What would a lawyer do that I wouldn't know to do in setting up a single member LLC in Florida?
June 28, 2011 8:44 AM   Subscribe

What would a lawyer do that I wouldn't know to do in setting up a single member LLC in Florida? I want to be smart but also want to save money on what appears to be a fairly simple task.

I'm about to start a single member LLC in Florida. After advising me on which type of company to form, my CPA recommended I go see a lawyer to get it set up or go see a lady he works with in town who has been setting people up for years for about a third of the cost of a lawyer.

What I wasn't able to get out of him though was why exactly I need to pay someone to do this. He kept saying you want to have somebody competent do it right the first time rather than have to pay even more down the road to fix mistakes.

I get that in principle and will go that way if it makes sense, but what I'm trying to figure out is what exactly these professionals would do differently than I would. Or what would they know to do that I would simply omit because I haven't done this before?

Starting a single member LLC with the state looks pretty straightforward. I mean, I can go to the state page where you set it up, I can fill out the form, designate a registered agent, and pay the fee. I know how to get a dba/fictitious. I know how to get a FEIN. I'm the only partner, so I don't need to worry about determining income percentage splits, etc. I'm aware of the ongoing annual requirements. My accountant will be guiding me in handling the books and handling tax prep.

In terms of getting set up though, is there something else that would be filed somewhere else other than at the linked state site? Is there something in this process (in my particular situation) that is screw-uppable, which warrants leaving it in the hands of professionals?

When I look around online I see a mix of advice. Plenty say leave it to the pros and plenty say they did it themselves, that it was easy, and that they haven't had any problems. If I were doing an S corp or had partners or other complicating factors, I'd definitely pay to have somebody else guide me through this just to be safe. But so far I'm not seeing why I need it in this case. I have plenty of other things to pay for as I start up, times will be tight going forward, and I'd love to minimize cost wherever possible/sensible/safe.

Please, entrepreneurs, lawyers, accountants and passionate answerers, I'm not looking for tough love here, just info, and am not trying to insult anybody's profession. I recognize I might not be able to see everything involved here. So what else do these professionals do in the setup process that I can't do or won't know to do that is worth the money? Thanks.
posted by Askr to Work & Money (11 answers total) 4 users marked this as a favorite
 
Nolo's info on Florida LLC with links. (Nolo provides technical assistance to non-lawyers and lawyers interacting with the legal system.)
posted by ClaudiaCenter at 9:02 AM on June 28, 2011


IANYL, and I am not a Florida lawyer.

I think you're looking for a direct how-to here, and I certainly wouldn't give advice on how to do that. Not out of protecting the lawyers' trade or anything, but it'd still be establishing a huge professional risk for someone who gives you that advice. I appreciate that you want to keep costs down by doing it yourself, but if you're going to do it yourself -- you're going to do it yourself.

I would suggest that you do in fact hire somebody to do this for you. Doesn't have to be a lawyer, even -- I imagine that a paralegal can handle something like this, and has a set fee schedule for it, too. They know the ins and outs, but more importantly, they have the professional insurance you can rely on if it doesn't go right.
posted by Capt. Renault at 9:04 AM on June 28, 2011 [1 favorite]


I get that in principle and will go that way if it makes sense, but what I'm trying to figure out is what exactly these professionals would do differently than I would. Or what would they know to do that I would simply omit because I haven't done this before?

I am not your lawyer, and I am not a Florida lawyer, although I am a lawyer in another jurisdiction. Why don't you meet with a lawyer--request a free consultation--find out from the lawyer what he or she could do for you. Better than just guessing. I know what I would say, but I am prevented from doing so by the Rules of Professional Responsibility.
posted by Ironmouth at 9:12 AM on June 28, 2011


I am also not your lawyer, and I'm not a corporate laywer. I agree with Ironmouth that you should contact a competent lawyer in florida and ask for a free consultation regarding what you need. Even big firms are likely to help you with this if you call an associate, since you might later be a good client. They will likely have a flat fee associated with this if it is as simple as you say, and it is not likely to cost you thousands of dollars or anything. They will do it right the first time and they will have insurance that will cover them if they screw it up. They will know, for example, whether you need bylaws or an operating agreement or articles of organization or articles of incorporation and what would need to go into those documents.
posted by dpx.mfx at 9:28 AM on June 28, 2011


IAAL, IANYL. TINLA.

