Last month we formed 76 Arizona LLCs, the most since we started counting in 2002. The previous monthly high was 62. Thanks to everybody who hired us last month.
I don’t usually insert reviews I get into a blog post, but yesterday I got a very nice review I want to share with you. Here is the review:
If you are ready to start your LLC, this is the office you need to call. The process is so streamlined, the people are so knowledgeable & kind, & they work INCREDIBLY fast. I was absolutely shocked at how quickly things were done & could not be more pleased. The reasonable fees up front are well worth the potential liability avoided in the future. The items completed for my business by this office would have taken days or weeks for me to research & execute myself, & even then I could not be sure they were done properly without an attorney reviewing them. The follow up support is also wonderful & the informational emails the office sends out on a regular basis have been very valuable. If you are on the fence, don’t think twice. Spend a little now for excellent service & LLC setup done properly, save a lot later by avoiding mistakes that can cost dearly in the future. Your business is important, do it right. Cannot recommend enough!
People love my LLC formation services, which is why I have 231 five star reviews on Google, Facebook and Birdeye.
July of 2020 was a record-setting month for our LLC formations. We formed 65 new Arizona LLCs and PLLCs that month. Thanks to all of our new clients. People love our low priced LLC formation services, which is why we have 231 five star reviews on Google, Facebook and Birdeye. See the contents and prices of our three LLC packages. Complete our online questionnaire to hire us to form an LLC or call Arizona LLC attorney Richard Keyt at 480-664-7478.
Memorial Day originated in the nineteenth century as a day to remember the U.S. soldiers who gave their lives in the American Civil War by decorating their graves with flowers. It is the day Americans remember the military men and women who died while serving our country. It is a day when people decorate the graves of our fallen military heroes. Memorial Day this year is May 25, 2020.
From World War I to today more than 40 million Americans have served in the U.S. military. Over 1,136,000 people were wounded in combat and 660,000 gave their lives for our country.
Duty, Honor Country
by Five Star General Douglas MacArthur
The motto of the United States Military Academy at West Point is “Duty, Honor, Country.” On May 12, 1962, retired 82 year old U.S. Army General Douglas MacArthur, holder of the Medal of Honor and the leader of the Army in the Pacific theater during World War II, gave his now famous 34 minute “Duty, Honor, Country” speech without notes to the entire corps of 2,100+ West Point cadets. This speech is my favorite speech of all time on any topic. I re-read it several times a year because: (i) what the General says about military service and sacrifice and Duty, Honor, Country moves and inspires me, and (ii) what he said then is as true now as it has always been throughout the history of the U.S. military. I recommend you read the entire text of the speech and listen to an audio of the General’s speech. (more…)
During 2019 we formed 535 Arizona LLCs and PLLCs, which is a firm record for the most companies formed in one year. Our previous record for forming LLCs was 530 in 2012. Since I started counting in 2002 I have formed 7,500+ LLCs and PLLCs. People love our low prices and LLC services. See the contents of our three LLC packages, the $397 Bronze, the $597 Silver (our most popular package) & the $997 Gold (for people who do not want their name and address on the Arizona Corporation Commission’s public records). Note: We have the very appropriate URL azllc.com.
We also set a firm record in 2019 for non-profit corporation formations of 34. Our previous record for forming non-profit corporations in one year was 32 in 2018.
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To crack down on terrorists, drug dealers and human traffickers the House Financial Services Committee in June of 2019 passed the Corporate Transparency Act. The bill would require all limited liability companies and corporations that have less than $5 million of revenue or twenty employees to disclose to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) personal information about the entity’s owners.
Each entity subject to this law must report to FinCEN the social security number, drivers license information, address, birth date and name of all owners of the entity. The penalty for not complying is a $10,000 fine and up to three years in jail.
The Wall St. Journal said “The reality is that the law would hit small businesses with another compliance burden, their confidential information would become less secure, and real criminals are unlikely to be deterred.”
The National Federation of Independent Business (NFIB) said the law is a “threat to more than 5 million small businesses in America.”
Arizona Attorney General Mark Brnovich announced today [March 11, 2019] that his office recently filed suit in the U.S. Supreme Court against the State of California seeking to invalidate California’s extraterritorial tax assessments and seizures, which result from an unconstitutional “doing business” tax against businesses and individuals that don’t actually conduct any business in California.
Every year, California assesses an $800 “doing business” taxes against Arizona businesses that conduct no actual business in California. Instead, their only connection to California is a mere passive, non-managing investment in a California limited liability company. California continues to assess these “doing business” taxes even though both its state courts and tax appeals agency have held that the taxes are illegal under California law.
