DIY LLC in NY
September 16, 2009 9:55 PM Subscribe
Has anyone successfully performed do-it-yourself LLC formation in New York (NYC)? Personal experiences with any kits or (especially) free templates that are out there?
I've seen the Nolo site, as well as the stuff at ilrg.com To my eye, it definitely looks like the kind of thing you can do on your own, particularly if you're just one person, and not a partnership. (I do have a lawyer, and an accountant, and I will consult them - so please hold those sort of comments.) I'm looking for personal experiences here, and intend to get to the point where I feel I feel competent before putting myself in the hands of expensive professionals.
I've seen the Nolo site, as well as the stuff at ilrg.com To my eye, it definitely looks like the kind of thing you can do on your own, particularly if you're just one person, and not a partnership. (I do have a lawyer, and an accountant, and I will consult them - so please hold those sort of comments.) I'm looking for personal experiences here, and intend to get to the point where I feel I feel competent before putting myself in the hands of expensive professionals.
I can't act as your attorney, and don't purport to be offering legal counsel here - but I have a suggestion to go with.
As an attorney, if you're trying to save cash, what I might do, is find somewhere to get the forms for free - there are two forms that you'll generally need just to set up the thing (exclusive of considering tax issues and the like). You'll need a certificate of formation and an operating agreement. The cert will form the entity, and the OA will set rules governing its operation - like, allocations of profit and loss (as it will most likely pass taxes through to members), what will cause it to be dissolved, who will make decisions if there are more than one member - and the like. You can usually download these forms for about $30 from Blumberg or elsewhere.
I'd take a crack at drafting them to your needs from the form, then prepare a list of business points and take both to your lawyer. They can work from there much more efficiently. Tell them up front you don't want them to spend more than an hour or two reworking your draft and that it doesn't need to be perfect - it just needs to do what you want it to do. Tell them all you need is for them to make sure it does the business things you want it to do, that you're protected from liability to the extend possible (you may be liable beyond the assets of the business, and you'll want to discuss that with them), and that they should warn you of risks - but that you don't want them to nitpick.
I think people don't realize they can be very demanding about legal services - and that they can do some work up front. For most things, you might not want to do an initial draft - it will take the lawyer so much revision that you're better off letting them do it. But if you work from online forms for a simple LLC, there's no reason that can't save you money on the parts you can do yourself.
You'll likely want a seperate tax ID for your entity, even if you pass taxes through it, to open bank accounts and the like. File for free online at irs.gov.
posted by mccn at 5:44 AM on September 17, 2009 [2 favorites]
As an attorney, if you're trying to save cash, what I might do, is find somewhere to get the forms for free - there are two forms that you'll generally need just to set up the thing (exclusive of considering tax issues and the like). You'll need a certificate of formation and an operating agreement. The cert will form the entity, and the OA will set rules governing its operation - like, allocations of profit and loss (as it will most likely pass taxes through to members), what will cause it to be dissolved, who will make decisions if there are more than one member - and the like. You can usually download these forms for about $30 from Blumberg or elsewhere.
I'd take a crack at drafting them to your needs from the form, then prepare a list of business points and take both to your lawyer. They can work from there much more efficiently. Tell them up front you don't want them to spend more than an hour or two reworking your draft and that it doesn't need to be perfect - it just needs to do what you want it to do. Tell them all you need is for them to make sure it does the business things you want it to do, that you're protected from liability to the extend possible (you may be liable beyond the assets of the business, and you'll want to discuss that with them), and that they should warn you of risks - but that you don't want them to nitpick.
I think people don't realize they can be very demanding about legal services - and that they can do some work up front. For most things, you might not want to do an initial draft - it will take the lawyer so much revision that you're better off letting them do it. But if you work from online forms for a simple LLC, there's no reason that can't save you money on the parts you can do yourself.
