LLC registration, Lawyer, myself, or online service
January 20, 2014 8:30 AM   Subscribe

I would like to register a single member LLC for the purpose of selling a software I developed and other programming related services. I was quoted , by a lawyer, 600 dollars on top of state registration fees. For consultations they charge around 400 an hour. There are several services I saw online where you pay for a monthly subscription and they claim you get free or cheap access to lawyers , and the LLC registration there is only 100 dollars (legalzoom, rocketlawyer,nolo etc) I could also fill out and send out the forms myself, but then I have to worry about the operating agreement etc. So, one idea I had was to bargain with the lawyer to include some hours of discounted consultation if I used them for the initial registration. But I am open for suggestions!
posted by spacefire to Law & Government (11 answers total) 3 users marked this as a favorite
Best answer: This is my day job. Feel free to MeMail me.
posted by griphus at 8:39 AM on January 20, 2014

$400/hour seems pretty high. How many lawyers did you get quotes from?
posted by sparklemotion at 8:41 AM on January 20, 2014

(Also, I see you're in NYC. If you plan to set this LLC up in NYC, be aware there's a publishing requirement for all LLCs that has additional costs involved depending on the coutny where you'll be filing.)
posted by griphus at 8:43 AM on January 20, 2014

get griphus to do it.
posted by bruce at 9:13 AM on January 20, 2014 [3 favorites]

Just in case griphus explodes, evaporates, or otherwise becomes unavailable -- I used nolo when I (grudgingly) set up my LLC.

It went fine.
posted by ook at 9:49 AM on January 20, 2014

FWIW: I used Legalzoom to create my LLC, and everything seemed to go quickly and smoothly. There were lots of OTHER things about creating an LLC that didn't (state requirements, tax stuff) but the initial "getting it done" with them was just fine.
posted by griffey at 9:50 AM on January 20, 2014

$600 is about right for this in NYC. The hourly rate is high though; you should be able to find someone for $200-$300/hr, depending on experience.

A few points:

1. As griphus says, if you're in NY, there's a publication requirement. In Manhattan, publishing is about $1200 (about half that for Brooklyn), but there are work-arounds (e.g. use a registered agent in Albany). Ask the attorney about this, if you decide to go with an attorney, or research it yourself. Legalzoom typically does not handle publication as part of their LLC formation process.

2. Determine if you actually need an LLC. This would generally be if you have personal assets that you want to protect. You don't need a business entity in order to have a "business," get an EIN, or deduct expenses for tax purposes.

Many attorneys will do a free consultation. I form LLCs and advise on other small business legal matters for side income. I (and my friends who also do this type of work) would generally talk to you about your situation (business sector, expected revenue, expenses, your personal assets, your funding plans, employees, etc) and give the run down of the pros and cons of forming an entity and the consequences of choice of entity without charging you. Or, as you said, charge you but credit it against the formation fee. If your attorney is charging you $400/hr for this, I'd find someone else. You don't want a lawyer who will nickel and dime you. I give about 70% of my legal advice for free (enough so that you understand why you'd want a lawyer for the other 30%, for which I charge accordingly).
posted by melissasaurus at 10:34 AM on January 20, 2014 [1 favorite]

Yeah, you don't need a lawyer, for starters. Just incorporate in Delaware and use Incorp or some such. It's cheesy but it's easier than doing the paperwork yourself.

You're a single-member LLC; if you need to, you can reformulate later to issue equity or what-have-you.
posted by RJ Reynolds at 11:44 AM on January 20, 2014

Just incorporate in Delaware...

Careful with this! Most (if not all) states require that you qualify an out-of-state entity in their state if you plan to do business with that entity within the state. The question of what counts as "doing business in that state," can get tricky. It's one of my default "talk to a lawyer or CPA, not me" questions like "is an LLC or corporation better?" or "what sort of protection does an LLC grant me?"

(Also you'll need a registered agent if you're setting up in DE, unless you've got someone over there willing to accept service of process for you.)
posted by griphus at 11:50 AM on January 20, 2014 [1 favorite]

I, being a lawyer, have a different take on this. The real question comes down to what do you want the LLC to do for you. The governmental requirements to show an LLC exists are pretty simple and Nolo, Griphus, or some such service can walk you through them pretty easily.

But getting your full bang for your buck out of an LLC so that it actually protects you if you're sued or you go bankrupt, or you want to get your full tax avoidance is a completely different beast and requires a lawyer who really understands your goals, and, honestly, probably a bit of a lifestyle change on your part. The real work is in the operating agreement and knowing how to show that your business is running in such a matter that it gives the operating agreement life.

To put things in perspective, when I still did this type of work at a former law firm we never charged $1000 for an LCC. I generally charged between $3,000 and $10,000 depending on the complexity. A lot of our operating agreements were around a hundred pages long and had another 50 or so pages of supplemental documents (trusts, wills, linked financial documents, dividend agreements, and on and on) depending on what the goals of the business owners.

A good lawyer will be asking you all sorts of uncomfortable questions you don't want to deal with and which you will feel like are a waste of money. They aren't a waste of money. Right now you're asking for a one person LLC, for instance. I think one person LLCs are almost a waste of money and I would push you hard to find another person, preferably more, to get involved for all sorts of strategic reasons in cases of litigation.

A lot of time I hear people talking about LLCs or Corporations as if they're interchangeable things like cardboard boxes of the same size you just "dump a business into". That's not really the case at all, they are more like houses you move into and you need to make sure the house is suited to your lifestyle has a solid roof, the proper insulation for your climate, the number of bedrooms you need, and a kitchen that suits your needs.

It may be that the "cardboard box" is really all you need. But no one here can answer that question, if you're confident in the lawyer pay the $400.00. But watch out, a lot of lawyers are happy to give you the cardboard box because they know you're willing to pay the $1000.00, but will go to a cardboard box guy if they tell you the cost of what you really need.
posted by bswinburn at 12:24 PM on January 20, 2014 [6 favorites]

Registering an LLC is easy. Anyone can do that in about 30 minutes.

Registering an LLC that does what you want it to is hard. You'll need a lawyer for that.

Not all operations justify the creation of a business entity. If your business doesn't generate enough revenue to make $1,000 affordable, one wonders if it's worth bothering. LLCs aren't things you create for the hell of it, they're things you create to do specific things for specific reasons based on your specific facts.
posted by valkyryn at 5:29 PM on January 20, 2014 [2 favorites]

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