A Limited Liability Company (LLC) is a separate legal entity that can conduct business just like a corporation with many of the advantages of a partnership. It is taxed as a partnership. Its owners are called members and receive income from the LLC just as a partner would. There is no tax on the LLC entity itself. The members are not personally liable for the debts and obligations of the entity like partners would be. Basically, an LLC combines the tax advantages of a partnership with the limited liability feature of a corporation.
An LLC is formed by filing articles of organization with the secretary of state in the same type manner that articles of incorporation are filed. The articles must contain the name, purpose, duration, registered agent, and principle office of the LLC. The name of the LLC must contain the words Limited Liability Company or LLC. An LLC is a separate legal entity like a corporation.
Management of an LLC is vested in its members. An operating agreement is executed by the members and operates much the same way a partnership agreement operates. Profits and losses are shared according to the terms of the operating agreement.
Phoenix, Arizona Operating Agreement: A Comprehensive Guide for States Adopting the Uniform Limited Liability Act and Revised Uniform Limited Liability Act In Phoenix, Arizona, the Operating Agreement serves as a crucial legal document for Limited Liability Companies (LCS) operating under the Uniform Limited Liability Act (UCLA) or the Revised Uniform Limited Liability Act (SULLA). The Operating Agreement outlines the internal workings, rights, and responsibilities of the company's members, as well as the distribution of profits and losses. 1. Understanding the UCLA and SULLA: The UCLA and SULLA are statutory frameworks that several states, including Arizona, have adopted to regulate LCS. These acts provide a set of default rules in the absence of an Operating Agreement but allow companies to customize their agreements to suit their unique needs and preferences. 2. Basic Components of a Phoenix Operating Agreement: Though the content of an Operating Agreement can vary, the following key elements are commonly addressed: a. Identifying Information: The agreement begins by stating the full legal name, address, and principal place of business of the LLC, along with the names and addresses of the members. b. Members' Interests: It outlines the members' percentage ownership interests and their respective capital contributions. c. Management Structure: The Operating Agreement specifies whether the LLC will be managed by its members (member-managed) or designated managers (manager-managed). d. Voting Rights and Decision-Making: The agreement clarifies the decision-making process, voting requirements, and any restrictions on members' actions. e. Profit and Loss Allocation: It defines how profits and losses are divided among members and provides mechanisms for distribution. f. Transfer and Assignment: The agreement addresses restrictions on transferring membership interests and outlines the procedures for adding or removing members. g. Dissolution and Liquidation: If the LLC faces dissolution, the Operating Agreement specifies the steps to be taken, including the distribution of assets and any liabilities. 3. Unique Types of Phoenix Arizona Operating Agreements: a. Single-Member Operating Agreement: Designed for LCS with only one member, this agreement outlines the member's rights, responsibilities, and decision-making powers. b. Multi-Member Operating Agreement: Applicable when an LLC has multiple members, this agreement governs their relationships, profit sharing, and voting rights. c. Special Purpose Operating Agreement: Some LCS may require a specialized operating agreement that addresses specific needs, such as real estate investments, joint ventures, or intellectual property agreements. 4. Importance of a written Operating Agreement: While the UCLA and SULLA provide a legal framework, having a well-drafted Operating Agreement ensures that the LLC's internal affairs are properly addressed. Operating Agreements also help prevent disputes among members by providing a defined set of rules and procedures. In conclusion, the Phoenix, Arizona Operating Agreement for LCS operating under the UCLA or SULLA is a vital document that details the internal workings of the company, guiding decision-making, profit distribution, and member relationships. By customizing these agreements based on their specific needs, LCS can protect their interests and foster successful operations.
