Would you use LegalZoom?

AuntPeggy

AuntPeggy

Final Approach
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I have sent in my resignation, but I might be needed from time to time. Hubby may also be working from home for his job and they may want him to be working as a consultant.

I need to set up a consulting firm so I can work for my previous employer. I contacted my lawyer a couple of months ago and asked what needed to be done and he said he would get back to me after looking in to it. Nothing since then.

I went through all the steps with LegalZoom except actually confirming payments and got a bottom line of $567.99 for a LLC registration in Delaware (I once heard that Delaware is where you should register), a Tax ID obtainment, and 500 business cards (just because), and legal forms and some "free" advice.

I can call back my lawyer, but he doesn't do this normally. I can try to find another lawyer who does do this normally, but I'm lazy and uninformed.

I can use LegalZoom or find some other company in town that has off-the-shelf forms.

What would you do?
 
SBA website suggests this:

This includes getting the proper tax registrations, business and occupational licenses and permits from federal, state and local governments in order to operate legally.

As an independent contractor, you will also want to create a standard agreement for your services. The U.S. Chamber of Commerce provides a sample agreement. You can find a number of other sample agreements on the Internet, but it is best to consult an attorney to draft one specifically for your business, since your agreement will be a legal document between you and your client.
 
I've used Legal Zoom to set up a couple LLCs in California. No problems, very easy.
 
I used it to incorporate a small business in NC. No issues.
 
I think registering it in Delaware would cause you more problems than benefits. I would just register it in the state that you are in. You are going to complicate your taxes, which will incur additional accounting fees and I don't think there are any benefits that would actually help a small LLC like yours.
 
I am a lawyer but this is not legal advice.

There is most likely no reason to form your LLC in Delaware if you are a resident of NY. There will likely be no tax savings to you and you will incur reoccurring annual costs for Delaware franchise tax and a registered agent.

Talk to your accountant about the tax consequences of creating an LLC in NY vs. DE.

Get another lawyer who will call back.

Ted

PS - If you can figure out how to post of PoA you can figure out how to form your own LLC without a lawyer or legalzoom:

http://www.dos.ny.gov/corps/llccorp.html#artorg
 
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You don't need them you can file a LLC by yourself online with the state and avoid 99 charge for nothing.
 
Why do you have to form a consulting firm?

Why not just be self-employed?
 
Not for anything important. You might be able to use it to form an LLC, but you need a professional to tell you if that's a good idea or not, how it affects all of your legal and financial interests, and how to operate it properly in your state. Once you've paid for all that advice, the actual paperwork will probably be thrown in free, saving you the price you'd pay LZ for the forms.
 
AuntPeggy said:
I have sent in my resignation, but I might be needed from time to time. Hubby may also be working from home for his job and they may want him to be working as a consultant.

I need to set up a consulting firm so I can work for my previous employer. I contacted my lawyer a couple of months ago and asked what needed to be done and he said he would get back to me after looking in to it. Nothing since then.

I went through all the steps with LegalZoom except actually confirming payments and got a bottom line of $567.99 for a LLC registration in Delaware (I once heard that Delaware is where you should register), a Tax ID obtainment, and 500 business cards (just because), and legal forms and some "free" advice.

I can call back my lawyer, but he doesn't do this normally. I can try to find another lawyer who does do this normally, but I'm lazy and uninformed.

I can use LegalZoom or find some other company in town that has off-the-shelf forms.

What would you do?
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Concur with registering in your state. I used Rocketlawyer.com and with their corporate kit and registration it was under $200. Skip the federal registration option...just get it online in five minutes. Skip the ongoing services, as well.
 
Not saying that YOU shouldn't, but personally, I would not...

I would learn all the legal requirements and do it myself. Learn all the related tax law and do it myself. Learn all the accounting requirements and do it myself.
 
The fact that you decided to form a Delaware LLC because "you heard it was better" is a good reason why you should avoid these self serve type operations.

In fact, I formed my LLC in my home state (VA) with nothing more than heading to the state web site and a credit card. Legal Zoom would have been overkill.
 
I've used LegalZoom for both registering my company (and a couple previous ones) as well as filing for DBA.
 
John221us said:
I think registering it in Delaware would cause you more problems than benefits. I would just register it in the state that you are in. You are going to complicate your taxes, which will incur additional accounting fees and I don't think there are any benefits that would actually help a small LLC like yours.
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This.

If you have a need to take advantage if being registered in DE, then you should probably be hiring both a very good accountant as well as an attorney who specializes in corporate law.
 
AuntPeggy said:
SBA website suggests this:

This includes getting the proper tax registrations, business and occupational licenses and permits from federal, state and local governments in order to operate legally.