The lawsuit filed by Arizona alleges that these taxes are plainly unconstitutional under the Due Process and Commerce Clauses of the U.S. Constitution. The Supreme Court has held that passive investment in a company located in another state is not sufficient “minimum contacts” to impose taxation under the Due Process Clause (Shaffer v. Heitner, 433 U.S. 186 (1977)). The Supreme Court has also recognized four requirements for states to impose taxes on out-of-state businesses under the Commerce Clause. California’s “doing business” assessments brazenly violate all four.
The amounts collected by these “doing business” assessments are substantial. Arizona estimates that its citizens pay over $10 million in these unconstitutional taxes to the State of California every year.
These taxes also impact Arizona’s tax collections. Since the “doing business” taxes are deductible expenses, Arizona loses an estimated $484,000 in tax revenue each year due to California’s illegal taxation.
These figures are further compounded since the tax applies to all individuals in other states who invest in California businesses.
Making matters worse, if California’s tax assessments are not paid voluntarily, California frequently further tramples on the sovereignty of other states by issuing orders to interstate banks, demanding that they transfer funds in Arizona-based accounts for back payment. Those seizure orders threaten the banks that, if they do not transfer the funds, California will take the taxes and penalties owed from the banks instead. Not surprisingly, the banks almost uniformly consent to California’s strong-arm tactics.
Exhibit G in the filing provides an example where California demanded that Wells Fargo not only transfer the $800 tax, but also a $200 “demand penalty,” a $432 “late filing penalty,” a $79 “filing enforcement fee,” and $63.40 in interest, for a “Total Tax, Penalties, Interest and Fees” of $1574.40.
The lawsuit alleges that these seizure orders violate both the Due Process Clause (by exercising jurisdiction over out-of-state funds without the requisite “minimum contacts”); and, the Fourth Amendment (by effectuating seizures without a warrant, probable cause, or involvement of any court). Those seizure orders further preclude the banks from filing any court challenge.
Arizona’s suit seeks to end California’s unconstitutional tax encroachments.
- Copy of the filing.
- Copy of NTUF brief.
- Copy of DRI and NFIB brief.
- Copy of Southeastern Legal Foundation and Cato Institute brief.
- Copy of Law Professors brief.
If you are a non-U.S. citizen who is the sole member/owner of a U.S. limited liability company treated by the IRS as a disregarded entity (a “DE”) you must file an IRS form 5472 with the IRS on or before the due date of the Form 5472 or become liable to pay the IRS a penalty of $25,000. If you must file Form 5472 and fail to file it before the due date and then fail to file the Form 5472 within 90 days after the due date you will become liable for an additional $25,000 penalty.
The U.S. DE LLC must file Form 5472 if it had a reportable transaction with a foreign or domestic related party. To learn what are reportable transactions, who are related parties and more about this topic read my article called “LLCs 100% Owned by Foreign Persons Must File IRS Form 5472 or be Liable for $25,000 Penalty.”
[bctt tweet=”Learn about the $25,000 penalty when a foreign person who owns a U.S. LLC that is a disregarded entity fails to file IRS form 5472.” username=”azattorney”]
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I formed my first Arizona LLC the day Arizona’s LLC law became effective in October of 1992. I did not start counting the number of LLCs I formed until 2002 so I don’t know how many LLCs I formed the ten years after Arizona adopted LLCs. On June 1, 2018, I formed Arizona LLC number 6,000.
The reason I’ve formed so many Arizona LLCs is because my LLC services are second to none. Nobody offers as many LLC services as I provide for the low prices of $597 (Silver LLC) and $997 (Gold LLC that includes a revocable living trust). Read some of the 231 five star Google & Facebook reviews our clients have given me.
The Arizona Corporation Commission announced today that its franken-monster, i.e., its online e-document filing and document retention system is almost alive! That’s what the email I got today from the Arizona Corporation Commission tells me. Here’s the text of the message
We are pleased to inform you that we are going live with our upgraded E-filing/database system! Some details to note:
- E-filing will NOT be available from Wednesday, May 16 at 5:00 pm until Monday, May 21 at 8:00 am.
- The website is otherwise available for searching and viewing entity records up until Friday, May 18 at noon.
- We will accept paper documents at our physical locations in Phoenix and Tucson up until Friday, May 18 at noon.
- The new system/site will be available on Monday, May 21, at 8:00 am.
- During implementation, penalties for late-filed corporation annual reports will be waived, and corporations will not be administratively dissolved for failing to file the annual report.