You'll likely want a seperate tax ID for your entity, even if you pass taxes through it, to open bank accounts and the like. File for free online at irs.gov.
posted by mccn at 5:44 AM on September 17, 2009 [2 favorites]
When I've looked into forming an LLC I chose to use a lawyer under the theory that paying money now to a lawyer would be less expensive than remedying mistakes I may make on my own.
Depending on your background this may be a viable argument for using an attorney to form the LLC.
posted by dfriedman at 6:25 AM on September 17, 2009
Depending on your background this may be a viable argument for using an attorney to form the LLC.
posted by dfriedman at 6:25 AM on September 17, 2009
I like mccn's advice quite a bit; it ensures that you have someone that knows what they're doing look over everything to make sure it's in order, but you'll save a fair bit on legal fees.
posted by craven_morhead at 6:52 AM on September 17, 2009
posted by craven_morhead at 6:52 AM on September 17, 2009
I used LegalZoom for all of the process. They walked me through it soup to nuts for what I recall was a reasonable fee (I was looking to do this on the cheap recognizing that you get what you pay for).
posted by JohnnyGunn at 6:54 AM on September 17, 2009
posted by JohnnyGunn at 6:54 AM on September 17, 2009
I bought an LLC kit from Nolo Press. If I remember right, it was basically software that walked you through the decisions and then automatically filled out the appropriate form for your state. Once I had my form filled out, I went to my state's web site to see if I could email it and found out that they had a similar program online, so I did the final form-filling there and got incorporated for $87.
posted by PatoPata at 7:04 AM on September 17, 2009
posted by PatoPata at 7:04 AM on September 17, 2009
Just a note - I believe NY has a newspaper publishing requirement, and that can get expensive.
(I set up mine in NJ, since I live just across the bridge, and there was no such requirement. I just used a book, which I would be happy to let you borrow if you are convenient to 200 Varick st.)
posted by bashos_frog at 7:17 AM on September 17, 2009
(I set up mine in NJ, since I live just across the bridge, and there was no such requirement. I just used a book, which I would be happy to let you borrow if you are convenient to 200 Varick st.)
posted by bashos_frog at 7:17 AM on September 17, 2009
bashos_frog is right - there is a publication requirement - something you'll want to talk to your attorney about.
posted by mccn at 9:25 AM on September 17, 2009
posted by mccn at 9:25 AM on September 17, 2009
Response by poster: Thanks to all for the advice. I probably should have been more verbose in explaining that I already intended to do exactly what mccn suggested - that is, go through everything myself via a cheap or free template, then pay an attorney some (hopefully) minimal fee to make sure it's right.
Having seen some of the forms out there, it appears that the Articles of Organization ("cert" in mccn's post) seems to be totally plug-and-play. The Operating Agreement appears slightly more complex, and is sensitive to whether you're a member-managed or manager-managed LLC, single- or multiple-member, etc.
What I was really looking for was first-hand positive experiences with individual forms/kits, specifically in the context of New York. It sounds like LegalZoom and Nolo both got the thumbs-up.
p.s. - Yes, NY has a publication requirement. And apparently, it's county-specific - meaning that in NYC you *have* to use the Times... meaning it will run you around $1500. Fun.
posted by meeotch at 10:27 PM on September 17, 2009
Having seen some of the forms out there, it appears that the Articles of Organization ("cert" in mccn's post) seems to be totally plug-and-play. The Operating Agreement appears slightly more complex, and is sensitive to whether you're a member-managed or manager-managed LLC, single- or multiple-member, etc.
What I was really looking for was first-hand positive experiences with individual forms/kits, specifically in the context of New York. It sounds like LegalZoom and Nolo both got the thumbs-up.
p.s. - Yes, NY has a publication requirement. And apparently, it's county-specific - meaning that in NYC you *have* to use the Times... meaning it will run you around $1500. Fun.
posted by meeotch at 10:27 PM on September 17, 2009
This thread is closed to new comments.
posted by caddis at 11:36 PM on September 16, 2009