Recently I received an email message from a person who is not my client that stated the following:
“I hired LegalZoom to form the LLC that I started here in Arizona . . . towards the end of 2014. Earlier this year I found out that . . . [the LLC] was never published in the newspapers ( I thought that this service what part of the package that I purchased from LegalZoom) I’m not quite sure what to do”
This is an example of why people should not use this document preparer to form an Arizona LLC. We always publish for every LLC we form. Publication is a requirement of Arizona LLC law.
Arizona Revised Statutes Section 29-635.C states:
“Within sixty days after the commission approves the filing, there shall be published in a newspaper of general circulation in the county of the known place of business, for three consecutive publications, a notice of the filing of such articles of organization”
Notice the language that says the notice SHALL be published. Arizona LLC law, however, does not state the consequence of failing to publish the notice timely. A third party could argue to a court that the failure to satisfy the publication requirement of Section 29-635.C means the LLC was not legally formed and therefore does not exist.
Because Arizona law is silent on the consequences of failing to publish, I recommend that LLCs that do not publish timely publish when they become aware of the fact the LLC did publish. Better late than never.
The post LegalZoom & Arizona LLC Newspaper Publication appeared first on Arizona Limited Liability Company Law.
On July 15, 2016, Patricia Barfield, Director, Corporations Division, of the Arizona Corporation Commission, announced the following change in procedures of the Arizona Corporation Commission:
“This is notice that we are changing the procedure for requesting copies and certificates of good standing. The change is being made as part of our ongoing effort to improve the document processing times. We will be channeling all copy or certificate requests to our Records Section.
Beginning Monday, July 18, 2016, you will no longer be able to request plain or certified copies of documents or certificates of good standing on the Cover Sheet. We are removing these options on the Cover Sheet. Instead, we suggest using our Records Request Form to request copies or certificates, and that will be sent directly to the Records Section.
IMPORTANT — FEES: If you submit your own cover sheet or letter and you request copies or certificates at the time you submit the document for filing, you must pay the correct fees. If the correct fees are not paid or the correct amount is not authorized to be deducted from the MOD account, the document will be rejected.
The fees for copies are as follows:
Certified copy – corporations (per document): $5.00 + $.50/page
Certified copy – LLCs (per document): $15.00 + $.50/page
Certificate (any type that is not for copies): $10.00
Uncertified or plain copy – corporations (per document): $.50/page
Uncertified or plain copy – LLCs (per document): $5.00 + $.50/page
*Expedited processing is available by adding $35.00 to the fee for any request or service.
Plain or certified copies of documents that have been filed can be obtained directly from our Records Section, by submitting a Records Request Form.
Certificates of Good Standing for active entities can be obtained online after the entity is formed, or by submitting Records Request Form.
We greatly appreciate your cooperation with our efforts at improving our customer service by improving our processing times!
Patricia L. Barfield
The post ACC Procedure Change appeared first on Arizona Limited Liability Company Law.
by Arizona LLC attorney Richard Keyt who has formed 5,000+ 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 your self following the steps described in detail below.
To form an Arizona LLC, you must complete each of the following tasks:
1. Pick a name for your LLC. The name must contain the words “limited liability company” or “limited company” or the abbreviations “L.L.C..” “L.C..” “LLC” or “LC” in uppercase or lowercase letters. The name may not contain the words “association,” “corporation” or “incorporated” or an abbreviation of these words. Check the Arizona Corporation Commission’s name availability database to determine if the desired name for your LLC is available. Arizona law requires that the new LLC’s name be distinguishable from other names already on file with the Arizona Corporation Commission and the Arizona Secretary of State.
A “distinguishable” name is one that is different in any way except for differences in (a) entity designation (Inc, LLC, Corporation, etc), (b) spaces between words (“roll out now co.” vs. “rollout now co.”), (c) specific punctuation (“Great Expectations ” vs. “Great Expectations!”) (d) the case of the letters contained in the name (“TOO COOL” vs. “Too Cool”), (e) the use of ampersand (&) versus “and” (“U & I Inc.” vs. “U AND I Inc.”) (f) the use of Arabic numerals (1,2,3,etc) and words representing these numerals (“One Stop LLC” vs. “1 Stop LLC”) and (g) the use of the articles “a”, “an” and “the” (A Birdcage vs. The Birdcage).
