How Do I

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

When Do I Change the Address of My LLC with the Arizona Corporation Commission?

Question:  After I filed the Articles of Organization for my Arizona LLC my LLC moved its place of business.  Should I notify the Arizona Corporation Commission about the address change?

Answer:  Yes.  Arizona LLC law requires that whenever an Arizona LLC changes it address the LLC must notify the ACC of its new address within thirty days of the change.

To change the address of your LLC with the ACC complete the Arizona Corporation Commission’s Statement of Change of Known Place of Business Address or Statutory Agent.  Print the change of address form and send to the Arizona Corporation Commission at Arizona Corporation Commission – Corporate Filings Section, 1300 W. Washington St., Phoenix, Arizona 85007, with a check for $5 or $40 if you want expedited review by the ACC.

2019-07-04T10:41:46-07:00February 24th, 2014|AZ Corporation Commission, FAQs, How Do I|0 Comments

How Do I Complete an IRS Form W-9 for My LLC?

Question: I operate my business through a limited liability company that is taxed as a sole proprietorship.  I received an IRS Form W-9 from a vendor who wants my LLC’s employer ID number or my social security number.  How do I complete the W-9?

Answer:  Here is how you complete the beginning of IRS Form W-9:

  1. Enter your name in the “Name (as shown on your income tax return)” box.
  2. Enter the name of your LLC in the “Business name/disregarded entity name, if different from above” box.
  3. Check the box in the “Check appropriate box for federal tax classification:” box that is to the left of “Individual/sole proprietor.”
  4. In Part I enter your social security account number.
  5. Complete the remainder of the form then date and sign it.

 The above assumes you did not file either an IRS Form 9932 or 2553 with the IRS to cause the LLC to be taxed as a C corporation or an S corporation, respectively.

2014-02-23T10:20:11-07:00February 13th, 2014|FAQs, How Do I, Tax Issues|0 Comments

Can I Have LLC in My Arizona Trade Name / DBA?

Question: I have not formed a limited liability company for my Arizona business, but can I register the trade name World Wide Widgets, LLC, from the Arizona Secretary of State for my business?

Answer:  No.  An Arizona trade name, aka a “dba,” cannot contain any words or abbreviations that indicate an entity type such as LLC or Inc.  See the Arizona Secretary of State’s Trademark Handbook.  If your dba included the letters LLC that would be misleading because it falsely represents to the public that the business is a limited liability company.

If you are going to operate a business you should form an LLC to protect yourself from things that might go wrong.  Without an LLC, a corporation or a limited partnership the owners of a business risk losing their life savings if business activity results in a lawsuit.  Read my article called “How LLCs Protect Your Life Savings.”

Say you form a business called World Wide Widgets, LLC.  That business could get a dba such as Best Widgets and use that on its store front or letterhead.  In Arizona the dba is obtained from the Arizona Secretary of State for $10 by completing and filing a Trade Name Registration Application.  This is explained in detail in my book called the Arizona LLC Operations Manual that is included with my Silver and Gold LLC packages.

2018-05-09T14:22:27-07:00February 12th, 2014|FAQs, How Do I|0 Comments

Who Signs the IRS Form 2553 If My Confidential Trust Owns My LLC that Wants to be Taxed as an S Corporation?

Question:  I purchased your Gold LLC formation package that included a Confidential Trust.  My Confidential Trust is the sole owner of my LLC.  My CPA advised me that my LLC should be taxed as an S corporation.  I am completing the IRS Form 2553, Election by a Small Business Corporation, but I am not sure how to show the ownership and who should sign the form.  What should I do?

Answer: Dealing with the IRS with respect to your LLC is different from everybody else.  The following only applies to the IRS and tax treatment of your LLC that is owned solely by your Confidential Trust:

  1. Because the LLC is a single owner LLC the IRS pretends like it does not exist.  The IRS calls a single member LLC a “disregarded entity” for federal income tax purposes.  This is the default tax treatment for single member LLCs.
  2. Because the Confidential Trust is revocable the IRS treats it as a “grantor trust,” which means the IRS pretends like the Confidential Trust does not exist.
  3. The end result of the application of items 1 & 2 above is the IRS considers you to be the owner.
  4. Sign the IRS Form 2553 on page 2 Part 1 and after your signature put a comma and print the following text: “individually and as Trustee of the [name of your trust] Trust under Agreement dated [date of your trust agreement], a grantor trust.”
  5. If you are a resident of a community property state like Arizona and own the beneficial interest in the Confidential Trust as community property then both spouses must sign the Form 2553 per the instructions in item 4 above.

