Voluntary vs. Administrative Dissolution of Your Arizona LLC

Voluntary vs. Administrative Dissolution of Your Arizona LLC

Business Formation, Entity Formation, Limited Liability Company
I'm often asked by LLC owners who have received a "Notice of Administrative Dissolution" from the Arizona Corporation Commission (ACC) whether they should just allow their company to be dissolved? Why not to rely on Administrative Dissolution of your Arizona LLC First off, it is important to understand that a notice of administrative dissolution is not the end of the World for your LLC.  An administratively dissolved LLC can be reinstated under certain circumstances (See A.R.S. 29-786(D)).  If you anticipate starting up business again in the near future, this is the path I usually recommend. This is because the ACC's Corporate Filings division is primarily a ministerial body.  In other words, it does not really review or investigate accidental or fraudulent corporate or LLC filings. For this reason, there is…
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LLC Operating Agreement should clearly spell out Ownership Interests

LLC Operating Agreement should clearly spell out Ownership Interests

Business Formation, Entity Formation, Limited Liability Company, Operating Agreement
A situation that came to us recently highlights the importance of having ownership percentage interests spelled out clearly in your Arizona limited liability company's Operating Agreement. Jay and Pat: a cautionary tale A person we'll call “Jay” was in business with his partner “Pat”.  The two had met because their kids were in after school activities together.  It turns out Pat had a great product but lacked people skills and was not much of a salesperson.  Jay, on the other hand, loved people and was born to sell.  After sampling the product one day, Jay asked if he could sell the product for Pat and receive a percentage of sales.  Pat thought that this was a great idea, to the point of turning around that very day day and forming an…
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