To learn more about this topic, read “Arizona Corporation Commission Naming Standards.” If your new LLC’s name is not distinguishable from an existing name in the databases of the Arizona Corporation Commission and the Arizona Secretary of State, the ACC will reject the the Articles of Organization and you will have 30 days from the date of rejection to resubmit the Articles of Organization with a different name.
2. Prepare the Articles of Organization. Complete Articles of Organization for the LLC. Don’t use the ACC’s form AOO found on its website. Instead, use the one I that I linked to at the beginning of this section. My Articles of Organization is an Adobe .pdf fillable form. The finished Articles will look much better if you use the AOO I turned in a fillable form rather than scribbling on the ACC’s form. First save the AOO to your computer then open the AOO on your computer. Don’t use the one on your browser. Enter the data in the form then save it for future reference. Print two copies of the completed document.
3. Sign the Articles of Organization. Arrange for a person to sign both copies of the Articles of Organization. The signer does not have to be a member or a manager.
4. Appoint a Statutory Agent. Insert the name and address of the LLC’s statutory agent in the Articles of Organization. Arizona LLC law requires that every Arizona LLC maintain a statutory agent for service of process (lawsuits for example) on the limited liability company that is either an individual (18 years or older) resident of this state, an Arizona corporation, an Arizona limited liability company or a foreign corporation or limited liability company authorized to transact business in Arizona. The statutory agent must sign the Articles of Organization.
5. Prepare ACC Coversheet. Fill out an Arizona Corporation Commission cover sheet to submit to the ACC along with the Articles of Organization.
6. Deliver Articles of Organization to ACC. Submit both copies of the completed and signed Articles of Organization to the Arizona Corporation Commission at one of the following addresses:
1300 W. Washington St., Phoenix, AZ 85007
400 W. Congress, 2nd Floor, Tucson, AZ 85701
7. Pay the LLC Filing Fee. Pay the Arizona Corporation Commission the filing fee of $50 for regular filing or $85 for expedited filing. The difference is your article will be reviewed in approximately one week if you file expedited or about a month if you pay $50. I always pay the $85 because nobody wants to wait a month to find out their Articles of Organization were rejected. Actually, my Articles are rarely rejected.
8. Keep One Copy of the Articles of Organization Stamped by the ACC. Ask the ACC clerk to keep on copy of the Articles of Organization and to stamp the ACC’s received stamp on the second copy. Keep the second copy and take it with you. You will need the copy of the AOO with the ACC stamp to open a bank account immediately. If you mail in your Articles of Organization, send two copies and an envelope with your address on it and a first class stamp and ask in a cover letter for the ACC to stamp the second copy of the Articles and mail it to you in the envelope. If you don’t follow this step, you might have to wait 7 – 14 days for expedited filing or 30 – 35 days for regular filing to get the approved (or rejected) Articles of Organization in the mail. Most banks will open a bank account in the name of the LLC if you give the bank a copy of the Articles of Organization with the ACC received stamp on it.
9. Prepare a Notice of Publication. When the ACC approves the Articles of Organization, it will send the approved Articles with its filed stamp on it to the person named in the ACC coversheet. The company must then prepare a Notice of Publication.
10. Publish the Notice of Publication. Send the Notice of Publication to an ACC approved newspaper. Arizona LLC law (Arizona Revised Statutes Section 29-635.C) requires that within sixty days after the ACC approves the Articles of Organization, a notice of the filing of the AOO must be published for three consecutive publications in an ACC approved newspaper in the county of the LLC’s known place of business stated in the AOO.
The cost of publication will be approximately $55 for publication in Maricopa County. Watch out for Yuma County. Its newspaper rips off the people who have to publish ACC required documents in that county because it is the only ACC approved newspaper. If your LLC has its known place of business in Yuma County, form the LLC with its KPB in Maricopa County, publish in Maricopa County then file a change of address form with the Arizona Corporation Commission to move the LLC’s known place of business to Yuma County.