Send the completed and signed IRS Form 2553 to the IRS via Certified Mail, Return Receipt Requested.  Make a transmittal letter that accompanies the Form 2553.  Keep a copy of the letter, the Form 2553, the Certified Mail certificate and the green Return Receipt in a save place in case the IRS claims it never got your Form 2553.

2017-02-25T10:36:53-07:00February 8th, 2014|FAQs, How Do I, Tax Issues|0 Comments

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

What Does the Signature Block on a Contract Look Like When My Trust is the Manager of My LLC?

Question:  My Arizona LLC is owned and managed by the Confidential Trust you created.  When the LLC signs a contract, what should the signature block on the contract look like?

Answer:  If your LLC is World Wide Widgets, LLC, and its manager is the Laguna Beach Trust dated 1/1/14 and Homer Simpson is the trustee, the signature block at the end of a contract should be as follows:

World Wide Widgets, LLC, an Arizona limited liability company

By: ____________________________
Homer Simpson, as Trustee of the Laguna Beach Trust
under Agreement dated 1/1/14, Manager

2014-02-24T21:47:06-07:00January 24th, 2014|FAQs, How Do I|0 Comments

Failure to Plan Causes Problem for Spouse of LLC Owner

Question:  My spouse owns an Arizona limited liability company as separate property and is the sole manager of the company.  He recently became mentally incompetent and can no longer run the company.  The LLC’s bank will not allow me to sign checks to pay employees and vendors.  How can I take over the management of the company?

Answer:  Because your husband failed to take action needed to protect you in the event of his incapacity you must now file a petition with an Arizona Superior Court and ask the Court to appoint you as the conservator of your husband’s financial affairs.  With that court order you will be able to elect yourself as a manager of the LLC, amend the Articles of Organization on file with the Arizona Corporation Commission to show that you are the new manager and give a copy of the filed amendment and Court order to the bank to take control of the LLC’s bank account.

Your husband’s failure to plan will cost you $3,000 – $5,0000 in legal fees that could have been avoided if he had signed a Financial Power of Attorney that named you as his agent with the power to manage his financial affairs in the even of his incapacity.  Contact us to prepare and file the petition to get you appointed as the conservator.

Warning:  This situation illustrates why people should take action to protect their most valuable asset – their family – before it is too late.  Don’t let this happen to your loved ones.  Adopt a comprehensive estate plan with a Trust, Will, Financial Power of Attorney, Healthcare Power of Attorney and Living Will now to prevent the stress, problems and high economic cost that results when people die or become incapacitated and have not taken the steps needed to protect their family.

To learn more about this topic and how to protect your family read my article called “Why You Need an Estate Plan to Protect Your Family and the High Cost of Procrastination and Neglect” and visit my Arizona Wills and Trusts website.

2013-10-17T07:10:24-07:00October 17th, 2013|FAQs, How Do I|0 Comments

How Do I Get an Arizona Trade Name aka DBA?

Question:  How does my limited liability company get an trade name, aka a “dba” or “doing business as?”

Answer:  In Arizona the term “dba” or “doing business as” is what Arizona law calls a “trade name.”  Trade names are issued by the Arizona Secretary of State.  To get a trade name the applicant must complete a Trade Name Registration Application form and file it with the Arizona Secretary of State at the address at the top of the form.  The filing fee is $10.

2018-04-03T19:39:51-07:00September 27th, 2013|FAQs, How Do I|0 Comments

How an LLC Owned by a NonUS Citizen / NonUS Resident Opens a US Bank Account

Question:  I am not a resident or citizen of the United States.  I want to form a limited liability company in the U.S. to own and operate a business or to own investment real estate.  How do I open a bank account in the name of the LLC?