As an independent contractor, you will also want to create a standard agreement for your services. The U.S. Chamber of Commerce provides a sample agreement. You can find a number of other sample agreements on the Internet, but it is best to consult an attorney to draft one specifically for your business, since your agreement will be a legal document between you and your client.
Click to expand...

The proper registrations, FEIN, permits, and contracts or engagement letters are important.

However:

Bob Noel said:
Why do you have to form a consulting firm?

Why not just be self-employed?
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If you form an LLC as a sole owner of the LLC, it is treated as a "disregarded entity" for federal (and most state) tax purposes, and all of the LLC information would be shown on Schedule C of your individual income tax return - identical to what you would have if you were a sole proprietor. You could also give your business a name, i.e. "A.P. Consulting", and you don't need an LLC for that.

So there are virtually no tax benefits for setting up a single-member LLC for yourself.

As for legal protection, I'll let the lawyers advise you on that. But since it sounds like you are providing personal services, I'm not sure how much protection you would get from an LLC, unless your LLC held the assets of your business. Adequate insurance would be necessary regardless of whether or not you organized as an LLC or a sole proprietor.
 
It took me about eight minutes to create my LLC by myself, using Articles of Organization I borrowed from my friend Steve (may he rest in peace), who had stolen them from someone who posted theirs (which they claimed had been written by a lawyer) on the Internet. I did a search-and-replace -- substituting my information for Steve's -- signed the last page, and filed it.

I'm not sure what it said because I never actually read it, which is okay because to my knowledge, no one else ever did, either. I may still have it someplace if you want it. No promises regarding its legality. Like I said, I never actually read it.

If you form the LLC in Delaware, you're still going to have to register as a "foreign" LLC in New York, which I believe voids any advantage.

Also, when I created mine, you had to publish it x-number of times in a newspaper. I picked some newspaper with a circulation of six people and three birdcages, which seemed to specialize in publishing legal notices -- and little else. If the requirement is still in effect, shop around. There's a vast difference in pricing.

-Rich
 
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Henning said:
If you are a one person firm, what liability do you shield yourself from?
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It provides some minimal protection against lawsuits, but quite a bit as far as banking. The key thing, as I understand it, is to anoint yourself the President, and then always sign as "President, for MyLLC, LLC, on any banking document; never sign any credit application that asks for you SSN; and never, ever sign a PG. If a bank wants a PG, walk out the door.

Actually, I'm speaking hypothetically because I think they'll be throwing dirt on my casket before I ever walk in a bank again. But you get the idea.

-Rich
 
I created a LLC by myself, but I used LegalZoom to create an S corp later on. The LLC was something simple my wife and I were doing together - we wanted an LLC to protect our personal assets from crazy lawsuit filers. The S corp is a real full blown partnership with another person.

Creating a LLC is as easy as pie. Look in your library for a book on it (there are literally dozens out there) and then augment with state specific information from the State's Corporation Commission website.

Creating an S-Corp has a few extra steps that made it worth it to us to use LegalZoom. If you think of LegalZoom as a document expediter, and not a lawyer, then you have the right idea. You need to know going in what you want, but they make it super easy... sign a few forms and mail them in, and a week later you get a big package in the mail with all your certificates and registrations. We thought it was worth it to pay to have somebody handle the paperwork.

Whatever you do, read a small book on the topic of running a small business. There are a few things that you will need to do on a regular basis, and if you fail to do them, you could lose all the protection offered by your selected business entity. And ditto on the DE thing - the benefits outweigh the bother for small/medium businesses.
 
One of the main advantages of the LLC is it helps avoid questions about your status as an employee for you clients. They make the check to "AP Consulting, LLC" and avoid arguing with the state or Feds about whether you were an employee or a contractor, which they might if writing checks to you personally.
 
I've done it myself once and used legal zoom three times. You're paying for convenience. Worth every penny IMHO. If you're not sure what you're doing or you are in a complicated field, a corporate lawyer is actually not much more expensive and even a better idea. IMHO I'd also forget the DE thing and register in the state you're in. You'll be filing there anyway.
 
RJM62 said:
It provides some minimal protection against lawsuits,
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Can you cite some legal precedents on that? As explained to me by a couple of lawyers, an LLC provides zero protection for an individual for liability from his/her own actions. 'Course, maybe things are different in your state (which is why you need real legal advice before doing something like this).
 
AuntPeggy said:
...
I went through all the steps with LegalZoom except actually confirming payments and got a bottom line of $567.99 for a LLC registration in Delaware (I once heard that Delaware is where you should register), a Tax ID obtainment, and 500 business cards (just because), and legal forms and some "free" advice.