Although Arizona LLC law no longer requires that the LLC file an affidavit of newspaper publication with the ACC, I strongly recommend that all LLCs do so. Publication is required by ARS Section 29-635.C. The failure to publish can result in the administrative dissolution of the LLC. It could also be a negative factor considered by a court in a lawsuit to pierce the company veil and hold the owners of the LLC liable for the LLC’s debts. Get an affidavit of publication from the newspaper. Keep the original for the LLC records and send a copy of it to the ACC so it can save the document and indicate on its records that publication was satisfied. If you don’t follow this procedure, you may not be able to find the proof of publication years later when you need it.
If you complete all of the above steps, your Arizona LLC will be validly formed and ready to start business, open a bank account and sign contracts. However, all you will have is that two page document.
Oh by the way you will also have completed phase 1 (the no brainer phase) in the life of an Arizona LLC. It’s phase 2 in the life of an Arizona LLC that is more important and demands that you comply with Arizona law if the members want to be protected from the debts and obligations of the LLC. To learn more about Phase 2, read my article called “Two Phases in the Life of an LLC.”
Compare Forming an LLC Yourself with My LLC Formation Services
I have formed 5,000+ 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 and the cost of newspaper publication in Maricopa County), 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 nonowner spouse must sign a Disclaimer in which he/she disclaims any ownership of the LLC interest. If the nonowner 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 nonowner spouse is not named in any of Articles of Organization or the Operating Agreement.
- Arizona LLC Operations Manual – When 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 both versions are 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.
The post How Do I Form an Arizona LLC? appeared first on Arizona Limited Liability Company Law.
From time to time a member of an Arizona LLC calls and tells me that another member of the LLC filed an amendment to the Articles of Organization with the Arizona Corporation Commission that removed the caller as a member of the LLC without the caller’s knowledge or consent. There was no legal basis to file the amendment.
The caller always asks “what can I do?” The simple answer is the caller should prepare and file another amendment to the Articles of Organization to correct the removal of the caller as a member. This solution, however, is only a temporary band aid. It does not solve the fundamental problem which is the members cannot get along.
Unfortunately this scenario is an all too common problem. The Arizona Corporation Commission is, in actuality, a mere filing service. If a person submits a document for filing and it satisfies the ACC’s filing requirements, the ACC will file the document. The ACC does not confirm or verify that the information set forth in a document is correct. Many times when members of an Arizona LLC can not agree on the management of the LLC one of the members will file an amendment to the Articles of Organization that removes another member without any legal basis for the removal.
People who file false documents with the ACC are usually unaware that they could be committing a felony. Arizona Revised Statutes Section 29-613.A states:
“A person who . . . signs any articles, statement, report, application or other document filed with the [Arizona Corporation] commission that is known to the person as false in any material respect is guilty of a class 4 felony.”
The bottom line is that when this happens the members need to consummate a “company divorce,” i.e., a legal termination of their relationship as members of the same LLC. The best solution occurs if the members agree on the terms and conditions of their company divorce and they sign documents that evidence their agreement. If the members cannot agree, they have two options:
- Continue their relationship as members of the LLC, which means ongoing disputes, problems and stress.
- File a lawsuit in an Arizona Superior Court and ask the court to dissolve the LLC. This option takes time and causes both members to pay large amounts of money to their lawyers.
As a result of this latest call, I revised my multi-member Operating Agreement (yes I have a single member and husband and wife owned Operating Agreement that is about 20 pages shorter) to include a section that obligates a member who causes a fraudulent amendment to the Articles of Organization to be filed with the ACC to pay each other member liquidated damages in the amount of $10,000. If the liquidated damages are not paid within 30 days of the filing date the unpaid amount accrues interest at the rate of 10% per annum. If the entire amount is not paid within one year of the filing date, the offending member’s membership interest in the LLC will be forfeited on the first anniversary of the date the false amendment to the Articles of Organization was filed with the ACC and the unpaid portion of the liquidated damages will be forgiven.
For more on this topic read my blog post called “Can One Member of an Arizona LLC Expel Another Member?“
The post Member Fraudulently Amends Articles of Organization to Remove Other Member appeared first on Arizona Limited Liability Company Law.