Chapter 3 Important Tasks to Accomplish in the 1st 75 Days

Chapter 3 Important Tasks to Accomplish in the 1st 75 Days2016-03-27T13:39:17+00:00

Section 3.1 Checklist of Tasks to Complete in the First 75 Days after Your LLC is Formed

If you thought that filing the Articles of Organization and getting it approved by the Arizona Corporation Commission was all you had to do for your new LLC you are mistaken.  There are a number of post Article filing tasks that must be accomplished to get your LLC up and running properly.

The following table contains a list of the most important tasks the your new Arizona limited liability company must accomplish within the 75 days of filing the Articles of Organization.  The right column titled “Responsible Party” names the person who is responsible for accomplishing the designated task.  If this column names KEYTLaw then we will perform the task.  If it names Manager then the manager must perform the task.  If it names a third party the manager must coordinate with the third party to accomplish the task.

EventDue DateResponsible Party
1. Create the LLC. Hand file the LLC's Articles of Organization with the Arizona Corporation Commission.

KEYTLaw

2. Articles of Organization. We email the Articles or Organization submitted to the ACC to the LLC's contact person.The day we submit the Articles of Organization to ACC or the next business day

KEYTLaw

3. Operating Agreement. We prepare the Operating Agreement and it give to the LLC's contact person: (i) as a pdf attachment to an email message for Bronze LLC purchasers, or (ii) behind the Operating Agreement tab in the LLC portfolio for Silver & Gold LLC purchasers.The next business day after the Articles of Organization are filed.

KEYTLaw

4. Organizational Resolutions: Silver & Gold LLC Purchasers. We prepare the organizational Resolutions of the Members and put it behind the tab of the same name in the LLC portfolio. The next business day after the Articles of Organization are filed.

KEYTLaw

5. Membership Certificates: Silver & Gold LLC Purchasers. We prepare a membership certificate for each member and put it behind the tab of the same name in the LLC portfolio. The next business day after the Articles of Organization are filed.

KEYTLaw

6. Disclaimer. If any married member will own his or her membership interest as separate property we prepare a Disclaimer for the non-owner spouse to sign that acknowledges that he or she does not have any interest in the LLC. The Disclaimer is found at the end of the Operating Agreement under the Operating Agreement tab in your LLC porfolio. You can make your own Disclaimer by copying and pasting the sample Disclaimer in the Operations Manual into your Word processor then editing it.The next business day after the Articles of Organization are filed.

KEYTLaw

7. Mail LLC Portfolio: Silver & Gold LLC Purchasers. The portfolio contains all of your LLC documents organized behind tabs. We mail it to the LLC's contact person.The next business day after the Articles of Organization are filed.

KEYTLaw

8.a. Employer ID Number (EIN): Silver & Gold LLC Purchasers & Bronze LLC Purchasers Who Paid for this Service. Complete, print, sign and send the partially completed IRS form SS-4 to us. For help completing this form see How to Complete IRS form SS-4. When we have the signed & completed SS-4 we will get the EIN and email it to the LLC's contact person. See Section 11.2 for a discussion on how to get the EIN for Your LLC.As soon as possible after forming the LLC.

KEYTLaw

8.b. Employer ID Number (EIN): Bronze LLC Purchasers Who Did Not Pay Extra for this Service. See Section 11.2 for a discussion on how to get the EIN in five minutes from www.irs.gov. When you see your new EIN on the IRS' website, print the page on the IRS' website that displays the EIN.As soon as possible after forming the LLC.

Manager or Accountant

9. Safe Guard IRS EIN Documentation. When you get your EIN letter from the IRS keep it in a safe place because third parties will ask for the EIN.Approximately 2 - 3 weeks after obtaining the EIN the IRS will mail to the LLC's responsible party a letter that confirms the LLC's EIN.

Manager

10. Open LLC's Bank Account. See Section 5.1. You need two items to open a bank account: (i) Articles of Organization with the ACC stamp on it, and (ii) the EIN. A few banks also require a copy of the Operating Agreement. If a trust owns your LLC you will also need to give the bank a copy of your trust agreement or the trust's Certification of Trust.As soon as possible, but not later than when the LLC first receives revenue

Manager

11. Set Up Bookkeeping System. Purchase QuickBooks and configure it to do the LLC's bookkeeping. See Section 5.5. We recommend you hire Joy Jaske, CPA, of CPA for Hire, P.C., 33755 North Scottsdale Road #130, Scottsdale, Arizona 85266; Phone 480-437-9022. Her company only does bookkeeping for small businesses, including our books.Immediately, but not later than when the LLC receives its first revenue or pays money from its bank account