Answer:  I form a lot of Arizona LLCs for people who are not residents or citizens of the United States, aka nonresident aliens.  Opening a US bank account for the US LLC can be a very big problem.  The US Patriot Act imposes substantial limits and restrictions on the ability of a US bank with respect to creating a US bank account for a people and entities.

The number one new account requirement is that the bank must positively identify the person who seeks to open the bank account.  Positive ID means two things:

  • Sufficient documentation such as a passport to prove the identity of the person who seeks to open the bank account, and
  • The presence of the person who seeks to open the bank account personally in front of the bank employee who is opening the account.

The banks seem to be getting tougher with respect to the personal ID requirement.  This week I met with a nonresident alien client from Australia who opened two LLC bank accounts with Wells Fargo for his two Arizona LLCs two years ago.  He did come to Phoenix to present himself to the bank personnel in order to open the accounts.

The client told me that he came to Phoenix this week because Wells Fargo notified him that it was closing ALL LLC BANK ACCOUNTS IN THE US IF THE LLC IS OWNED BY A NONRESIDENT ALIEN OR ALIENS.  Wells Fargo closed his LLC bank accounts, but did allow him to open a personal bank account while he was present at the bank.

If somebody tells you that they know of a bank that will open an LLC bank account for a nonresident alien without the need for the nonresident alien satisfying the two requirements described above, don’t buy it.  I personally know that MidFirst Bank and Commerica Bank had opened LLC bank accounts without requiring the nonresident alien owner of the LLC to satisfy the two requirements listed above.  When supervisors found out about the accounts, they closed the accounts and fired the bank officer.

One potential solution to the problem is for the LLC to have a member or manager that is a US citizen or legal resident.  That person could open a bank account in the US for the LLC.  However, this solution creates its own set of problems.  The person who opens the bank account is taking a risk that if the LLC is involved with anything that is illegal he or she could be in big trouble, perhaps criminal trouble.

2016-11-16T08:23:44-07:00September 5th, 2013|FAQs, Forming LLCs, How Do I|3 Comments

If You Have a Confidential Trust Don’t Create a Separate Estate Planning Trust

Question:  You created a Confidential Trust for me to own my Arizona LLC and keep my name off the public records of the Arizona Corporation Commission.  Recently I signed a new trust that is for estate planning.  My new trust includes provisions for the administration of my assets after my death.  How does my new trust become the owner of the LLC currently owned by my Confidential Trust?

Answer:  You now have two trusts, each with their own names and creation dates.  The problem is that the Confidential Trust owns the LLC, but the Estate Planning Trust should own it.  Instead of creating an entirely new estate planning trust you should have kept the same trust name, trustees and trust creation date and just amended and restated the entire trust agreement to contain the language needed for your estate plan.  In other words, you should have converted the Confidential Trust to your estate planning trust with the end result that you would have one trust and it would be the owner of the LLC.

Going forward your choices are:

1.  Transfer ownership of the LLC from the Confidential Trust to the estate planning trust and allow the Confidential Trust to die.  However, if the new estate planning trust has your name in it and you want to continue to keep your name off of the Arizona Corporation Commission’s public records then retain ownership of the LLC in the Confidential Trust and follow the next option.  We charge $545 to do this.  It includes preparing an Assignment of Membership Interest Agreement, Amendment to the Articles of Organization, resolutions of the member and a new membership certificate.

2.  Modify the Confidential Trust to provide that the beneficiary is the trustee(s) of the new estate planning trust.

My recommendation is to do option 1 now because option 2 postpones the need to do option 1 until the creator(s) of the Confidential Trust is/are deceased.

To learn more about how a Confidential Trust can keep your name off the Arizona Corporation Commission’s public records read my article called “How to Form an Arizona LLC without Disclosing Its Ultimate Owner(s).”

2013-08-28T06:48:53-07:00August 28th, 2013|FAQs, How Do I, Miscellaneous, Operating LLCs|0 Comments

How Do I Loan Money to My LLC?

Question:  I want to loan money to my Arizona limited liability company.  How do I document the loan so it will stand up to a challenge by the IRS, another member of the LLC or a creditor?

