How Do I

How Do I Protect My Company’s Name in All 50 States?

Question:  I want to form a new limited liability company and protect its name in all fifty states.  How do I do that?

Answer:  Each of the fifty states regulates and authorizes the names of companies formed in the state.  Company names are protected only in the state in which the company is formed.  There is no way to protect a company name in all fifty states other than forming a company with the same name in every state in every state, but that would not be practical or prudent.  Bottom line:  There is no practical way to protect a company name in all fifty states unless you can register the name as a trademark or service mark with the U.S. Patent & Trademark office.

Federally Registered Trademarks & Service Marks

The U.S. allows people and companies to register a trademark or service mark with the U.S. Patent & Trademark office. A federally registered trademark or service mark is protected in all fifty states. A trademark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others. A service mark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of a service rather than goods.

Examples of trademarks and service marks include: brand names, slogans, and logos. The term “trademark” is often used in a general sense to refer to both trademarks and service marks. Use of a business name does not necessarily qualify as trademark use, though other use of a business name as the source of goods or services may qualify it as both a business name and a trademark or service mark.

Trademarks are territorial and must be filed in each country where protection is sought. A U.S. trademark does not afford protection in another country. For more information on how to apply for trademarks in a foreign country, contact the intellectual property office in that country directly.

2018-09-01T17:12:36-07:00September 1st, 2018|FAQs, How Do I|0 Comments

How to Add or Remove a Member of an Arizona LLC

This video demonstrates how to amend the Articles of Organization of an Arizona LLC to add or remove a member.  Caution:  Before removing or adding a member of an AZ LLC read my article called “Member Fraudulently Amends Articles of Organization to Remove Other Member.”

Links mentioned in the video are:

For more videos on forming and operating Arizona limited liability companies and how to use the Arizona Corporation Commission’s forms and online services  see the KEYTLaw Youtube channel.  Please click on the subscribe icon and the bell symbol to the right of the subscribe icon to get a notice when we upload a new video.

2019-07-04T10:40:02-07:00March 3rd, 2018|ACC How to Videos, How Do I, Our Videos|0 Comments

How to Make an ACC Cover Sheet

This video demonstrates how to make an Arizona Corporation Commission cover sheet.  Every document filed with the Arizona Corporation Commission (ACC) must include an ACC cover sheet.  It’s one of the Arizona llc requirements.  Without a cover sheet the Arizona Corporation Commission will reject the document.  The Arizona Corporation Commission cover sheet (sometimes called an azcc cover sheet) is a simple one page document.  Here’s the link to the ACC cover sheet.

For more videos on forming and operating Arizona limited liability companies and how to use the Arizona Corporation Commission’s forms and online services  see the KEYTLaw Youtube channel.  Please click on the subscribe icon and the bell symbol to the right of the subscribe icon to get a notice when we upload a new video.

2018-11-01T07:40:05-07:00February 10th, 2018|ACC How to Videos, How Do I, Our Videos|0 Comments

How to Do an Arizona Business Name Search to Find a Name for a New LLC

If you want to form a new Arizona limited liability company the first thing you need to do is determine if your desired name is available.  The good news is that the Arizona Corporation Commission has an online name check database that will tell you if a desired name is available or taken.

In this video we will demonstrate and show you how to how to do an Arizona business name search to find a name for a new LLC. If the name is available we will also show you how to reserve the name for 120 days.

Here is the link to the Arizona Corporation Commission’s entity name database:

http://ecorp.azcc.gov/

Warning:  People sometimes mistakenly search for arizona secretary of state business entity search when they want to know if a name is available for an Arizona LLC or corporation.  Do not search the Arizona Secretary of State’s website for LLC or corporation names because it is the Arizona Corporation Commission that determines is a name is available for an Arizona LLC or corporation.

For more videos on forming and operating Arizona limited liability companies and how to use the Arizona Corporation Commission’s forms and online services  see the KEYTLaw Youtube channel.  Please click on the subscribe icon and the bell symbol to the right of the subscribe icon to get a notice when we upload a new video.

