Limited Liability Company Archives

23Feb 2022 by bhandlaw

Yes, Your Startup Needs to Have Its Own Insurance. Here’s Why.

Business Formation, Corporations, Insurance, Limited Liability Company

Rarely a month goes by that a new founder or business owner I’m meeting with asks me some version of the following: “But we already formed a corporation (or LLC), why do we need liability insurance?” or “Aren’t my personal assets protected as it is [by the legal formation of the company]?” In this blog post, I’ll try an answer those questions, explain the specific types of insurance that a new startup should consider, and how to get started. Doesn't legal formation of my business protect my personal assets? Well, yes and no. First off, let me be absolutely clear-- operating any business under a validly formed legal entity is one of the first things you should be doing as an entrepreneur who’s about to actually market and sell goods…

29May 2019 by bhandlaw

My Foreign Company’s Name Conflicts with An Existing Arizona One. Now What?

Business Formation, Corporations, Entity Formation, Foreign LLC, Limited Liability Company

Our law firm's startup clients are often formed as a limited liability company (LLC) (or for-profit corporation) in another state but have either relocated to, or now conduct their operations in, Arizona. In an earlier post, I discussed the requirement of registering your foreign entity with the Arizona Corporation Commission if you were initially formed in another jurisdiction but are nonetheless deemed to be "transacting business" here in Arizona. However, there are times when the name of your foreign-chartered entity also happens to be the same as an existing trade name or entity already registered here in Arizona. Adoption of A Fictitious Name In this situation, as part of your application you will have to have your foreign entity adopt a fictitious name (also known as a "d/b/a" or "assumed"…

15May 2019 by bhandlaw

Is Your LLC Ready for the New Arizona LLC Act?

Business Formation, Entity Formation, Limited Liability Company

On September 1, 2020, Arizona's adoption of the Uniform Revised Limited Liability Company Act takes full effect in the form of the "Arizona Limited Liability Company Act" (ALLCA), which was signed into law by Governor Ducey last year. The Arizona Limited Liability Company Act ALLCA repeals Arizona's previous Limited Liability Company Act (in place since 1992) and introduces a number of default provisions that, if you and your fellow LLC members do not have a written operating agreement in place, could alter the way your LLC is managed and operates. There are two important dates current and potential LLC members should keep in mind for ALLCA: As of September 1, 2019, all LLCs formed in Arizona on or after that date must be compliant with ALLCA.As of September 1, 2020,…

27Nov 2018 by bhandlaw

Is Your Foreign LLC Qualified to Do Business in AZ?

Business Formation, Foreign LLC, Limited Liability Company, registration to transact business

I frequently see startups who've organized as limited liability companies that operate (or at least have an office) here in Arizona but (for a various of reasons) opted to initially form in another state, such as Delaware or Nevada. Many of these LLC owners or partners don't realize that having formed in one state does not automatically mean that it can conduct business any old way in the other 49--- including Arizona. This misconception can be a costly one. "Foreign" vs. Domestic LLCs in Arizona The Arizona Limited Liability Company Act (Arizona Revised Statutes, Title 29, Chapter 7) (the "Act") specifically requires a foreign LLC to obtain a certificate of registration "before transacting business" in Arizona (A.R.S. 29-3902(A)) [formerly §29-802(A)]). In other words, here in Arizona anyway, every foreign (i.e., one formed…

23Oct 2018 by bhandlaw

My LLC Doesn’t Have an Operating Agreement; Can I Sell My Interest?

Business Formation, Limited Liability Company, Operating Agreement

An operating agreement of a limited liability company (LLC) is the company's instruction manual. Through an operating agreement, the members (i.e., owners) can agree on critical things like their ownership percentage, roles in the company, and other rights and obligations as a member. The no operating agreement problem As a Phoenix Arizona business attorney, I (far too) often come across LLC owners without an operating agreement. Typically, the company's owners don't really think about it until there's a problem and one or more of the partners wants out. These members usually want to know if they can sell their interest (either to the other members or even an outsider), given the lack of an operating agreement between the members. Enter the Arizona Limited Liability Company Act Where the members of…