Answer:  The lender must take care to prepare and have the appropriate parties sign the following documents:

  • A Promissory Note:  The promissory note must be signed by at least one member of a member managed LLC or one manager of a manager managed LLC.  The promissory note should state the principal amount of the loan, the lender to whom payments will be made, where payments are to be sent, the date of the loan, no interest will accrue or interest will accrue at a specified rate, the repayment terms and a maturity date by which the loan must be repaid in full.
  • Resolutions or Action by Unanimous Consent:  This is a document that shows that the members of the LLC authorize the company to borrow the money on the terms set forth in the promissory note and that specifies which member or manager has the authority to sign the promissory note on behalf of the LLC.

Action by Unanimous Consent:  This is the simplest and easiest way for members to approve the loan.  If all members of the LLC  agree to the loan and its terms, they can sign an Action by Unanimous Consent that contains the resolutions adopted by the members.

Resolutions:  If any member refuses to sign the Action by Unanimous Consent, the members must call a special meeting of the members to consider and vote on the loan and give appropriate notice of the date and time of the meeting to all the members.  The special meeting must be held, the loan discussed, a motion must be made and seconded that the members authorize the company to borrow $X,XXX from <name of lender> on the following terms <state the terms referred to above in the discussion of the Promissory Note> and that <name of member or manager> is authorized to sign the Promissory Note and related documents on behalf of the company.

  • Security Agreement and / or Deed of Trust:  If the lender insists that the Promissory Note be secured by a lien on the LLC’s personal property and/or real property then this is done by having the LLC’s authorized signer sign a Security Agreement (for personal property) and/or a Deed of Trust (for real property).  If the lender gets a Security Agreement the lender must also file a UCC-1 Financing Statement with the Arizona Secretary of State.  If the lender gets a Deed of Trust, the original document must be recorded with the county recorder of the county in which the encumbered property is located.

In addition to the above documents, the lender must write a check payable to the LLC or wire the funds to the LLC’s bank account and the LLC must indicate in its books that it borrowed the funds from the lender.

Purchase Our Do It Yourself Loan Documents

  • Promissory NoteDo-It-Yourself for $47:  A Promissory Note is the legal document signed by a borrower that evidences a promise to repay and the payment terms and conditions.  It specifies the amount owed, if interest will be charged, the interest rate, when payments are due, the amount of payments and the maturity date.  It contains other important terms such as events that can cause a default and allow the holder of the Note to accelerate the entire balance due after a default, late payment charges and increased interest rate after a default.  The Promissory Note is the fundamental loan document, i.e., it is the primary document that evidences the borrower’s legally enforceable promise to repay.  If you are owed money and you do not have a Promissory Note signed by the borrower(s), you are at a great disadvantage if you have to sue to collect the debt.  Suing to collect a debt evidenced by a Promissory Note is one of the easiest types of lawsuits because you only have to prove the borrower gave you a note and didn’t pay in full.  Related Documents:  A Promissory Note can be secured by a lien on personal property (use our Security Agreement for personal property in Arizona) and by a lien on real property (use our Deed of Trust for real property located in Arizona).
  • Limited Liability Company Borrowing ResolutionDo-It-Yourself for $47:  If the borrower or signer on a Promissory Note is limited liability company, the lender must obtain a borrowing resolution from the members of an limited liability company to prevent the company from claiming that the person who signed the Promissory Note or other loan documents did not have the authority to sign for the company and therefore the company is not obligated.  It is prudent business practice to obtain a borrowing resolution.  Commercial lenders almost always require a borrowing resolution as a condition to making a loan.
  • Security AgreementDo-It-Yourself for $47: If a lender wants to secure payment of a Promissory Note with a lien on personal property located in Arizona, the lender must obtain the borrower’s signature on a document that creates the lien. When the lender has a lien on personal property and the borrower defaults under the Promissory Note, the lender can foreclose on the personal property and sell the encumbered property at an auction and apply the proceeds to the debt. The Security Agreement is the document that when signed by a borrower or a guarantor creates a lien on the signer’s personal property that is described in the Security Agreement. My Security Agreement gives you the option to describe specific items of personal property to be encumbered or you can use the all encompassing language that gives the lender a lien on all of the borrower’s personal property. Note: The Security Agreement is not a stand-alone document. This document is intended to be used with a Promissory Note. There must be a debt or obligation created to which the Security Agreement creates a lien. No debt, no lien. Additional Required Document: The lender/secured party must immediately file a UCC-1 Financing Statement with the Arizona Secretary of State to perfect notice to the world that the lender/secured party has a lien on the collateral described in the UCC-1. For more about the UCC-1 and a link to the form, see Richard Keyt’s article that explains the UCC-1 Financing Statement.
  • Deed of TrustDo-It-Yourself for $47: The Deed of Trust is the document that creates a lien on Arizona real property to secure payment of a debt or satisfaction of an obligation. It must be signed by a person, people, entity and/or entities that own the real property to be encumbered. The Deed of Trust is the preferred method of obtaining a lien on Arizona real property. Mortgages can also be used to create a lien on Arizona real property, but the Mortgage is rarely used in Arizona. Common Usage: When a borrower gives a lender a Promissory Note to evidence a promise to pay money to the lender and the lender wants security for the loan, the Deed of Trust is used frequently to create a lien on Arizona real property to secure the obligations contained in the Promissory Note. If the borrower / debtor defaults on the Promissory Note or other contractual obligation secured by a Deed of Trust, the lender / creditor can foreclose the Deed of Trust and cause the real property that is encumbered by the Deed of Trust to be sold at an auction to the highest bidder for cash.