How to Change the Statutory Agent of an Arizona LLC or Corporation

This video demonstrates how to prepare and file the Arizona Corporation Commission’s LLC Statement of Change of Know Place of Business Address or Statutory Agent form to notify the ACC that an Arizona LLC changed its statutory agent.

Links mentioned in the video are:

For more videos on forming and operating Arizona limited liability companies and how to use the Arizona Corporation Commission’s forms and online services  see the KEYTLaw Youtube channel.  Please click on the subscribe icon and the bell symbol to the right of the subscribe icon to get a notice when we upload a new video.

2019-07-04T10:41:47-07:00March 3rd, 2017|ACC How to Videos, How Do I, Our Videos|0 Comments

How Does My LLC become an S Corporation?

Question:  My accountant says that I need to turn my LLC into an S corporation.  How do I do that?

Answer:  First you need to understand that the term “S corporation” refers to a method of income tax under the Internal Revenue Code of 1986.  S corporation is one of four federal income tax methods that can apply to a limited liability company.

You do not have to convert your LLC into a corporation.  Instead, the LLC simply makes an election with the IRS to have the LLC taxed as an S corporation by having all members of the LLC sign an IRS Form 2553 and then file the signed Form 2553 with the IRS.  See the Instructions to IRS Form 2553.  If you want your LLC to be taxed as an S corporation for the tax year beginning January 1, 2017, the members must sign and file IRS Form 2553 with the IRS not later than March 15, 2017.

Caution:  There are certain requirements that must be satisfied for an LLC to eligible to elect to be taxed as an S corporation. An LLC may to elect to be an S corporation only if it meets all the following tests.

  • It is (a) a domestic corporation, or (b) a domestic entity such as an LLC eligible to elect to be treated as a corporation, that timely files Form 2553. If Form 2553 is not timely filed, see Relief for Late Elections, later.
  • It has no more than 100 shareholders. You can treat an individual and his or her spouse (and their estates) as one shareholder for this test. You can also treat all members of a family (as defined in section 1361(c)(1)(B)) and their estates as one shareholder for this test.
  • Its only shareholders are individuals, estates, exempt organizations described in section 401(a) or 501(c)(3), or certain trusts described in section 1361(c)(2)(A).
  • It has no nonresident alien shareholders or members.
  • It has only one class of stock (disregarding differences in voting rights). Generally, a corporation or LLC is treated as having only one class of stock if all outstanding shares of the corporation’s stock or LLC’s membership interests confer identical rights to distribution and liquidation proceeds.

There are other requirements, but the major requirements are listed above.  For more about S corporations and LLCs read my blog post called “S Corporation Ignorance.”

P.S.  Besides the S corporation federal income tax method, an LLC can also be called taxed as a sole proprietorship (if it has one member or two members who are married and own their membership interests as community property) partnership (if it has two or more members), a C corporation.

2017-01-10T16:49:18-07:00January 10th, 2017|FAQs, How Do I, Operating LLCs, Tax Issues|0 Comments

How Do I Transfer Real Estate to My LLC?

Question:  I own Arizona real estate that I rent to tenants.  I don’t want to be sued personally if somebody gets hurt on the property so I formed an Arizona limited liability company to own my investment real estate.  If a tenant or guest is injured on the property and he or she wants to sue the owner the defendant will be the LLC not me because the LLC will own the land.  What do I have to do to transfer the land to the Arizona LLC?

Answer:  Forming an LLC to own the real estate and to shield you from liability if something goes wrong with the real estate is definitely a good idea.  The plan, however, will not work unless you actually transfer ownership of the land from the current owner(s) to the LLC.  To transfer the land to the LLC the owner(s) must sign a deed and the deed must be recorded with the county recorder of the county in which the real estate is located.

Warnings:

1. Title Insurance Issue #1.  Example:  After the LLC acquired title it discovers that the property is encumbered by a $25,000 lien.  The title insurance policy acquired by the prior owner(s) did not list the lien as an exception from title insurance coverage.

Quit Claim Deed Bad Example.  Because the LLC acquired title by a Quit Claim Deed the title insurance policy will not pay the $25,000 lien.  A Quit Claim Deed does not contain any title warranties. This means that if a title defect is discovered while the LLC owns the land the LLC does not have a claim against the prior owner for breach of a title warranty.  Because the LLC does not have a claim against the prior owner for breach of a title warranty the prior owner’s title insurance policy does not cover the $25,000 lien.  The LLC must pay the lien or risk losing the property in a foreclosure.

