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.
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.
OK a little story about why I recommend getting educated, before working with an attorney.
My first LLC was created by the title attorney handling my first rental purchase. I didn't understand some things in the operating agreement, so we had a meeting to discuss it. Evey time I asked him a question his answer was "don't worry about it it's jut boilerplate". He then said "Did you read it?" I answered "Yes that is why we are having this meeting. Did you read it?"
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.
Hi Jeff, in Ohio you can simply and easily get an LLC by applying online with the secretary of state, nominal filing fee. Sorry not sure about California, if you do have the capacity to do it online, I do not think their is any additional benefit of using an attorney f you do not need one.
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, I want to add one more thing, you should defiantly seek legal counsel in case you have technical questions and you ave other entities that may somehow impact this future LLC, but an LLC is a pass through and offers one layer of protection, depending on how much protection you are seeking you may want to review your position with counsel. Defiantly speak with a tax advisor to define the tax ramifications associated with the LLC and if you even need it, you may need another structure entity if your current financial position is structured in a special way. Always ask, does not mean you have to use them.
In Ohio the registration itself is very easy and most people can handle it on their own. I'd recommend you consult an attorney to draft the operating agreement though. This is even more true if you jointly own the LLC with one or more partners.
In Wyoming setting up an LLC is very easy and you can get the forms online at the secretary of states office. You can buy pretty good book kits from places like Corpex or other stores for LLCs Corporations, Limited companies, etc. The biggest problem is not really understanding how they work and what you do to keep the corporate veil in place. You should read up on the entity you want. A good attorney will tell you what you need to do to keep up corporate formalities, but it is better if you understand why. The company structure you create is only as good as your maintenance and following of the rules of operation. Operating agreements depend on your purpose. If you only plan on doing real estate many of the boiler operating agreements are fine.
it's worth it to pay for an attorney so that you are positive it's set up correctly. When you're dealing with extra zeros that comes along with real estate paying attorney is a small price to make sure that you're protected.
it's worth it to pay for an attorney so that you are positive it's set up correctly. When you're dealing with extra zeros that comes along with real estate paying attorney is a small price to make sure that you're protected.
Lance and others, I agree with the principal - Don't cheap out on legal fees. However the story I mentioned a few posts up was from an attorney that charged me $1,000 to spit out boilerplate without much advice. Price is not necessarily an indication of the quality of service you are getting.
That is why I recommend learning something about the subject before consulting an attorney.
You might want to ask your attorney just how protected a person is these days with an LLC in your state. Its the right thing to do, but dont think your untouchable. Lawyers call it "piercing the corporate veil."
Well, as Jerry mentioned, operating agreements depend on the purpose.
As to the filing, your first decision will be thinking down the road about what you will be doing and consider what you might do, are you going to be a member managed LLC or a manager managed LLC? There are pros and cons to each, don't just assume assume which is better for you.......as Ned mentioned, learn the differences first.
While Articles and an operating agreement can be amended, it can be more expensive backing up and heading off in another direction or correcting aspects that should or could have been accomplished from day one, with more thought as to what the future may hold.
You're giving birth to an alter ego, unlike kids, we can form the LLC to adapt and grow in as we want them to, it's the planning I'd say most miss. Many default to operating as they might themselves, not taking minutes or notations of business actions, buying or selling things, making deposits or withdraws casually, you have to remember your LLC isn't you. It's as if you are the trustee, or the parent of this separate entity and it cannot act without you.
Don't get carried away with that standard phrase "and to do all things allowed by law" if you veer off into other business areas that are not usual and customary for your defined business purpose you can find trouble, it might be legal to do something but it may not be appropriate. For example, a buy and hold operation begins buying notes, buying notes can put you in a position where you're not operating in the intended purpose of your entity.
We use many different investor strategies in real estate and opportunities arise where you might want to partner with others, it might be a contractor, a finance guy, another landlord or a homeowner. The time frame of working with others can vary, say for 3 days or 3 weeks or months, could be years. The operating agreement should address possible arrangements, how you admit another member, events of withdrawal, voting rights (might think in terms of a corporation with preferred and common stock as to voting rights), buy-sell arrangements and authorizations granted to members or managers.
A good attorney isn't just a lawyer they are also planners that can map out the direction of operations, they can be the gatekeeper that allows flexibility but keeping you on the main track.
If you fail to address some matter as to taxes or operations, state or federal law may default to how that matter is addressed, that may not be your intention or desire and not understanding issues can really cause problems, for you, others or heirs. Not only will your attorney be aware of these issues but they will likely know how the local courts will make determinations, you probably don't.
Good legal advice is like insurance, we don't like paying for it until something happens and then it pays to have it. Unlike insurance, legal advice is an investment, it stays with you and allows you to benefit from the dividends for years to come, and it's probably much cheaper than insurance in the long run.
Do you really need an attorney? After you get past that first question of management, you probably can file the Articles yourself, a monkey can do that (they can fly rockets so why couldn't they?). That's where the operating agreement comes in and at that point, to have a flexible, well managed operation, you probably need consultation with your attorney. Don't be penny wise and pound foolish. :)
Lots of good replies.
Yes, easy to do yourself, and you should. But you still need education and an understanding of how it works. Lots of good books out there. But you should probably have a good relationship with a RE attorney to cover you.
And, before contacting an attorney about LLCs, read up on them so you can ask intelligent questions.