Question: I went to the bank to open my LLC bank account and they need to know what kind of LLC I have. The bank wanted to know if I have an S LLC, C LLC or partnership LLC.
Answer: You need to go to another bank that knows how to deal with LLCs. The State of Arizona only has two types of LLCs, i.e., an LLC and a professional LLC (PLLC). You have an LLC.
There are no such terms as S LLC, C LLC or partnership LLC. The person you are talking to is ignorant, which is troubling. He or she may be asking for the LLC’s tax method under the internal revenue code, which could be:
Those terms refer to the four possible federal income tax methods availabe to LLCs under the Internal Revenue Code. The terms do not describe a type of LLC.
The bank does not need to know how the LLC is taxed. The default tax method for your two member LLC is partnership. The LLC will be taxed as a partnership unless it files a timely IRS form 8832 (election to be taxed as a C corporation) or an IRS form 2553 (election to be taxed as an S corporation). The subject of the four possible LLC tax methods is discussed in great detail in your Operations Manual in your LLC portfolio.
For the last 12 years I have offered one LLC price ($599) and LLC formation services. Starting today, I now give people a choice of three LLC prices and formation service packages. The packages and prices are:
All packages include custom Articles of Organization, custom Operating Agreement, newspaper publication and statutory agent service.
See our table that compares LLC formation services for each of the three packages. For a detailed explanation of the LLC formation services we provide for each of the three packages see “Contents of Our Bronze, Silver & Gold LLC Formation Packages.”
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.
The post Failure to Plan Causes Problem for Spouse of LLC Owner appeared first on Arizona Limited Liability Company Law.
Question: I am the sole member of my Arizona limited liability company. Must I sign the LLC’s Operating Agreement?
Answer: Although Arizona LLC does not require that the members of an Arizona LLC sign an Operating Agreement, as an Arizona LLC attorney I highly recommend that all members of an Arizona LLC, including single member LLCs, sign a “good” Operating Agreement. A good Operating Agreement is a document that is drafted specifically to comply with Arizona’s LLC law and that contains provisions and language needed by most LLCs and their members. The fact the members of an LLC sign an Operating Agreement could actually be detrimental to the members if the Operating Agreement is poorly written or not written specifically to comply with Arizona LLC law.
There are two reasons a the sole member of an LLC should sign an Operating Agreement:
A good Operating Agreement is a complex document that should cover a lot of important ground. It should be drafted by an experienced LLC attorney licensed to practice in the LLC’s state of formation. I’ve prepared over 4,000 Operating Agreements and spent hundreds of hours researching and revising my Operating Agreement. It is the product of my 33 years of law practice as a tax lawyer who forms companies.
I want to thank California attorney Mark G. Lerner of the Lerner & McDonald law firm in Santa Ana, California, for his recent very nice testimonial about my LLC formation services. He said:
“As a California attorney, I have used Richard Keyt’s LLC formation services for many of my clients as well as myself over the past 7 years. Richard and his staff do an excellent job of creating high quality documentation in a very efficient manner. I have always been quite satisfied with each time that I have used Richard Keyt to form an Arizona LLC. I would strongly recommend his LLC formation services to others as we.”
See the great testimonials many other happy LLC clients have given me.