Manager or Accountant

12. Get Insurance. Before engaging in any activity, including owning real estate, the LLC must purchase insurance in amounts and types appropriate for the company’s activities and for the assets owned by the company. Consult with an experienced business insurance agent.Before engaging in business or acquiring assets

Manager

13. Get State & Local Sales Tax License. If your LLC will engage in an activity that requires an Arizona state and/or local jurisdiction transaction privilege tax license (aka a sales tax license) get the license. Get an Arizona sales tax license from the Arizona Department of Revenue. See Chapter 14. Before engaging in activity in Arizona that requires a license

Manager or Accountant

14. Safe Guard Sales Tax License Number. Insert the transaction privilege tax license information in your AZ LLC portfolio or company records.When received

Manager

15. Review Operating Agreement. Have all members review the Operating Agreement. If the members want to modify the Operating Agreement or discuss possible changes, contact LLC attorney Richard C. Keyt at 480-664-7478 (email rck@keytlaw.com).As soon as possible

All Members

16. Sign Operating Agreement. All members should sign the Operating Agreement. Any member who does not sign the Operating Agreement will not be bound by it.As soon as possible

All Members

17. Springing Member. If your Operating Agreement has a springing member clause and you want the LLC to have a springing member, insert the springing member's name where indicated at the end of the Operating Agreement and have the Springing Member sign below his or her name. See Section 6.6.As soon as possible

Manager & Springing Member

18. Non-economic Member. If your Operating Agreement has a non-economic member article and you want the LLC to have a non-economic member, insert the non-economic member's name where indicated at the end of the Operating Agreement and have the Non-economic Member sign below his or her name. See Section 6.7As soon as possible

Manager & Non-economic Member

19. Organizational Resolutions: Silver & Gold LLC Purchasers. Arrange to have all members sign the organizational resolutions. Put a fully signed copy of the resolutions behind tab called Resolutions in the LLC portfolio.As soon as possible

Manager & All Members

20. Membership Certificates: Silver & Gold LLC Purchasers. The manager must sign the membership certificates, deliver originals to the member named on the certificate and keep a copy in the LLC's portfolio.As soon as possible

Manager

21. Confidential Trust. If any member is the trustee of a Confidential Trust: The trustmaker(s) must sign the trust agreemnte and have it notarized. See Section 2.9. Keep a signed and notarized copy in a safe place.As soon as possible

Trustmaker(s)

22. Give Members Copies of LLC Documents. Give every member a copy of the Articles of Organization and fully signed copy of the Operating Agreement. Silver & Gold LLC purchasers should also give all members a copy of the signed organizational resolutions and give each member the member's original membership certificate.As soon as possible

Manager

23. ACC Review the Articles of Organization. The Arizona Corporation Commission approves or rejects the Articles of Organization. To check the status of your LLC look it up on the ACC's LLC Database.One week after filing the Articles of Organization, but Bronze LLC purchasers who did not pay an additional $35 for expedited filing will have their Articles reviewed one month after filing.

Arizona Corporation Commission

24. Approved Articles of Organization. We email the approved Articles with the ACC filed stamp & date and the ACC's approval letter to the LLC's contact person. When we receive these documents from the ACC. Approximately 10 days (Silver & Gold LLCs and Bronze LLCs that paid $35 extra for the expedited filing fee) or 37 days (Bronze LLCs w/o the expedited filing fee) after filing.

KEYTLaw

25. Approved Articles of Organization: Silver & Gold LLC Purchasers. Insert the Articles of Organization approved by the ACC and the ACC's approval letter in the LC portfolio.When received

Manager

26. Notice of Publication. If the LLC's place of business in the Articles of Organization is not in Maricopa or Pima County the LLC must prepare and submit a Notice of Publication to an ACC approved newspaper in the county of its place of business for publication in three consecutive publications.As soon as possible after the ACC approves the Articles of Organization but not later than sixty days after the date the ACC approved the Articles of Organization

KEYTLaw

27. Affidavit of Publication. If publication is required, send a copy of the Affidavit of Publication to the ACC and the LLC's contact person.Although Arizona LLC law no longer requires the LLC to file an Affidavit of Publication with the Arizona Corporation Commission we always file the affidavit so there is proof on the public record that the LLC complied with the law and timely published the Notice of Publication.