Caution #1: A lender does not have a lien on any of the borrower’s real property simply because the borrower signs a Promissory Note or other document that creates a legal obligation that the lender may enforce. If the lender wants a lien on Arizona real property, the lender must get the owner(s) of the Arizona real property to sign a Deed of Trust (best type of lien) or a Mortgage (rarely used in Arizona).

Caution #2: The lender must record the properly signed and notarized Deed of Trust with the County Recorder of the Arizona county in which the encumbered real property is located.

Caution #3: The Deed of Trust will not be valid unless the owner(s) of the Arizona real property owe a debt or other obligation to the lender / secured party. For example, if Bart Simpson borrows $10,000 to buy a car and Homer and Marge give the lender a Deed of Trust on their home, the Deed of Trust will not be valid because Homer and Marge do not owe money or any obligation to the lender. If the lender wants to be able to foreclose on Homer and Marge’s home if Bart defaults on the loan, the lender must have Homer and Marge sign a Personal Guaranty by which they guaranty Bart’s debt and then the Deed of Trust would secure the satisfaction of Homer and Marge’s obligations under the Personal Guaranty, not under the Promissory Note because they did not sign it.

2016-11-16T08:23:51-07:00December 22nd, 2011|FAQs, How Do I, Operating LLCs|0 Comments

Can an Arizona LLC Become a PLLC & an Arizona PLLC Become an LLC?

Question:  I have an Arizona LLC, but I want to change it to a professional LLC (a PLLC).  Is it possible and how do I make the change?

Answer:  Yes.  An Arizona LLC can be converted to a PLLC and an Arizona PLLC can be converted to an LLC.  You convert one type of LLC to the other type by filing an amendment to the Articles of Organization with the Arizona Corporation Commission and then publishing the name change in an ACC approved newspaper after the ACC approves the amendment.  The Amendment to the Articles of Organization must be signed by a member of a member managed company or a manager of a manager managed company.  The amendment to the Articles of Organization must satisfy the following requirements:

Converting from an LLC to a PLLC:

The Amendment to the Articles of Organization must contain the following provisions:

1.  A statement of the new name of the company with the correct ending.  Arizona Revised Statutes Section 29-4102.B states:

“A limited liability company organized under a law of this state other than this Article may elect professional limited liability company status by amending its Articles of Organization pursuant to Section 29-3202 to comply with subsection A of this Section and with Section 29-4106.