If you previously responded to a request to provide your email address (for some statutory agents and MOD account holders), beginning May 21 you can register in the new system using that email address. As a reminder, MOD accounts will be handled solely online.
We will send a separate email explaining how the statutory agent process works in the new system.
Online filing is not mandatory, but is strongly recommended. When the new system is up and running (as of May 21), we will continue to accept documents by mail, in person, by fax, and through the email address of [email protected] The EMAIL document intake will be discontinued approximately 2-3 weeks after the go-live date. We will change the bounce-back auto message on that email to give a date certain for termination of that service.
Bottom line: A new Arizona Corporation Commission electronic world is about to begin. I’m sure there will be growing pains, but from the demo I saw last November it looks like the new digital / online filing and record-keeping system is going to be great. I anticipate that we will soon be filing all LLC and corporation documents with the Arizona Corporation Commission using its online e-filing system.
Watch the Arizona Corporation Commission’s short explanation video.
Last week we got 5 star online review number 100. Shortly thereafter we got number 101. These 101 reviews include 71 5 star Google reviews and 16 5 star Facebook reviews. The other reviews are on Birdeye and Avvo. Thanks to all who gave us the nice reviews. We appreciate it very much and will continue to provide excellent legal services.
Wall St. Journal: “In the age of the internet, privacy is an especially valuable commodity. To that end, many home buyers and real-estate investors form limited-liability companies with cryptic names when purchasing property. This appeals to the publicity shy, but LLCs also help homeowners avoid scams, identity theft and frivolous lawsuits.”
Arizona LLC law requires that the Articles of Organization of an Arizona LLC contain the name(s) and address(es) of all members of member managed LLCs and the name(s) and address(es) of all managers and members who own 20% or more of the capital or profits of the LLC.
The Confidential Arizona LLC
If you want to form an Arizona LLC without having your name and address stated in the Articles of Organization then you need to purchase my Gold LLC package for $997. Our Gold LLC package provides confidentiality for the ultimate owner because we prepare a confidential trust to be the member of the LLC.
To learn more about the confidential LLC read my article called “How to Form an Arizona LLC without Disclosing Its Ultimate Owner(s).”
We get most of our new clients from people who visit one of our websites. For example, this Arizona LLC law website is the reason we have formed 7,500+ Arizona LLCs. I’ve invested thousands of hours into creating content on my sites and the investment has paid off.
We all know that a good website can generate business. Most business people, however, are unaware that another great source of business is Youtube. Youtube is owned by Google. Google may be the most visited website, but Youtube is the second most visited website. Youtube can also be a great source of business.
In November of 2017 I made a commitment to update and invest in my firm’s Youtube channel. I’ve added many new videos in the last three months and will be adding many more videos in the future. There is a lot more to creating a successful Youtube channel that just uploading videos. It does have a learning curve.
Check out our 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. I encourage you to leave a comment and tell me what you think about our channel.
On December 13, 2016, the IRS issued T.D. 9796, which created a new reporting requirement for owners of U.S. limited liability companies that are owned solely by one member that is a “foreign person.” A U.S. LLC with both of these traits is called a “reportable disregarded entity.” This new reporting requirement is set forth in Treasury Regulation 26 CFR 1.6038A-1.
Every LLC that is a reportable disregarded entity will be treated as a domestic corporation separate from its owner for the limited purposes of the reporting, record maintenance and associated compliance requirements that apply to 25 percent foreign-owned domestic corporations under section 6038A of the Internal Revenue Code. Translation: LLCs that are reportable disregarded entities will be treated as corporations with respect to the reporting obligations under section 6038A.
Reportable disregarded entities are subject to the IRS’s new information reporting requirements with respect to tax years that begin on or after January 1, 2017, and that end on or after December 13, 2017. The first returns will be due in early 2018. The taxable year of a reportable disregarded entity is the same as the taxable year of the foreign person if the foreign person has a U.S. income tax or information return filing obligation for its taxable year otherwise it is the calendar year.
The Arizona legislature passed SB1272, which was signed into law by the Governor or Arizona. This new law makes minor changes to Arizona’s LLC and corporate laws. These new laws are effective on August 9, 2017. A summary of the changes is below.
NEW LEGISLATION SUMMARY
SB1272 was passed this last session. It was a corporation omnibus bill, and it affects several filing requirements for both corporations and LLCs. The changes are summarized below in the order in which they appear in the bill. To read the entire bill, click on the bill number.