It's a good idea to meet with a local lawyer to find out what extra stuff they might think you need, or might offer to do for you. You don't have to hire them to do it: you might decide that the extras are not worth the money at this point in your business's development.

You may also want to consult a solo or small-firm lawyer as well as (or instead of) a big firm. I've seen several people who got the "new company package" from a large local firm that shall remain nameless, and they paid a sh!tload of money for extremely poor service. You'll generally get a shiny 3-ring binder with nice "engraved" stock certificates and other tchotchkes from such a place (as you do with LegalZoom, IIUC), but you may not get adequate explanation of how things are intended to work.

One of my patent clients mentioned that she was thinking of granting stock to an early employee...turns out, the big-firm setup person hadn't issued any stock to my client, so this early employee was poised to become the sole shareholder.

Just because you hire a lawyer -- even a big-firm lawyer -- doesn't mean you won't get bad advice, or that you'll be better off than if you did it yourself. The fact that lawyers often carry insurance is a bit of a red herring -- my client would never collect from Big Firm's malpractice carrier even if she had accidentally given away her company, and the fight would take away from the business development she wants to be (and should be) doing.
posted by spacewrench at 10:05 AM on June 28, 2011


Spacewatch makes good points; I didn't mean to imply that you should necessarily seek big firm advice. I merely meant to imply that you should not assume you would not be able to get advice from them. The individual lawyer you get hooked up with is much more important that what kind of firm he or she works for.

And any lawyer is going to have malpractice insurance, and that may or may not be something that someone can collect on. But the more general point is, if you do it yourself and screw it up you only have yourself to blame. While if someone else screws it up, you have someone else to blame. And even if you don't get the money from the malpractice insurance, you'd probably get free help in fixing the situation, rather than just being screwed.

You can get good advice and bad advice from any kind of lawyer. Get make sure you get a good lawyer. (Good has nothing to do with how much they cost). What makes a good lawyer depends on what you need. In your case, I'd say that a good lawyer is someone who is going to 1) provide a free consultation that outlines exactly what you're going to need and why you need a lawyer to do it; 2) gets you the documents quickly, without much fuss, and with an explanation of exactly what the documents are, what you need to do on an ongoing basis with respect to them, and does so at a reasonable flat fee; 3) provides an ongoing relationship with you where he or she provides any knowledge and advice that might help you along the way - including potential networking, updates on legal things that might impact your type of work or changes to the law that might impact your bottom line (or your personal pocketbook); 4) be willing to partner with your other vendors, such as accountants when necessary; 5) will provide practical advice that will save you money when appropriate as you grow (i.e. say you end up with 5 employees in a year; I know attorneys who will tell you that means you need an employee handbook and that they'd be happy to draft it for you for thousands of dollars; I know other lawyers who will ask helpful questions like "have you thought about workers' compensation insurance? set up an unemployment account? are you complying with the FLSA?"). Maybe you won't need that in the future, but perhaps it will be helpful.

Anyway, those are some of the reasons you might want to consult a lawyer when setting up companies. When I worked at a big firm, our mid-level associates/jr-level partners LOVED clients like you. Not because they saw you and great money makers, but because they were interested in helping people start businesses. It's a fun thing to do. I imagine lots of solo/small firm attorneys feel the same way. You can use that to your advantage!
posted by dpx.mfx at 10:43 AM on June 28, 2011


Response by poster: I guess I'll call this lady my CPA recommended and ask her these questions. The specific reason I was asking you all was because of course she will think I should use her services. It's why she's in business. So I wanted neutral third party advice from other people who had done what I'm doing and either found set-up help to be necessary or a waste of money.

