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

Michael Coates

May 28th, 2013

Agreed, online is easy and as long as it's only a couple of people, it should be simple.  You can always go back and file a revised operating agreement if it gets more complicated.

Blake Caldwell

May 29th, 2013

Definitely legal zoom. Lona adds an important tidbit about articles of incorporation and by laws. Those don't have to be done beforehand though. 

Anonymous

May 29th, 2013

I'd go ahead and do the initial state and federal incorporation yourself.  I've formed three companies and did it myself this last time and it was actually more efficient for me to do it myself and just send the confirmation paperwork to my accountant.  The only part I outsourced was the "publishing" requirement NYS has, which means a new company has to run an ad in a location paper for a few weeks announcing the formation.  Since it's just you for now, you also may want to consider and LLC with a S-Corp election.

Regarding incorporation in Delaware, the advice I've always received is that if you're operating in another state and are a small company, it usually makes more sense to form the company in the state you're operating in, as you'll be obligate to file taxes in your operating state.  In this case filing in Delaware then just adds to the administrative burden.  I'd be interested in others' experience along these lines as well.

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.

Kristann Orton Helping clients design at the intersection of business goals and technology needs | Innovation Catalyst

May 28th, 2013

I did one online just through the .gov small business website. I did another one through a professional. The latter cost $750 and I do not think it was worth the money because frankly, the process was really easy. I would save my legal $$’s for things like creating contracts with suppliers or bringing on partners. My $.02.

Van Chappell

May 28th, 2013

I'm planning on forming an LLC and using the Slicing the Pie structure that Mike Moyer has written about.  Seems easy enough to convert to a S or C Corp down the road when I'm ready to take on funding.  I haven't decided on whether to use an attorney for the formation documents....but I'm inclined to use an attorney.  1500-2000 seems about right from the folks I've spoken with.

Oussama Sekkat

May 28th, 2013

Thank you all so much for very valuable feedback. 
Yes, so I'm a solo founder. I have released an app in the AppStore, and considering releasing more. I thought an LLC or some other legal structure would be useful for legal protection, tax deductions (if the app gets some traction, I'll start paying a considerable amount in server fees), and brand name. 

It seems to me that for now, it would make sense to just do it online. If down the road I want (and can) hire employees or raise funding, I'll have to convert it to a C-corp. 

One more thing: it seems that incorporating in DE makes sense only for a C-corp. So for the LLC, should I create it in my state (CA)?