The bill grants the Commission the discretion to allow the use of MOD (money-on-deposit) accounts. Previously, the statute did not give the Commission any discretion. (See changes to A.R.S. § 10-122(K).) For the foreseeable future, the ACC will continue current procedure with MOD accounts.
Approval of documents:
The Commission is no longer obligated to return a copy of an approved document to the customer; the obligation now is to provide notice of the approval. (See changes to A.R.S. § 10-125.) Effective August 9, 2017, the Commission will no longer send out a copy of the document with the approval letter; only the approval letter will be returned to the submitter. Approved documents are available on our website.
Rejection of documents:
The Commission will continue to return a copy of a rejected document along with the letter explaining the rejection. (See changes to A.R.S. § 10-125.)
Electronic transmission and Notice:
Definitional changes were made, and other references throughout the corporation and LLC statutes have been modified to refer to “electronic transmission” where appropriate, and that definition links back to the definition of “electronic record” found in the electronic transactions statutes, A.R.S. § 44-7001, et seq. This is an attempt to codify the use of email as an allowable means of communication and for giving Notice between the Commission and entities. (See, e.g., A.R.S. §§ 10-140(21), 10-141, and 10-504.) The Commission now can send official notices, such as a Notice of Pending Administrative Dissolution, via email. Please note that this will NOT be implemented until the new computer system is up and running. When the new system is in use, the Commission will ask for the entity to consent to receive such notices by email. If the entity does not consent, notices will be sent via the U.S. Post Office.
The requirements for Statements of Change have been simplified. Only the new information for address and agent will be required. We are revising our forms to reflect the minimal requirements and will have those available as of August 9.
The dissolution and withdrawal statutes have been revised to allow for a six-month suspension of the annual report requirement for corporations that file for a voluntary dissolution/withdrawal. (See, e.g., changes to A.R.S. § 10-1403.) Corporations have six months after submission in which to complete a dissolution or withdrawal. Often, corporations will try to complete the dissolution/withdrawal but find that they now owe their annual report and/or owe penalties for not filing it on time. This bill provides that the annual report requirement is suspended for six months from the date the dissolution/withdrawal is submitted. Note: once the six months passes, the annual report is due and so are penalties, if enough time has passed since the due date. TIP – obtain the tax clearance certificate before submitting the dissolution. That way, you will never run into a penalty situation with the annual report. This change is being programmed into the current system and should be implemented by August 9. The new law applies only to dissolutions or withdrawals delivered to the ACC on or after August 9, 2017.
Foreign nonprofit corporations:
The gap left by last year’s SB1356 is now closed – foreign nonprofit corporations no longer have to file applications for new authority when they amend their articles. A foreign nonprofit corporation that amends its name, duration, or state of jurisdiction will now file Articles of Amendment to Application for Authority (along with a certified copy of the amendment) – a significant cost savings ($25 fee instead of $175). This change is already in effect for foreign for-profit corporations, from last year’s SB1356. The ACC’s form will apply to both for-profit and nonprofit corporations as of August 9, 2017.
Another gap was closed – nonprofit corporations can sue for false filings. For-profit corporations and LLCs were granted this right of action in last year’s SB1356. Note – this is a private right of action and is not something the ACC will do for the corporation.
LLC administrative dissolution:
LLCs whose latest date to dissolve has passed will now be administratively dissolved. (See changes to A.R.S. § 29-786.) The LLC does have an option of amending its articles, or, if it is administratively dissolved, of reinstating and then amending its articles. There are several thousand LLCs that will be administratively dissolved pursuant to this provision, beginning on or after August 9, 2017.
Proposition 206, the Fair Wages and Healthy Families Act (the “Act”), was a ballot initiative approved by Arizona voters on November 8, 2016. The Act established a new Arizona state minimum wage effective January 1, 2017, and entitles employees to accrue earned paid sick time. Effective July 1, 2017, employers of Arizona employees must accrue and provide paid sick leave for all employees except exempt employees. Earned paid sick time is sick time accrued by an employee that is compensated at the same hourly rate and with the same benefits, including health care benefits, as the employee normally earns during hours worked.
Employees can begin accruing earned paid sick time at the commencement of employment or July 1, 2017, whichever is later. Employees may use earned paid sick time for themselves or for family members (see Arizona Revised Statutes § 23-373 to see who qualifies as a family member) in the following circumstances:
- Medical care or mental or physical illness, injury, or health condition;
- A public health emergency; (see Arizona Revised Statutes § 23-373 for more information about what qualifies as a public health emergency) ; and
- Absence due to domestic violence, sexual violence, abuse, or stalking.