Warranty Deed or Special Warranty Deed Good Example.  A Warranty Deed and a Special Warranty Deed both contain title warranties that if breached give the new owner a claim against the prior owner(s).  If a properly drafted Warranty Deed or Special Warranty Deed had been used to transfer title to the LLC the deed would contain a warranty that the land was not subject to the $25,000 lien.  The breach of this title warranty gives the LLC a claim against the prior owner(s).  Because the LLC has a claim against the prior owner(s) for breach of the title warranty the prior owner(s) could then make a claim under the prior owner(s) title insurance policy and the title insurance company would pay off the $25,000 lien.

2. Title Insurance Issue #2.  The LLC should contact the title insurance company that issued the prior owner(s) title insurance and purchase an endorsement to the title insurance policy that names the LLC as an additional insured under the original title insurance policy issued to the prior owner(s) as of the date the prior owner(s) acquired the title insurance.  With the endorsement the LLC can make a claim on the title insurance policy directly to the title insurer rather than against the prior owner(s) for breach of a title warranty.  This type of endorsement typically costs $75 – $125.

3. Insurance Issue.  When the LLC acquires title to the land be sure to contact your insurance company and notify it that the LLC owns the property and arrange for the LLC to be the named insured under the policy or added to the policy as an additional insured.  If the property burns to the ground you don’t want the insurance company to deny coverage because it insured the prior owner(s) not the LLC.  Make sure the LLC acquires all types of insurance that is appropriate for the property and its use.

4. Due on Sale Clause Issue.  If the property is encumbered by a lien, the lender may have an option to call the loan if the borrower(s) transfers title to the LLC.  This type of option is called a “due on sale clause.”  If you ask the lender for permission to transfer the land to your LLC the lender will always say no.  I’ve formed thousands of LLCs that acquired real estate subject to due on sale clauses.  I’ve never had a client tell me that their lender called their loan when they transferred their land to their LLC.  If you transfer your land to an LLC and your lender calls your loan, please let me know.  The good news with respect to Arizona real estate encumbered by a Deed of Trust is that Arizona Revised Statutes Section 33-813.A allows the prior owner(s) to cure the default and stop a trustee’s sale under a Deed of Trust by deeding the property from the LLC back to the prior owner(s) who must also pay the lender its foreclosure costs.

Purchase a Do-It-Yourself Special Warranty Deed

If you need to transfer Arizona real estate to a limited liability company, purchase one of my editable do-it-yourself Word documents for $47.  Each deed comes with instructions on how to complete the deed and record it with the appropriate Arizona county recorder.  Purchase a deed in my legal forms web form store.

How to Add or Remove a Manager of an Arizona LLC

This video demonstrates how to amend the Articles of Organization of an Arizona LLC to add or remove a manager.

Links mentioned in the video are:

For more videos on forming and operating Arizona limited liability companies and how to use the Arizona Corporation Commission’s forms and online services  see the KEYTLaw Youtube channel.  Please click on the subscribe icon and the bell symbol to the right of the subscribe icon to get a notice when we upload a new video.

2019-07-04T10:40:03-07:00January 3rd, 2017|ACC How to Videos, How Do I, Our Videos|0 Comments

Tax Free Merger of a Corporation into an LLC

Question:  How do I convert my corporation into a limited liability company?

Answer: Two ways – the easy way and the hard, but not too hard way.

Easy Way:  If your corporation does not have assets that have substantial value or contracts that cannot be assigned or transferred to the LLC without the consent of the other party to the contract then simply form a new LLC, dissolve the corporation and start doing business under the new LLC.  If your corporation is an Arizona corporation and you dissolve it before or concurrently with forming your Arizona LLC the new LLC’s name can be identical to the corporation’s name.

Harder Way:  Form an Arizona LLC and merge the corporation into the LLC.  The advantage of this method is that a merger causes the assets and liabilities of the corporation to become assets and liabilities of the LLC automatically as of the effective date of the merger.  If the dissolution of the corporation would cause its shareholders to pay unwanted income taxes the merger method may avoid the tax.

