Do I need to hire an attorney to create an LLC?

36 Replies

I need to create an LLC for financing as well as liability reasons. This thread isn't about the pros and cons of forming an LLC.

Rather, my question is:

Should I hire an attorney to do it "right", or is it good enough for me to do it myself, or something inbetween?

It's not that I want to save every penny, I'm just wondering if attorneys will charge too much for something that doesn't take too much effort and knowledge to do on my own. At the same time, I don't want to screw it up and open myself to future problems due to doing it on my own.

@Jeff L.

That will depend on who you ask. I would like to suggest an audio book by Garret Sutton. He was a "Rich Dad Poor Dad contributor". If you cancel your subscription to the audio for free. I have all his audio books on real estate and running a business. It is excellent as a baseline. If you use a company like company corp it is easy and affordable. Folks like said author do not advise such practices and believe you should use an attorney. The claim I have heard is that LLC are highly customize able and the operation agreement needs to be setup properly. I have used the company corp to setup 3 LLCs and one C-corp. No problems, but I also have never been suede. If I had to do it again, I would go back to the Company corp. Just my opinion.

Will this is be a single member LLC? How much do you know about running an LLC, the required formalities, and under what circumstances it might be pierced?

Do you now how to create an operating agreement?

If you don't know you should see an attorney and perhaps a good CPA familiar with real estate. 

I recommend you don't simply rely on an attorney. I suggest you educate yourself on some of the issues above so that you can better work with your legal and accounting professionals. I recommend the NOLO Press site

Originally posted by @Ned Carey :

Will this is be a single member LLC? How much do you know about running an LLC, the required formalities, and under what circumstances it might be pierced?

Do you now how to create an operating agreement?

If you don't know you should see an attorney and perhaps a good CPA familiar with real estate. 

I recommend you don't simply rely on an attorney. I suggest you educate yourself on some of the issues above so that you can better work with your legal and accounting professionals. I recommend the NOLO Press site

I have read a lot about the basics of LLCs, piercing the veil, etc.. It will probably be a single member LLC. There are templates to create an operating agreement. There don't seem to be as many requirements as other types of corporations in terms of holding meetings and stuff like that.

Originally posted by @Account Closed :

@Jeff L.

That will depend on who you ask. I would like to suggest an audio book by Garret Sutton. He was a "Rich Dad Poor Dad contributor". If you cancel your subscription to the audio for free. I have all his audio books on real estate and running a business. It is excellent as a baseline. If you use a company like company corp it is easy and affordable. Folks like said author do not advise such practices and believe you should use an attorney. The claim I have heard is that LLC are highly customize able and the operation agreement needs to be setup properly. I have used the company corp to setup 3 LLCs and one C-corp. No problems, but I also have never been suede. If I had to do it again, I would go back to the Company corp. Just my opinion.

 Thanks for your perspective on setting it up through an online service. I don't know if I trust them enough in place of an attorney though. I'll check out Garret Sutton's audio books.

@Jeff L.

As robert has said garrett sutton has a lot of great info out there to really since he breaks it down to laymen terms it had really helped me get a great understanding of what i wanted to do personally. I had the same question as you did and after doing my own research i decided to use a professional to set up my LLC.

Originally posted by @Nick Doria :

@Jeff L.

As robert has said garrett sutton has a lot of great info out there to really since he breaks it down to laymen terms it had really helped me get a great understanding of what i wanted to do personally. I had the same question as you did and after doing my own research i decided to use a professional to set up my LLC.

1) What did the attorney do for you that you couldn't have done on your own?

2) What did the attorney do for you, did he file everything with the state or did he just draft something for you and have you mail it yourself?

3) It is a one time event where he sets it up and gives you some advice and then you're off on your own, or is there continual service? If the latter, do you pay for the continual service?

4) If you were to do another LLC, would you have the same attorney do it for you or would you be comfortable setting it up yourself?

5) How much did the attorney charge you?

As a finance company, your operating declaration will need a little more than the standard real estate or operational LLC language. I'd say get an attorney, just make sure it's not one that is ripping you off.

I have a good attorney I work with on California matters in the Pasadena area. Send me a message if you'd like his contact info. 

Originally posted by @Samuel R. Harden :

As a finance company, your operating declaration will need a little more than the standard real estate or operational LLC language. I'd say get an attorney, just make sure it's not one that is ripping you off.

I have a good attorney I work with on California matters in the Pasadena area. Send me a message if you'd like his contact info. 

I'm not a finance company though. I'm just an investor creating an LLC to hold my properties in, that's all.

Jeff, it depends on your state whether you need an attorney or not.  I do know CA is one of the worst states in the country from a tax standpoint and is unfriendly to business in other ways. 

Go to the CA secretary of state website and read about the steps for forming a LLC or corporation there to determine if you think you need an attorney or not.

Originally posted by @Jeff L. :

1) What did the attorney do for you that you couldn't have done on your own?