2. Arizona Revised Statutes Section 29-4106 states:

“The name of a professional limited liability company authorized to transact business in this state shall satisfy the requirements of Section 29-3112, except that the name shall contain the words “professional limited liability company” or the abbreviation “p.l.l.c.”, “p.l.c.”, “pllc” or “plc” in uppercase or lowercase letters.”

2. A statement that the company is a professional limited liability company.

3. A description of the professional service or services that the company is organized to provide.

Converting from a PLLC to an LLC:

The Amendment to the Articles of Organization must satisfy each of the following requirements:

1.  It must contain a statement of the new name of the company with the correct ending.

2.  It must remove the statement in the Articles of Organization that the company is a professional limited liability company.

3. It must remove the statement in the Articles of Organization that describes the professional service or services that the PLLC was organized to provide.

Read “What are the Differences Between an Arizona PLLC vs LLC?

How Do I Form an Arizona LLC without Disclosing My Name?

Question:  I know that Arizona LLC law requires that the names and addresses of all members of a member managed Arizona limited liability company be disclosed in the Articles of Organization filed with the Arizona Corporation Commission.  I also know that anybody who searches my LLC’s name or my name on the ACC’s website will find me and my LLC if I am named in the Articles of Organization.  How can I form an Arizona LLC without disclosing that I am the ultimate owner of the LLC?

Answer:  The cheapest and easier way to form an Arizona LLC without disclosing your name and address is to have your trust own the membership interest in the LLC instead of you.  For this to work, two requirements must be satisfied:

  1. The name of the trust must not include your name or anything that would tie the trust to you.
  2. In the LLC’s Articles of Organization you name the trust as the member or manager and do not put your name in the document.

You should not put an address in the Articles of Organization for the company, a member or a manager that is an address that somebody could tie to you.  Instead, get a Post Office box or a UPS mailbox.

For  more on this topic read my article called “The Confidential LLC – How to Form an Arizona LLC without Disclosing Its Ultimate Owner(s).”

How to Hire Richard Keyt to Prepare a Confidential Trust

If you want me to prepare a Confidential Trust for you, the simplest and least expensive way is to hire me to form your Arizona LLC ($597) and prepare the Confidential Trust for $297, a $200 discount off the $497 price charged if I do not form your LLC.

If you do not hire me to prepare your LLC and you want to hire me to prepare your Confidential Trust for $497, complete my online Confidential Trust Preparation Agreement then print, sign and deliver the signed agreement to me per the instructions on the last page of the form.  You can pay online in our web store or call KEYTLaw legal assistant Michelle Watkins at 480-664-7413 and give her your information over the phone.

2015-10-31T11:31:51-07:00October 15th, 2011|FAQs, How Do I|0 Comments

How Do I Acquire an Ownership Interest in an Arizona LLC as Separate Property?

Question:  My spouse and I are Arizona residents.  I formed an Arizona LLC by filing Articles of Organization that state that I am the sole member.  Even though I was married when I formed the LLC, my spouse is not listed in the Articles of Organization as a member of my LLC.  How do I prove that I am the sole owner of the LLC and that my spouse does not own one half of the LLC as community property?

Answer:  You must have your spouse sign a written document (I call it a Disclaimer of Membership Interest in an Arizona Limited Liability Company) in which the non-owner spouse acknowledges that the non-owner spouse does not have any ownership interest in the owner spouse’s membership interest in the LLC.

Arizona Revised Statutes Section 25-211.A states:

All property acquired by either husband or wife during the marriage is the community property of the husband and wife except for property that is:

1. Acquired by gift, devise or descent.

2. Acquired after service of a petition for dissolution of marriage, legal separation or annulment if the petition results in a decree of dissolution of marriage, legal separation or annulment.

The word “devise” means inheriting property through a will.  The word “descent” means inheriting property from a relative who died without a will.

If you are a resident of Arizona who is married and you form an Arizona LLC or if you acquire a membership interest in an Arizona LLC while you are married your spouse will own a community property interest in the company with you EVEN IF HE/SHE IS NOT NAMED IN THE ARTICLES OF ORGANIZATION, AN OPERATING AGREEMENT OR ANY OTHER  LLC DOCUMENT unless Section 25-211.A applies to make your ownership separate property.  The legal consequence of owning as community property is that each spouse owns an undivided one half of the total amount of the membership interest.  For example, if the spouse named in the Articles of Organization as a member owns 100% or 50% of the LLC, community property ownership means each spouse owns 50% and 25% respectively of the LLC.  If you divorce, each spouse will be entitled to his/her one half membership interest or other property of equivalent value.