Example 1:  World Wide Widgets, Inc. owns property that has a value of $101,000.  The sole shareholder’s basis in his stock of the corporation is $1,000.  If the corporation assigned the property to its shareholder before dissolving the shareholder would have taxable gain of $100,000 ($101,000 value of property – $1,000 adjusted basis of the stock).

If the stock is a capital asset (held for more than one year) the shareholder in this case could be paying as much as 23.8% of the gain as federal income tax plus state income tax if the shareholder resides in a state that has a state income tax.  Arizona’s tax rate for capital gains in 2016 is 4.5%.  Therefore, if the shareholder is an Arizona resident and the stock is a capital asset the total federal and Arizona income tax on the $100,00 gain is $24,500 if the shareholder is not subject to the 3.8% federal surtax on net investment income or $28,300 if the shareholder is subject to the surtax.  Yikes!  Who wants to pay federal and state income tax if it can be avoided.

The good news is that if the corporation is taxed as an S corporation or a C corporation and the LLC is taxed as an S corporation or a C corporation the merger can be a tax free reorganization under Section 368(a)(1)(F) of the Internal Revenue Code.  By carrying out the “F” merger the shareholder can eliminate the income tax.

Example 2:  Same facts as example 1 except the corporation taxed as a C or an S corporation merges into an LLC taxed as a C or an S corporation.  Result:  $0 income tax instead of $24,500 or $28,300.

Conclusion:  Ask your CPA to tell you in writing what would be the income tax consequences to you if you were to dissolve your corporation.  If dissolution will cause you to pay federal and/or state income tax you do not want to pay then do an F reorganization, i.e. merge your corporation into an LLC that is taxed as a C or S corporation.

P.S.  If your surviving LLC will be an Arizona LLC hire me, Richard Keyt to prepare the merger documents and to consummate the tax-free merger.  Call me at 480-664-7478 if you have questions or to get started.

2016-11-24T11:13:40-07:00November 25th, 2016|FAQs, How Do I, LLCs & Corporations, Tax Issues|0 Comments

How a Married Couple Owns an Arizona LLC as Community Property

Married Arizona residents can own property as separate property, community property and community property with right of survivorship.  Arizona law provides that if a married Arizona resident acquires property, the property is automatically community property (not community property with right of survivorship) unless the property was a gift or inherited property.  When property is owned as community property or community property with right of survivorship then each spouse owns an undivided one half of the property and if they divorce, each spouse is entitled to one half the value of the combined value of the couple’s community property asset.

Separate property is property acquired from a gift or inherited property or property acquired before marriage.  The non-owner spouse has no interest in or claim to his or her spouse’s separate property.

The only difference between community property and community property with right of survivorship is what happens to the interest of the first spouse to die.  When an Arizona married couple owns property as community property and one of them dies, the interest of the deceased spouse does not transfer automatically to the other spouse.  The interest of the deceased spouse is inherited as provided in the deceased spouse’s will or trust, but if there is no will or trust then the interest of the deceased spouse passes according to the law of intestate succession.  A probate may be required to complete the transfer to the property heir(s) unless the value of the interest is less than $75,000.

When an Arizona couple owns property as community property with right of survivorship then if one spouse dies, the interest of the deceased spouse transfers automatically to the surviving spouse without the need for a probate.  If a married Arizona couple wants the community property interest of a deceased spouse to pass automatically to the surviving spouse on the death of the first spouse they must own the property as community property with right of survivoship.

How to Own an Interest in an Arizona LLC as Community Property with Right of Survivorship

If a married couple who are Arizona residents form an Arizona LLC they automatically own their interest in the LLC as community property, not community property with right of survivorship.  If they want to own their interest in the LLC as community property with right of survivorship they must sign an Operating Agreement that expressly declares that the married couple holds their interest in the limited liability company as community property with right of survivorship. Arizona Revised Statutes Section 29-732.01.C.

When people hire me to form their Arizona LLC and tell me they want to own their interest in the LLC as community property with right of survivorship then we insert language in the LLC’s Operating Agreement hat expressly declares that the married couple holds their interest in the limited liability company as community property with right of survivorship.