2) What did the attorney do for you, did he file everything with the state or did he just draft something for you and have you mail it yourself?

3) It is a one time event where he sets it up and gives you some advice and then you're off on your own, or is there continual service? If the latter, do you pay for the continual service?

4) If you were to do another LLC, would you have the same attorney do it for you or would you be comfortable setting it up yourself?

5) How much did the attorney charge you?

Since my name was mentioned, I thought I would shed some light on some of the questions you may have on how an attorney may help you with your LLC formation;

1) Everything an attorneys does can be done by a person representing themselves. There isn't anything magical an attorney can do that a savvy businessman cannot do himself. It is more of a question of whether the savvy businessman can do it correct. Many of the templates you find online are unlikely to protect you completely. An attorney's role is to walk you through the types of formations available to you, and determine what works best for you based on your needs. You may not want an LLC.

2) The extent of attorney services are dictated by the Retainer Agreement. An attorney will do however much you want them to do and are willing to pay for.

3) Depends on what you set up with your attorney. In my opinion, it is good to have an attorney continue to represent you with your business. When you come up against legal problems, that attorney will be far more familiar with the underlying issues than someone else you bring in.

4) Skip.

5) The cost of an attorney varies with experience and locality. The cost of incorporation can be as little as $400 in some places, while as high as $4,000 in others. I would recommend sitting down with an interviewing attorneys to find a good fit.

I am not a licensed attorney, nor an accountant. However, here's what I would consider. One, go to incorporate . com to incorporate your LLC. Just get the starter package, you do not need the bells and whistles. Next, go to the IRS . gov web site and you generate your FEIN for free. Finally, go to rocketlawyer . com to create an operating agreement for the LLC. Rocket lawyer offers a ten day trial so it will not cost you anything for the operating agreement if you cancel within the trial. This should not cost more than a few hundred dollars to form and setup the LLC. As for the tax situation, you need to check with your accountant for that. Finally, do not forget to get proper insurance on your property.

I think you are better off with hiring an attorney. The reason is they will to help you with the minutes that you might to provide and other types of fillings that you might have to do. You don't want to do something to lose your corporate veil.

Originally posted by @Jamal White :

I think you are better off with hiring an attorney. The reason is they will to help you with the minutes that you might to provide and other types of fillings that you might have to do. You don't want to do something to lose your corporate veil.

For an LLC, there are no minutes or shareholders, just members.

Rather than hiring an attorney, you can use an online service like LegalZoom. They hand-hold you through the LLC creation process, have a lot of resources for homeowners and hook you up with a few hours phone consultation with an attorney. My family owns a business in CA and we used them to get set up. Everything went smoothly and costs weren't too bad.

@Jeff L.

With all do respect, I think some of the comments here are exactly why you should get council to help you set it up and operate it cleanly. It's not about being perfectly bullet proof but deterring would be attackers in the first place. For example, you absolutely want to take minutes as an LLC to show that you are a fully functioning business. They show when and why you made decisions.

I setup my first LLC myself after reading a few books and doing some research, but then paid to have it cleaned-up after a few years when I learned where my gaps were. All future work was/is through the law office. Also, the law office I use is also my registered agent service which is nice.

I think that entity structuring for REI anything is always something that needs to be done professionally. Because if done wrong, the tax implications alone could wipe out a ton of cash. You may not necessarily have to have an attorney do it though....there are other entity specialists of sorts and even your accountant might be able to help. I wouldn't do it yourself though, because there are too many ways to goof it.

Originally posted by @Ned Carey :

Will this is be a single member LLC? How much do you know about running an LLC, the required formalities, and under what circumstances it might be pierced?

Do you now how to create an operating agreement?

If you don't know you should see an attorney and perhaps a good CPA familiar with real estate. 

I recommend you don't simply rely on an attorney. I suggest you educate yourself on some of the issues above so that you can better work with your legal and accounting professionals. I recommend the NOLO Press site

 Great answer Ned, I am for educating myself before speaking to attorneys.  Maybe just me been a businessman or the added experience of paying an attorney for advice on a certain issue that turns out proving I knew more about the law on that particular matter than he did..!!

Do you now how to create an operating agreement? That is the tricky part,..,

Most my commercial lenders want that document redrawn or modified on legal review....cause the LLC docs with the State are just a boiler plate! My current clients LLC Operating agreement talks about his food service company but gives him no right to encumber Real Estate or acquire Real Estate in the LLC??/ Made sense when he started in the Food Service business. My suggestion is get a good RE lawyer or steal a good copy - one that someone paid a lot of money for and then change the names to protect the guilty and damn the innocent :-) Note to Self - Divorce lawyers and Criminal attorneys may have gotten you out of jail - but they do not know RE Law...so have someone who practices RE law do the docs...or the title company will jam you up at closing....when they do not like the LLC docs......