I can call back my lawyer, but he doesn't do this normally. I can try to find another lawyer who does do this normally, but I'm lazy and uninformed.

I can use LegalZoom or find some other company in town that has off-the-shelf forms.

What would you do?
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Peggy,

Why would you do an LLC ever a sole proprietership or a Sub S corp?

What tax benefits and write offs are you looking for?

Do you plan on ever subing any work out or hiring any personel ever?

Do you know what the advertising requirements are for each?

Do you know whether you will be required to make Decenial filings?

These are just some of the many questions that people should know when forming a busniess. With all due respect any one with a computer or a pen can incorporate. YOu don't even need a service like legal zoom you can do it on your own most of the forms are online for free from various departments of state.

The fact that you state you are "uniformed and lazy" tells me you really need advice. Hire an attorney. Why because you don't know what you are doing. If you knew and you had experience thats one thing but I'd have to believe that a new business venture is worth at least the cost of advice. I also recall that you may be moving to OK. So why incorporate in DE or NY? Hire an attorney who practices corporate law where you will live. Its not going to be that expensive.
 
RJM62 said:
It provides some minimal protection against lawsuits, but quite a bit as far as banking. The key thing, as I understand it, is to anoint yourself the President, and then always sign as "President, for MyLLC, LLC, on any banking document; never sign any credit application that asks for you SSN; and never, ever sign a PG. If a bank wants a PG, walk out the door.

Actually, I'm speaking hypothetically because I think they'll be throwing dirt on my casket before I ever walk in a bank again. But you get the idea.

-Rich
Click to expand...

Of course, nobody is gong to extend credit to an unproven LLC that's little more than a wrapper around a sole proprietor.
 
Henning said:
If you are a one person firm, what liability do you shield yourself from?
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Virtually none.

livitup said:
I created a LLC by myself, but I used LegalZoom to create an S corp later on. The LLC was something simple my wife and I were doing together - we wanted an LLC to protect our personal assets from crazy lawsuit filers. The S corp is a real full blown partnership with another person.
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Hence, documenting why, if you are doing things with legal consequences, you should consult with a legal professional. An S-Corp is not a Partnership. But, qualified lawyer would have told you this.

Would you deal with "SurgeryZoom"? Seriously?

But, if you have determined (by whatever means) that you want an LLC, most every state makes it very simple to establish an LLC for just the state filing fee, with no added cost for "preparing documents." Big hint: the documents for creating a corporation pretty much consist of company name, your name, your address and the name and address of the Registered Agent (if that is not you). Anything else you might do differently would require, you know, like, legal advice as to what you need.

livitup said:
Creating an S-Corp has a few extra steps that made it worth it to us to use LegalZoom. If you think of LegalZoom as a document expediter, and not a lawyer, then you have the right idea. You need to know going in what you want, but they make it super easy... sign a few forms and mail them in, and a week later you get a big package in the mail with all your certificates and registrations. We thought it was worth it to pay to have somebody handle the paperwork.
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Gosh. It is almost as if the choices have... legal effect.

The fact that you thought you should crete in delaware, a state which has absolutely nothing to do with you or your business, makes it clear why you need to consult with professionals. Legal professionals for whather you can derive any meaningful benefit from creating an entity (corporation, LLC, LP, whatever), and Tax professionals for whether you need a particular form of entity.

---

I know it is popular sport to rag on lawyers, ha ha, I get it, but seriously - making substantive business decisions based upon radio ads? I don't make money on creating corporations, etc., but I do them as a presumably valuable service to help a new business get off the ground.

Quick show of hands: How many of you perform a service of some kind to make your living?

And, of those of you who do that, how many of you believe that what you do could be accomplished as well by a web site?

Seriously.
 
By the way, if I am suing someone for a bad act, the existence of a corporate entity has virtually no impact on my ability to get to the assets of a bad actor. If you want protection from liability loss, buy good insurance.

maybe you just use InsuranceGuyZoom.com - I bet they know what you need.
 
Henning said:
If you are a one person firm, what liability do you shield yourself from?
Click to expand...

Some States won't allow an LLC to be formed around a single person anyway. They require a Board of Directors who can vote on Bylaws.

The whole question leads back to one answer.

Do you think you need to form an LLC, or do you know you need to form an LLC?

If you don't know WHY you're forming an LLC, why are you asking how to form one?
 
It might not be a bad idea to speak with an accountant before you elect if you will have income from other than your new venture. Get the tax picture before you hang your shingle.
 
AP, correct me if I'm wrong but you're going to be working on an "as needed" and "if you want to" basis as a software tester?