2017-05-29T10:38:51-07:00November 24th, 2016|How Do I, Operating Agreements|0 Comments

How Do I Form an Arizona LLC?

by Arizona LLC attorney Richard Keyt who has formed 6,500+ LLCs

Question:  How do I form an Arizona limited liability company?

Answer:  Two ways: (1) hire me (see the “Contents of the Bronze ($397), Silver ($597) & Gold ($997) LLC Packages), or (2) do it yourself.  There are two ways to form a do it yourself Arizona LLC:

Compare Forming an LLC Yourself with My LLC Formation Services

I have formed 6,500+ Arizona LLCs because I give my clients everything they need to know to operate the LLC during phase 2 and comply with Arizona LLC law.  When I form an Arizona LLC for $597 (I pay the $85 ACC expedited filing fee), I provide many LLC formation services, including preparing the following custom drafted LLC documents:

  • Articles of Organization – I do not use the minimally functional ACC fill in the blanks form AOO.  My Articles of Organization is a four page document that contains many provisions not found in the state’s form AOO.
  • Spousal Disclaimer – If a married member who is a resident of Arizona is to own his or her interest in the LLC as separate property, the non-owner spouse must sign a Disclaimer in which he/she disclaims any ownership of the LLC interest.  If the non-owner spouse does not sign and deliver a Disclaimer to the owner spouse, Arizona law presumes that the spouses own the LLC as community property even if the non-owner spouse is not named in any of Articles of Organization or the Operating Agreement.
  • Arizona LLC Operations ManualWhen we form an Arizona LLC we give our clients access to my 170 page ebook called the Arizona LLC Operations Manual. This book covers 75+ topics the members and managers of AZ LLCs must know.  We sell this must have book for $99 in our store, but the book is included in our Silver ($597) and Gold ($997) LLC formation packages.  Even if you do not hire Richard Keyt to form your Arizona LLC, you owe it to yourself to buy and read this book from cover to cover.  It explains what your LLC must do to comply with Arizona’s LLC laws.
  • Organizational Resolutions – Resolutions signed by all of the members that approve the issuance of membership interests, adoption of the Operating Agreement, opening a bank account, reimbursement of LLC formation expenses paid by any member, election of one or more managers and other formation related actions.  Silver ($597) and Gold ($997) LLC formation packages only.
  • Membership Certificates – The LLC equivalent of a numbered stock certificate issued to each member.  Silver ($597) and Gold ($997) LLC formation packages only.

We put all of your LLC documents in a nice portfolio with everything organized behind tabs  Silver ($597) and Gold ($997) LLC formation packages only.  To see exactly what I give to every Silver and Gold LLC package purchaser, watch the KEYTLaw Girl’s demo video.

2019-06-15T09:40:38-07:00July 14th, 2016|FAQs, Forming LLCs, How Do I|0 Comments

How to Get a Certificate of Good Standing for an AZ LLC

Question:  How can I get a Certificate of Good standing for my Arizona LLC from the Arizona Corporation Commission?

Answer:  It is very easy.  First go to the link below and search for the LLC.

http://ecorp.azcc.gov/Search

Do the following:

  • Enter the name of the limited liability company in the name field.
  • Click on “Search.”
  • Click on the link that says “Check Corporate Status.”
  • Click on the link that says “Print Certificate.”
  • Click on the link that says “Payment Screen.”
  • Follow the instructions to pay $45 with your major credit card to buy the Certificate of Good Standing.
  • As soon as you pay print the Certificate of Good Standing.
2018-09-27T13:03:13-07:00June 4th, 2016|FAQs, How Do I|0 Comments

Latest IRS Procedure for a Nonresident Alien to get an EIN

Question:  I am not a citizen or resident of the United States who wants to form a U.S. limited liability company.  Can I get a federal employer identification number (EIN) for my LLC and if so, how?