KEYTLaw

28. Affidavit of Publication. Insert a copy of the Affidavit of Publication in the LLC's portfolio.When received from the newspaper

Manager

29. Tax Advisor. Consult with a tax accountant to determine the best method of federal income taxation (sole proprietorship, partnership, C corporation or S corporation) for the LLC and its members. See Chapter 11 and Professional We Like for our list of Arizona CPAs.As soon as possible, but not later than 75 days after the date the LLC was created.

Manager

30. Optional: File IRS Form 8832. File IRS Form 8832 (if C corporation taxation is desired) with the IRS to elect federal income tax method different from IRS default tax method (sole proprietorship for single member LLCs and partnership for multi-member LLCs)As soon as possible,but not later than 75 days after the date the LLC was created or the date you want the LLC to be taxed as a C corporation if later

Manager or Accountant

30. Optional: File IRS Form 2553. File IRS Form 2553 (if S corporation taxation is desired) with the IRS to elect federal income tax method different from IRS default tax method (sole proprietorship for single member LLCs and partnership for multi-member LLCs)As soon as possible, but not later than” (i) 2 months and 15 days after the date the LLC was created or (ii) the beginning of the first fiscal year you want S corp status if the LLC did not elect S corp from day one

Manager or Accountant

32. Review ACC LLC Database. Review the LLC’s information on file in the ACC's LLC Information Database to make sure that the members and managers names and address and the domestic address is correct and that all other information about the LLC displayed on the ACC's website is correctNot later than 90 days after the LLC is created and at least once every calendar year thereafter

All Members & Managers

33. Meetings of Members. If the LLC has multiple members (other than a husband and wife) the members should hold meetings of members and managers to approve or reject major company actions and document the meetings with minutes and resolutions. See Section 4.9Not required by Arizona law, but recommended at least once a year to prove that the LLC is operated like a business rather than a hobby. This is an important factor the courts consider when a plaintiff asks the court to pierce the company veil and hold the members of the LLC liable for the LLC's debts.

All Members & Managers

34. Monitor ACC Record. Correct any inaccurate information about the company contained in the . To check the status of your LLC look it up on the ACC's LLC Database.Whenever inaccurate information exists

All Members & Managers

Section 3.2 The Operations Compliance Alert System

Because we were hired to form the Company, we added the manager/contact person to our LLC Alert System. The LLC Alert System is our automated email system that sends periodic alerts to the members of the Company concerning important operational issues. It’s an automatic tickler / reminder system for Arizona LLCs. Here are just a few examples of what the LLC Alert System does:

  • Reminds the members to get an Employer ID Number (EIN) if we didn’t get it for the LLC.
  • Reminds the members to open a bank account in the Company’s name.
  • Reminds the members to sign the Operating Agreement and the organizational documents.
  • Reminds the members to set up a bookkeeping system.
  • Reminds the members to consult with a tax advisor in the first 75 days after forming the LLC with respect to which of the four possible federal income tax methods is best for the Company and its members.
  • Reminds the members of the deadline for electing C corporation or S corporation federal income tax methods.
  • Reminds real estate Companies to convey the real estate to the Company by signing and recording a deed in the appropriate county.
  • Reminds the members to document loans made by the members to the Company.

Arizona law requires that the LLC keep its ACC information current, but most people never think to check to see if it is out of date. The LLC Alert System sends reminder email alerts to the members twice a year to check the LLC’s information on file with the Arizona Corporation Commission to confirm that all information is correct.

But the LLC Alert System is more than just a reminder system. It can also help you complete LLC operational tasks. To check the ACC information for your LLC, you simply click on the link in the LLC Alert System reminder email alert and you are taken to the ACC’s website where you can enter the name of your LLC and review the information about your LLC on file with the ACC.

If you need to update an address or appoint a new statutory agent, click on the link in the LLC Alert System reminder email alert to access the ACC’s change of address form. This online fill-in-the-blanks change of address form is on the KEYTLaw website. To change an out of date address for the Company, member or manager, you simply fill out the form online, print and sign it then mail the form to the ACC with a check for $5.

The LLC Alert System is intended to make complying with Arizona LLC law easier. LLC Alert System subscribers do not have to: (1) trust their memory to check the Company’s address on file with the ACC, (2) waste time trying to find the ACC’s change of address form on the its website, or (3) use the ACC’s non-fill-in-the-blanks change of address form. The LLC Alert System simplifies the entire ACC data checking and updating process for you.

If you are the manager and contact person for the Company and you are not getting emails from Richard Keyt that remind you of operational tasks the Company must accomplish, send Rick an email at rickkeyt@keytlaw.com and ask him to add you to the LLC Alert System.