1099
 
Ron Levy said:
Can you cite some legal precedents on that? As explained to me by a couple of lawyers, an LLC provides zero protection for an individual for liability from his/her own actions. 'Course, maybe things are different in your state (which is why you need real legal advice before doing something like this).
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I mean minimal as in very little (like, almost none) unless the actionable party was the LLC, not the person, which is almost impossible in a one-person show.

But it would (and in fact did) protect me in terms of things like employees getting into car accidents. The LLC had liability insurance for that, and the employees worked for the LLC, not for me. As long as I pulled a driving abstract that showed they had a clean driving record, and didn't do stupid things like give them routes that they couldn't finish without speeding, it did offer me, personally, some protection.

I suppose it also could have helped had I ever been sued for damages related to work performed by an employee, but that never happened.

But yes, the protection is minimal, which is why I used that word.

-Rich

EDIT: The other thing that helped was that at the command on the advice of my insurance agent, I required everyone to take Defensive Driving courses upon hire, and every two years afterwards. That turned out to be very valuable, liability-wise.
 
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flyingron said:
Of course, nobody is gong to extend credit to an unproven LLC that's little more than a wrapper around a sole proprietor.
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You'd be surprised. I got several pre-approved credit cards (Home Depot, Lowes, and some bank card) in the LLC's name within a week or two after forming the LLC, that didn't ask for either my SSN or a PG. I thought it was rather odd, but I took them. Commerce Bank came about six months later; and Dell and other hardware vendors after the first year mark.

This was back in 1999, when credit was flowing freely. I suspect they may have tightened things up since then.

-Rich
 
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Which states do not allow a single-member LLC?

denverpilot said:
Some States won't allow an LLC to be formed around a single person anyway. They require a Board of Directors who can vote on Bylaws.

The whole question leads back to one answer.

Do you think you need to form an LLC, or do you know you need to form an LLC?

If you don't know WHY you're forming an LLC, why are you asking how to form one?
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When we applied for a single-member LLC for an aviation-related endeavor, the IRS would not issue a separate Tax ID, since the entity had no employees. Using the member's SSN simplifies the tax accounting significantly, since all the activity is recorded on a single return. But to demonstrate some of the differences, TX does not require a business purpose to form an LLC.
 
wabower said:
Which states do not allow a single-member LLC?
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I'll have to go ask the attorney friend who ran into it. Basically they'd be allowed but you couldn't have a proper vote by a Board, and that effectively meant the Corporate Veil was guaranteed to be broken immediately upon entrance to any lawsuit, because the entity wasn't following its own Bylaws. (Having a meeting with yourself apparently didn't count... :) )

So you could create the LLC but it ended up worthless for at least one of the possible reasons to form it.

Of course, same attorney has pointed out that there's so many holes in Corporate Veil law appearing that a) You're going to get personally named anyway in any lawsuit against your LLC, and b) you're pretty likely to not get the portion of the case against you personally thrown out nowadays, especially if the LLC has zero assets and you have some....

Since the whole point is not just to get the plaintiff paid for whatever butthurt you caused them, but their lawyer also. That lawyer will fight tooth and nail to keep your personal assets involved if it means he won't get paid otherwise.

Most of his stuff is real-estate related so there's always a juicy asset involved. Next time I talk to him I'll ask him what State the Bylaw problem was in.
 
I've used LegalZoom for an LLC and did a Sub S myself back in 96.
 
LLC's aren't corps. Why are we discussing corporate veils?

denverpilot said:
I'll have to go ask the attorney friend who ran into it. Basically they'd be allowed but you couldn't have a proper vote by a Board, and that effectively meant the Corporate Veil was guaranteed to be broken immediately upon entrance to any lawsuit, because the entity wasn't following its own Bylaws. (Having a meeting with yourself apparently didn't count... :) )

So you could create the LLC but it ended up worthless for at least one of the possible reasons to form it.

Of course, same attorney has pointed out that there's so many holes in Corporate Veil law appearing that a) You're going to get personally named anyway in any lawsuit against your LLC, and b) you're pretty likely to not get the portion of the case against you personally thrown out nowadays, especially if the LLC has zero assets and you have some....

Since the whole point is not just to get the plaintiff paid for whatever butthurt you caused them, but their lawyer also. That lawyer will fight tooth and nail to keep your personal assets involved if it means he won't get paid otherwise.

Most of his stuff is real-estate related so there's always a juicy asset involved. Next time I talk to him I'll ask him what State the Bylaw problem was in.
Click to expand...
 
A Limited Liability Corporation isn't a Corporation?

You guys doing something weird down there in Texas?
 
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