For employers with 15 or more employees: Employees must accrue a minimum of one hour of earned paid sick time for every 30 hours worked, but employees are not entitled to accrue or use more than 40 hours of earned paid sick time per year, unless the employer selects a higher limit.
For employers with fewer than 15 employees: Employees must accrue a minimum of one hour of earned paid sick time for every 30 hours worked, but they are not entitled to accrue or use more than 24 hours of earned paid sick time per year, unless the employer sets a higher limit.
An employee who earns sick time is every person who performs work for compensation, whether full-time, part-time, or on a temporary basis, as an employee. For purposes of determining the number of employees, an employer has 15 or more employees if it maintained 15 or more employees on the payroll for some portion of a day in each of 20 different calendar weeks (the weeks do not have to be consecutive) in the current or preceding year.
Earned paid sick time shall be carried over to the following year, subject to usage limitations based on employer size. Alternatively, in lieu of carry over, an employer may pay an employee for unused earned paid sick time pursuant to Arizona Revised Statutes Section § 23-372(D)(4). An employee of an employer with 15 or more employees may carry over to the following year a maximum of 40 hours of unused earned paid sick time. An employee of an employer with fewer than 15 employees may carry over to the following year a maximum of 24 hours of unused earned paid sick time.
Employers Must Give Employees Notices of Accrued Sick Time
Employers must give employees written notice of the following at the commencement of employment or by July 1, 2017, whichever is later:
- Employees are entitled to earned paid sick time;
- The amount of earned paid sick time that employees are entitled to accrue;
- That retaliation against employees who request or use earned paid sick time is prohibited;
- That each employee has the right to file a complaint if earned paid sick time is denied by the employer or the employee is subjected to retaliation for requesting or taking earned paid sick time; and
- Contact information for the Industrial Commission.
See the Industrial Commission’s 2017 model earned paid sick time employee notice.
Employer’s Record-keeping Requirements
Unless otherwise exempted from the record-keeping requirements, employers subject to Arizona’s earned paid sick time laws are required to comply with notice, posting, and record-keeping requirements pertaining to earned paid sick time. The requirements include:
(1) posting earned paid sick time notices in the workplace;
(2) providing employees with the employer’s business name, address, and telephone number in writing upon hire;
(3) providing employees with a notice that informs them of their rights and responsibilities under the Fair Wages and Healthy Families Act; and
(4) maintaining payroll records in accordance with Arizona’s statutes and rules.
For more information about which employers are subject to Arizona’s earned paid sick leave laws, see Which employers are subject to earned paid sick time laws?
Download and print the Industrial Commission’s 2017 model earned paid sick time notice.
Note: The Industrial Commission is currently proposing rules that would exempt small employers (defined as a corporation, proprietorship, partnership, joint venture, limited liability company, trust, or association that has less than $500,000 in gross annual revenue) from the Act’s posting requirements.
Paycheck Notice Requirement
An employer must also provide employees either in or on an attachment to the employee’s paycheck:
- The amount of earned paid sick time available to the employee;
- The amount of earned paid sick time taken by the employee to date in the year; and
- The amount of pay time the employee has received as earned paid sick time.
An employee may use earned paid sick time as soon as it is accrued. However, an employer may require an employee hired after July 1, 2017, to wait 90 calendar days after the start of employment before using accrued earned paid sick time.
Employers’ Recommended Reading Assignment
If you or your company is an employer that employees people who are covered by the Act then the employer must comply with the Act. All employers should read one of the following:
- the Arizona Industrial Commission’s pdf version of frequently asked questions about the Act.
- the Arizona Industrial Commission’s online FAQ
Posters Employers Must Post for Employees
Arizona law requires employers to post SIX notices, or “posters,” and each notice must be posted in a conspicuous place where employees will see it. Go to the Industrial Commission’s required notices page to see the list of required notices and download each notice.
I am very proud of my son Richard C. Keyt for speaking on four topics at a two day seminar called “Estate Planning and Administration: the Complete Guide” offered by the National Business Institute (NBI). Ricky, who is licensed to practice law in Arizona and California and who was a CPA in a national accounting firm before he went to ASU’s law school, spoke on the following subjects on June 26 & 27, 2017:
- Common trust structures and when they are used
- Tax consequences of trusts
- Post-mortem tax planning options
- Marshaling assets and dealing with creditors
Ricky and I work together to prepare wills, trusts and estate plans for people. We are co-authors of a book called “Family Asset Protection.” The purpose of our book is to answer common questions people have about estate planning and explain what you need to do to protect your most valuable assets, your loved ones. Get free access to Family Asset Protection.