How to Create a Separate Property Ownership Interest in an Arizona LLC

If a married resident of Arizona wants to own his or her interest in an Arizona LLC as separate property rather jointly with the other spouse as community property, the owner spouse must obtain the signature of the non-owner spouse on a document in which the non-owner spouse disclaims any ownership of the membership interest in the LLC.  If the non-owner spouse will not sign a disclaimer, the LLC will be owned equally by the two spouses as community property unless Section 25-211.A applies to make the LLC membership interest separate property.

Purchase Arizona LLC attorney Richard Keyt’s Disclaimer of Membership Interest in an Arizona Limited Liability Company

If you are a married Arizona resident and you want own your membership interest in an Arizona LLC as separate property, you need to purchase my Disclaimer of a Membership Interest in an Arizona Limited Liability Company form for $47.  As soon as your credit card payment is approved, you will receive an email message with the disclaimer attached as an Abode pdf fillable form.  Simply type the information into the blank spaces, print the document and present it to the non-owner spouse for signature.

Click to purchase the Disclaimer of a Membership Interest in an Arizona Limited Liability Company form

2016-11-16T08:23:53-07:00August 8th, 2011|FAQs, How Do I|0 Comments

How Do I Amend the Articles of Organization of an Arizona LLC?

Question:  One of the members of my member managed Arizona LLC has ceased to be a member.  I know that Arizona LLC law requires that the LLC amend it Articles of Organization on file with the Arizona Corporation Commission.  How do I amend the Articles of Organization?

Answer:  Arizona Revised Statutes Section 29-3202 requires that a member of a member managed Arizona LLC must prepare Articles of Amendment to the Articles of Organization and file it with the Arizona Corporation Commission if a member named in the Articles of Organization on file with the ACC ceases to be a member or if the Articles of Organization does not name a person or entity who is a member.  The same is true of of a manager managed Arizona LLC if:

A.  A person or entity acquires 20% or more of the capital or profits of the company (for example:  a 5% owner becomes a 20% owner); or

B.  A person or entity named in the Articles of Organization ceases to own a 20% or greater interest in the capital or profits interest of the company.

See also my article called “When Must an Arizona LLC Amend Its Articles of Organization?

 

2021-01-02T16:23:12-07:00July 31st, 2011|FAQs, How Do I|0 Comments

How Do I Prepare a Notice of Publication for a New Arizona LLC?

Question:  I know Arizona LLC law requires that I prepare and publish a Notice of Publication in the an Arizona Corporation Commission approved newspaper for three consecutive publications.  What is a Notice of Publication and where can I get it?

Answer:  Effective January 1, 2017, Arizona’s LLC law was modified to provide that a Notice of Publication must be published in a newspaper only if the LLC’s known place of business is outside Maricopa County or Pima County.  The Notice of Publication is a document that every new LLC with a known place of business in a county other than Maricopa or Pima must prepare and deliver to an ACC approved newspaper in the county in which the LLC has its known place of business as stated in its Articles of Organization filed with the Arizona Corporation Commission.  If you need a Notice of Publication, just copy and paste the below text into your word processor and edit it to add the information for your LLC.

Use the following form Notice of Publication for an LLC that is member managed.

Notice For Publication

ACC File Number: __________________

1.   Articles of Organization have been filed in the office of the Arizona Corporation Commission for _________________________________________________, LLC

2. The address of the known place of business of the company is:  _____________________________________________________.

3. The name and street address of the company’s agent for service of process are:  _____________________________________________________.

4. Management of the limited liability company is reserved to the members.

5. The name(s) and address(es) of each Member of this limited liability company are:  _____________________________________________________.

Use the following form Notice of Publication for an LLC that is member managed.

Use the following form Notice of Publication for an LLC that is manager managed.