Answer:  The instructions to IRS Form SS-4, explain how a non-U.S. citizen who is a non-resident of the U.S. can get an EIN for his or her LLC.  The instructions say the following:

“Apply by telephone—option available to international applicants only. If you have NO legal residence, principal place of business, or principal office or agency in the U.S. or U.S. possessions, you may call 267-941-1099 (not a toll-free number), 6:00 a.m. to 11:00 p.m. (Eastern time), Monday through Friday, to obtain an EIN. The person making the call must be authorized to receive the EIN and answer questions concerning Form SS-4.

Note. It will be helpful to complete Form SS-4 before contacting the IRS. An IRS representative will use the information from Form SS-4 to establish your account and assign you an EIN. Write the number you’re given on the upper right corner of the form and sign and date it. Keep this copy for your records.

Apply by fax. Under the Fax-TIN program, you can receive your EIN by fax generally within 4 business days. Complete and fax Form SS-4 to the IRS using the appropriate fax number listed in Where To File or Fax, later. A long-distance charge to callers outside of the local calling area will apply. Fax-TIN numbers can only be used to apply for an EIN. The numbers may change without notice. Fax-TIN is available 24 hours a day, 7 days a week. Be sure to provide your fax number so the IRS can fax the EIN back to you.”

2016-11-16T08:23:41-07:00May 7th, 2016|FAQs, How Do I, Tax Issues|0 Comments

How to Change the Name of an Arizona LLC

This video demonstrates how to change the name of an Arizona LLC on the records of the Arizona Corporation Commission.

Links mentioned in the video are:

For more videos on forming and operating Arizona limited liability companies and how to use the Arizona Corporation Commission’s forms and online services  see the KEYTLaw Youtube channel.  Please click on the subscribe icon and the bell symbol to the right of the subscribe icon to get a notice when we upload a new video.

2019-07-04T10:40:03-07:00March 3rd, 2016|ACC How to Videos, How Do I, Our Videos|0 Comments

Can I be the President of My LLC?

Question: I am the sole member of my Arizona limited liability company.  Can I tell the public that I am the President of my LLC?

Answer:  Yes, but I don’t recommend you use that term because some people may mistakenly think they are dealing with a corporation rather than an LLC.  Arizona LLC law refers only members and managers of an Arizona limited liability company.  The term “member” means a person or entity that holds an ownership interest in the LLC.  The term “manager” means a person or entity of a manager managed AZ LLC that is a manager of the LLC.  FYI:  If your Arizona LLC is member managed, then it does not have any managers.

Although the terms President, Vice President, Secretary and Treasurer are most commonly used when referring to officers of a corporation, an Arizona LLC could elect to use any or all of those terms when referring to people who are associated with the LLC.  If you own the LLC you can call people associated with the LLC anything you desire, but if the term is not member or manager it has no legal significance unless the term is defined.

If you insist on using a corporate term to describe somebody associated with your LLC I recommend that the LLC’s Operating Agreement specify the terms to be used and that it describe the duties and powers applicable to each position.  For example, if your Arizona LLC is manager managed and you want to call the manager the “President” of the LLC, add the following text to the LLC’s Operating Agreement:

The manager of this Company may be referred to as the Company’s President both internally and in matters dealing with the public.  The duties and powers of the President are identical to the duties and powers of the manager of this Company.

2016-11-16T08:23:41-07:00January 31st, 2016|FAQs, How Do I|0 Comments

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.
  • Click on the text that says “Name – Forms for entity name reservations.”
  • Click on the text that says “Check Entity Name Availability.”
  • Enter your desired LLC name in the Name field.
  • Click on the down icon to the right of the text that says “Select an Entity Type.”
  • Click on the letters “LLC.”
  • Click on Check Name.

The ACC’s database will then tell you the desired name is bad or it is available.

Name Reservation Warning:  Although the ACC’s database will ask if you want to reserve the name, I don’t recommend that you waste the $45 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?

Warning: Improper Contract Signature May Create Personal Liability

Question:  My LLC is to be the tenant on a real property lease.  The landlord’s lease has a signature block that indicates I will sign the lease as the manager and as a member of the LLC.  The signature block looks like this:

World Wide Widgets, LLC, an Arizona limited liability company

By:_______________________________
Homer Simpson, Manager and Member

If I sign the contract will I be personally liable under the lease in addition to the LLC?

