona Corporation Commission and it was approved.

2019-06-15T11:23:02-07:00September 24th, 2009|Articles of Organization, Ask the KEYTLaw Girl, FAQs, Forming LLCs|0 Comments
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How to Keep an Arizona LLC in Good Standing

Question:  How do I keep my Arizona LLC in good standing with the Arizona Corporation Commission?

Answer:  Once you start your Arizona limited liability company (LLC), there are some very important issues to consider to keep the LLC in good standing with the Arizona Corporation Commission. When an LLC is not in good standing, the ACC will first classify the LLC as delinquent and then administratively dissolve or revoke the LLC’s existence if the LLC does not correct the problem within the time period listed on the ACC’s delinquency notice.

Here’s how to keep your LLC in good standing with the Arizona Corporation Commission:

  • Publish your Notice of Publication if Required! Arizona LLC law requires that within 60 days of the date the Arizona Corporation Commission approves the Articles of Organization, a Notice of Publication  must be published for three consecutive publications in a newspaper of general circulation in the county of the LLC’s known place of business in Arizona.  Publication in a newspaper is not necessary if the LLC’s known place of business is in Maricopa County or Pima County.  The LLC may be dissolved if it does not publish and file an Affidavit of Publication with the ACC when publication is required.
  • If your LLC moves, tell the Arizona Corporation Commission! Always notify the Arizona Corporation Commission of any change of address of the business or its members or managers.  If you move the known place of business address for your LLC, or if your Statutory Agent’s address changes, you must submit a Statement of Change of Known place of Business or Statutory Agent. You may also use this form to update your member/manager addresses. However, adding or removing members and/or managers requires an amendment to be filed. Please note that the ACC does not allow the Postal Service to forward mail, so once you move you will no longer receive critical documents from the Arizona Corporation Commission. Therefore, it is extremely important that you notify the ACC of any address changes.
  • If any member or manager moves, tell the Arizona Corporation Commission!  If the address of a member or manager in the LLC’s Articles of Organization changes, the LLC must notify the Arizona Corporation Commission of the new address.  To change the address of a member or manager complete and submit a Statement of Change of Manager or Member Addresses to the Arizona Corporation Commission.
  • Maintain a Statutory Agent at all times! If your statutory agent has resigned, you must appoint a new agent immediately. The form, Statement of Change of Known place of Business or Statutory Agent, can be downloaded by clicking here. There is a $5.00 fee to file this form and it may also be expedited for an additional $35.00.
  • Make sure that your LLC’s duration has not expired! Every LLC that we form has a perpetual duration, but some people create LLCs with a specified dissolution date.  When you originally organized your LLC, you may have chosen a specified period of time that your LLC would exist. If you intend to operate your LLC beyond that original life span, you must file an Amendment to the Articles of Organization with the Corporate Filings Section of the ACC to extend the life period of the LLC. You may obtain the amendment form by clicking here. The fee to file an amendment is $25.00. Expedited service is available for an additional $35.00.
  • Make good on any Non-sufficient funds (NSF) checks! If you bounced a check payable to the Arizona Corporation Commission, you must submit the payment amount plus a $10.00 fee, which is imposed on all NSF checks.  The payment you submit cannot be a personal check or business check. The payment must be a cashier’s check, money order, or cash (accepted only at the ACC’s counter).

If your LLC has been dissolved or its authority revoked for any of the above reasons, you have six years from the dissolution date to correct the deficiency.  This may be accomplished by filing the necessary documents, paying all fees that are due, and including the proper reinstatement fee. The reinstatement fee is $100.00.

Note: Your LLC’s name will only be held for six months after the date of delinquency.  After that time anybody can create an Arizona entity with the exact name of the dissolved company.

2019-07-04T10:25:38-07:00September 19th, 2009|FAQs, LLCs & Corporations|0 Comments
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Personal Guaranty’s & LLC’s

Question:  My LLC is borrowing money and the lender wants me to sign a guaranty.  Should I sign it?

Answer:  It depends on whether you can convince the lender that it should drop the guaranty.  A prudent lender will always require that the members of an LLC that is borrowing money personally guaranty the loan.  No guaranty – no loan unless the LLC has sufficient assets to assure the lender that the loan will be repaid.  Without a guaranty signed by the members, the lender’s only source for repaying the loan is the LLC and its assets.  Prudent lenders require the owners of an LLC and a corporation to sign guaranties by which the owners of the LLC promise to pay the loan if the LLC does not do so.

A client sent me a copy of a guaranty that a contractor asked each member of the limited liability company to sign.  The client asked:

“If I sign the guaranty, can the contractor come after my personal assets?  If so, why doesn’t my LLC protect me from the liability?”

The general rule of Arizona law is that the members (owners) of an Arizona limited liability company are not liable for the debts or obligations of the LLC.  There are exceptions to the general rule.  The biggest and most common exception arises when a member guarantees the debts or obligations of the LLC.

By guarantying the LLC’s debts or obligations, the member becomes liable under contract law to satisfy the LLC’s debts and obligations that were guaranteed.  For example, if the LLC borrows $10,000, the general rule is that the members are not liable for the debt.  However, if a member signs a guaranty in favor of the lender that says the member will pay the debt if the LLC defaults, the member is agreeing in the contract (the guaranty) that the lender can sue the member for the amount owed on the loan if the LLC defaults and obtain the member’s personal assets to pay the debt.

LLC members should avoid guarantying debts and obligations of their LLCs unless absolutely necessary.

The concepts described above also apply to shareholders of Arizona corporations and limited partners of Arizona partnership.

2019-06-15T11:24:27-07:00September 10th, 2009|Ask the KEYTLaw Girl, Asset Protection, FAQs|0 Comments
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