For the record, I'm not asking for a how-to here. I can google that and did google that and wound up with things like ClaudiaCenter suggested. So I've already go the how-to, and I keep looking for the part of that how-to that requires the lawyer and still haven't found it. I found a handful of steps that looked like I could do them pretty easily and that didn't have vague parts where a novice might screw up out of ignorance of the process or of the law. And that's why I'm here - I don't understand why I would need to pay someone to do these steps for me. But you hear enough people say it and you scratch your head and think maybe you ought to. Or maybe there are other steps that the state resources aren't listing. But then other people are like, "Nope, not necessary. It was easy and I did fine." Like I said, if my situation were at all complicated, I wouldn't even be asking this, but it sounds like I have about the simplest arrangement there is.

If one of you had said, "Well in addition to the stuff you listed, the lawyer drafts a required instrument called a writ of [some Latin word] and files that with the county clerk in a procedural court appearance," I'd have said, "Ah, I see. Yeah, I can't do that and didn't even know that was required." I wouldn't even attempt to try to teach myself how to do it because that sounds very much like something a layman could and would screw up, unlike the very simple online forms to file my articles of organization and get a dba and get an FEIN. So in that case I'd go pay that person to do that thing that I can't do because I'm not a lawyer, probably just as part of a larger setup package of the type you all mention. That's the sort of thing I was looking for here strictly in regard to officially creating the company with the state.

From what you all have said, mixed with the particulars of my situation, the impression I get is that there would be potential and optional advantages to using someone, and that in more complicated cases there could be some real problems if I didn't. I'll see what the LLC lady has to say and what all she offers.
posted by Askr at 1:07 PM on June 28, 2011


It may well be that you are smart enough and have read enough to know all of what needs to be done. It is worth the money you pay to be sure.

Many lawyers will be willing to review documents that you have prepared using these downloaded forms and advise whether anything needs to be modified, at a price that would be lower than drafting them from the outset. Not all would do this, but many would.

And in jurisdictions I am familiar with, the cost of having a lawyer do it from the outset is roughly $500. It is probably not nearly as costly as you fear.
posted by yclipse at 4:32 PM on June 28, 2011


I set up my LLC in Washington state all on my own. It was freakin' trivial.

Since I didn't have any employees, I didn't have to do the federal thing. And I simply filed taxes as an individual (I didn't go the Taxed as C Corp route).

I probably would have retained a lawyer at some point as things became more complex. Maybe Florida is very different from WA, but, frankly, I don't see how you can screw up registering your LLC.
posted by Netzapper at 6:07 PM on June 28, 2011 [1 favorite]


Recently I set up an LLC using a lawyer. Researched it all in a similar way, but in the end I just wanted the peace of mind that everything was written correctly. Since one of the main reasons for setting up an LLC is to limit your liability, you want to do everything you can to make sure your corporate veil is as strong as possible and my lawyer was able to provide useful advice on this.

It really wasn't that expensive either. If you can get it done for a third of the cost of a lawyer, then you likely won't even be laying out more than $100.
posted by jeyb at 11:26 AM on June 29, 2011


Response by poster: For anyone reading this later, I set up my company on my own. It was easy. The whole thing between the state and the IRS took about 15 minutes online because I was going slowly and deliberately. When I got my confirmation the next day, I went and set up a business bank account. Now I'm a functioning company. Just for the hell of it I found a free operating agreement template online and filled in the blanks even though it's just me. Next up is getting QuickBooks and talking to the CPA about setting up the books and keeping track of things properly for tax purposes. The first client check arrives today.

This is Florida and this is for a single member LLC with no office, property, partners nor intention to have employees. If one or more of those things were different, I'd probably have wanted the peace of mind of a lawyer/paralegal. But it was really simple in my case.
posted by Askr at 9:18 AM on July 16, 2011 [1 favorite]


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