Dead Wood: 4 Things to Help LLC Owners Avoid Unproductive Members

Contracts, Limited Liability Company, Operating Agreement, Uncategorized
When LLC business owners later decide to take on partner or partners, they can easily lose sight of what can happen if the partnership doesn't live up to expectations. Recently, a situation that came to our Phoenix business law firm illustrates the importance of thinking through the planned partnership and what can go wrong when you don't consider the possibility of the partner to-be under performing expectations (or not performing at all). LLC owner decides to add partners A few years ago, our business owner (we'll call him "A") started LLC (the "Company") to operate her service business.  A built out the business into a highly profitable one and was eventually approached by outsiders B and C to become part owners in the Company.  Partner C owned a successful business…
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Death of a Single Member (Part 3 of 3):  Transferring LLC Interest To Someone other than Surviving Spouse

Death of a Single Member (Part 3 of 3): Transferring LLC Interest To Someone other than Surviving Spouse

Limited Liability Company, Single Member LLC
This is the final Part of a three part series on the legal issues surrounding the death of a single member of an LLC in Arizona. Most single member LLC owners who are married are usually agreeable to having their spouse inherit their LLC ownership interest in case the member unexpectedly dies.  However, every so often our Phoenix business law firm sees a situation where a relative or outside third-party has deep reservations about the surviving spouse taking over the LLC or has a vested interest in not being in business with the surviving spouse. In Part 1, we were introduced to “SM”, a married owner of a single member LLC operating a growing and highly profitable business here in Arizona.  Like most young business owners I see, SM had…
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Death of a Single Member (Part 2):  Can Deceased’s LLC Ownership be Transferred by Contract?

Death of a Single Member (Part 2): Can Deceased’s LLC Ownership be Transferred by Contract?

Limited Liability Company, Single Member LLC
This is Part 2 of a three part series on key legal issues surrounding the unanticipated death of a member of a single member LLC in Arizona. Most single member LLC owners who are married are usually agreeable to having their spouse inherit their LLC ownership interest in case the member unexpectedly dies.  However, every so often our Phoenix business law firm sees a situation where a relative or outside third-party has deep reservations about the surviving spouse taking over the LLC or has a vested interest in not being in business with the surviving spouse. In Part 1, we were introduced to “SM”, a married owner of a single member LLC operating a growing and highly profitable business here in Arizona.  Like most young business owners I see, SM…
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But I Thought I Had an LLC?!  The S-Corp Election Dilemma

But I Thought I Had an LLC?! The S-Corp Election Dilemma

Business Formation, Corporations, Limited Liability Company
The other day, a colleague of mine (who works in an unrelated practice area) messaged me wanting to refer a client who wanted to "convert an LLC to an S-Corp".  As a Phoenix business lawyer, I frequently get this question (or some version of it) from new entrepreneurs or business partners looking into forming a new business entity, as well as business owners who formed their LLC some years ago and are now having second thoughts on the IRS' default tax treatment of LLCs. The difference between legal entity selection and taxable entity election The confusion is understandable.  The problem stems from the fact that LLC owners are really dealing with two separate issues; when it comes to forming a legal business entity (at least here in the United States)…
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Death of a Single Member: What Happens when An LLC Owner Dies in Arizona?

Death of a Single Member: What Happens when An LLC Owner Dies in Arizona?

Limited Liability Company, Single Member LLC
This is Part 1 of a three part series on key legal issues surrounding the unanticipated death of a member of a single member LLC in Arizona. Most single member LLC owners who are married are usually agreeable to having their spouse inherit their LLC ownership interest in case that member unexpectedly dies. However, every so often our Phoenix business law firm sees a situation where a relative or outside third-party has strong concerns about the surviving spouse taking over the LLC or otherwise has a strong preference in not being forced into doing business with the surviving spouse. Take a recent situation our Arizona emerging business law firm was asked to work on.   The single member LLC owner (we'll call him "SM") of a growing and highly profitable business…
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