LLC · Company

What is the best way to create an LLC?

Oussama Sekkat

May 28th, 2013

 Would you recommend doing it online (legalzoom, nolo etc..) or hiring a professional to do it?

Michael Barnathan

May 28th, 2013

Just go to your state's website and file the form, then fill out the IRS's application for an EIN. It's really easy in most states, and typically costs about $100.

Michael Barnathan

May 28th, 2013

You can always amend your articles of incorporation. Spending a lot to protect against legal liability in the very beginning is an example of premature scaling - no one is going to sue you until you're large enough for them to care.

Jesal Gadhia

May 28th, 2013

I would recommend doing it yourself or in my case I had a professional do it for me since we had a need for a monthly retainer with an accountant anyway. 

By the way, on a tangent, you might find this interesting: https://itunes.apple.com/us/app/nosh/id442976546?mt=8

Meghan Conroy

May 28th, 2013

call company corporation

Joe Keenan Digital Strategist

May 28th, 2013

I agree with Michael.  I had an estimate from a local accountant for $1000, and did it directly on the state website for 125.

Brent Goldstein

May 28th, 2013

I'd say it depends on whether you are a sole-prop or will have partners. The real value of an attorney is the experience and consulting for creating a partner agreement. Even if you think you have a great relationship with prospective partners, this is business and it's really best to have an agreement in place that meets your long-term business objectives. Many people get by fine with do-it-yourself, but it's like insurance. If you need it, your glad you have it.

-Brent

Lona Duncan

May 28th, 2013

I'm actually on the same boat and deciding whether to incorporate through legalzoom or hire a startup attorney.  The last company I incorporated through a law firm ended up costing $20K in legal fees before we even had a product and customers so I'd love to get some advise as well in terms of maybe going for a hybrid model.   For example can one incorporate through legalzoom and then hire a firm to draft the agreements that the startup should have in order to engage contractors, hire employees etc. 

Here is some advise I was given by a friend who is a startup attorney.

"Legal zoom is probably the cheapest route and that is probably fine if you are the sole owner, but before you start adding additional stockholders or board members you should have an attorney draft robust articles of incorporation and bylaws, in addition to keeping accurate board minutes.  Better to pay up front than to pay 10x more down the road. 

Also, you should note that following corporate formalities of a corporation is one of the factors considered when determining a corporation's limited liability down the road if someone ever tries to "pierce the corporate veil" and goes after you personally for company liabilities.  This means formal board resolutions should be drafted for issuing stock, adopting bylaws, appointing directors and officers, approving material contracts, approving officer salaries or company dividends to stockholders etc.  A lawyer should help you with this as well.  Separate bank accounts for Company matters should be used as well."

Robert H Lee

May 28th, 2013

DYI can make sense, but only if you have a lot more time than money and only for specific cases. I wouldn't use a large, brand name law firm, because a few thousand dollar client is hardly worth their attention. I use a solo guy like Derek Yu, who charges about 80% less than the big law firms and used to work at one of the big firms, e.g., about $1500 for incorporation.

http://www.corporateestatelaw.com

Umed Latifov New Ventures

May 28th, 2013

Just in case you are trying to decide LLC vs. Corporation here's my story. I am not providing a legal advice here, but going through a costly process myself this is what I learned: 

If I plan to fundraise down the road and add people/co-founders to the team and give them equity in the company, I would set up a Delaware based corporation by utilizing companies like: RASI (www.rasi.com). I would authorize standard 10MM shares and issue 6MM and distribute the 6MM according to ownership %s. Delaware provides one of the most flexible incorporation laws in terms of voting, transfers, governance, investing, etc. Plus, a corporation allows me to grant or sell shares to new team members (note: "sell" is for nominal amounts like  .0001 cent/share and doesn't mean profit making here). This structure also allows you to have the standard 4year/1cliff vesting language for the equity and makes it pretty straight forward and transparent. Hope this helps.



Kym McNicholas TV Host, Tech Jounalist, Director of Extreme Tech Challenge, Host of KDOW Radio's NewFocus On Innovation

May 28th, 2013

Professional and I just went through Royse law firm! Love them!!! Roger Royse is awesome! Sent from my iPhone