Notice For Publication

ACC File Number: __________________

1.   Articles of Organization have been filed in the office of the Arizona Corporation Commission for _________________________________________________, LLC

2. The address of the known place of business of the company is:  _____________________________________________________.

3. The name and street address of the company’s agent for service of process are:  _____________________________________________________.

4. Management of the limited liability company is vested in a manager or managers.

5. The name(s) and address(es) of each Manager of this limited liability company are:  _____________________________________________________.

[Option 1:  If no members owns 20% or more of the LLC use the following sentence and delete Option 2.]

6.  No member of the limited liability company owns a twenty percent or greater interest in the capital or profits of this limited liability company.

[Option 2:  If any member owns 20% or more of the LLC use the following sentence and delete Option 1.]

6.  The name(s) and address(es) of each Member who owns a twenty percent or greater interest in the capital or profits of this limited liability company are:  _____________________________________________________.

2017-01-07T04:57:21-07:00July 29th, 2011|FAQs, Forming LLCs, How Do I|2 Comments

How Do I Check the Arizona Corporation Commission for the Status of My Arizona LLC?

Question:  How can I check the records of the Arizona Corporation Commission to see if my new LLC’s Articles of Organization have been approved or if the information listed for the company and its members and managers is correct?

Answer:  Search for the LLC on the Arizona Corporation Commission’s name search database.  If any LLC information displayed is incorrect, a member (if member managed) or a manager (if manager managed) must take action to correct the bad information.

If an address of the company or the statutory agent is wrong, file a Statement of Change of Known Place of Business Address or Statutory Agent with the ACC.  If the address of a member or manager is wrong file a Statement of Change of Manager or Member Addresses with the ACC.

A member (if member managed) or a manager (if manager managed) of an LLC must file an Articles of Amendment to the Articles of Organization to correct any of the following errors:

  • The LLC is member managed and the ACC’s records show a person or entity that is no longer a member or does not show a person or entity that is a member.
  • The LLC is manager managed and the ACC’s records shows a person or entity: (i)  that is no longer a member, or (ii) who no longer owns 20% or more of the LLC
  • The LLC is manager managed and the ACC’s records do not show a person or entity who owns 20% or more of the LLC.
  • The LLC is manager managed and the ACC’s records show a person or entity that is no longer a manager or does not show a person or entity that is a manager.
2019-07-04T10:42:12-07:00July 11th, 2011|FAQs, How Do I|0 Comments

How Do I Open a Bank Account for an LLC?

Question:  I just formed by new Arizona limited liability company.  I now need to open a bank account in the name of the LLC.  How do I open the account?

Answer:  Tell the bank you want to open a bank account in the name of the LLC.  Give the following to the bank officer:

  • A copy of the LLC’s Articles of Organization with either the Arizona Corporation Commission’s “received” stamp or its “filed” stamp.  Most banks will accept the Articles of Organization before it has been approved by the ACC.  A few, however, require a copy of the Articles of Organization approved by the ACC with the “filed” stamp on it.
  • A few banks also require a copy of the LLC’s Operating Agreement.  If you do not have an Operating Agreement for your Arizona LLC hire me to prepare a custom Operating Agreement by completing and submitting our online Operation Agreement Questionnaire.

If you want to open a bank account immediately after submitting the Articles of Organization to the ACC, you must hand deliver two copies of the Articles of Organization to the ACC. Give one copy to the ACC and ask the ACC clerk to stamp the copy with the ACC received stamp and return it to you.  Use this copy to open the LLC’s bank account.  If you do not follow this procedure, you will not be able to open the LLC’s bank account until you receive the approved Articles of Organization from the ACC one to four week after the submission date.  Check the upper right hand corner of this website for the date of documents filed on an expedited basis that are being reviewed by the ACC.

I recommend that you get an EIN for your LLC.  Banks will allow you to open a bank account in the name of the LLC if you give the bank your social security number.  In this age of identity theft, it is better to get an EIN for the LLC so you do not have to give out your SSAN to banks or others from time to time.

2019-07-04T07:55:38-07:00July 11th, 2011|FAQs, How Do I|4 Comments
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