Answer:  Probably.  If you sign the contract with the signature block as indicated above the landlord will claim you signed the contract in your capacity as the manager of the LLC AND in your individual capacity as a member.  A court might agree because that is the strict reading of the text under your signature.  Arizona LLC law says that a member does have have the legal power to sign a contract and bind the Arizona LLC on legal obligations.  Therefore the text “and Member” can only mean the signer is signing in his or her individual capacity.

Bottom Line:  If you do not want to be liable for obligations under a contract, make sure the signature line/block shows that you are signing only on behalf of the LLC.  The signature block should be one of the following:

If the LLC is member managed:

World Wide Widgets, LLC, an Arizona limited liability company

By:_______________________________
Homer Simpson, Member

If the LLC is manager managed:

World Wide Widgets, LLC, an Arizona limited liability company

By:_______________________________
Homer Simpson, Manager

2016-11-16T08:23:42-07:00April 21st, 2014|FAQs, How Do I, Operating LLCs|0 Comments

How Do I Complete IRS Form SS-4

Question:  I just formed a limited liability company.  I want a third party to obtain a federal employer id number (EIN) from the IRS.  The form is confusing.  Can you help me complete IRS Form SS-4?

Answer:  Yes.  We get this question so often LLC attorney Richard Keyt wrote a detailed article that explains how to complete the IRS Form SS-4.  Read “How to Complete IRS Form SS-4.”

Note:  If you are not asking a third party to get your LLC’s EIN don’t use IRS Form SS-4.  Instead, go to the IRS’ EIN wizard and take five minutes to answer questions online.  The IRS will issue your LLC an EIN at the end of the simple data entry process.

2017-10-06T21:44:18-07:00April 20th, 2014|FAQs, Forming LLCs, How Do I, Operating LLCs|0 Comments

Question about the Arizona Joint Tax Application Form

Question:  I am completing the Arizona Joint Tax Application (the sales tax license application) for my Arizona limited liability company that is owned by my Confidential Trust.  How do I answer question 18 that asks for the social security number of the owner?

Answer: Because your Confidential Trust owns your LLC so that your name does not appear on the public records of the Arizona Corporation Commission for confidentiality purposes, the answers to question 18 may not be obvious.  The trust owns the LLC so put the trust’s name in question 18.A. The trust is a revocable living trust, which means the IRS treats the trust as if it does not exist so for federal income tax purposes the trust uses the social security number of the trustmaker. Put the SSAN of the trustmaker in question 18.B. In question 18.C put the word “member.”

To learn more about the LLC owned by a Confidential Trust read my article called “How to Form an Arizona LLC without Disclosing Its Ultimate Owner(s).”

2018-05-20T14:01:27-07:00March 11th, 2014|FAQs, How Do I, Operating LLCs|0 Comments

How Do I Get Money into My LLC?

Question:  My limited liability company needs money.  How do I get my money into the LLC?

Answer:  There are two ways a member of a limited liability company funds the LLC:

  • a Loan:  The member loans money to the LLC.  The loan should be evidenced by a Promissory Note signed by the LLC.  The Promissory Note should state the the terms of the loan such as the interest rate (if interest will be charged), repayment terms and the maturity date.  The member(s) of the LLC should sign a resolution or action by unanimous consent that authorizes the loan.  The loan should also be reflected as a loan in the LLC’s books.
  • Capital Contribution:  A capital contribution is the equivalent of a gift from the member to the LLC without any obligation to repay the contribution until the LLC liquidates.  Capital contributions are additions to the LLCs’ assets without a corresponding debt that arises when money is loaned to the company.   Capital contributions are added to the contributing member’s capital account.  The LLC’s books must correctly reflect that the funds were made by the member as a capital contribution.  Capital contributions should also be approved by members by signing a resolution or action by unanimous consent that authorizes the capital contribution.

Purchase an Editable Promissory Note & Member Resolution

The KEYTForms store sells a form Promissory Note and a form Resolution of Members authorizing the member loan.  Each form is $47, is a downloadable & editable Word file, and comes with instructions on how to edit the form.

2016-11-16T08:23:43-07:00March 8th, 2014|FAQs, How Do I|0 Comments