VIDEO LIBRARY

Yes, there is nothing in the law that requires that an LLC be formed by a lawyer or other service.  A business owner can form an LLC on their own by learning about and following the legal requirements and processes required to process an LLC registration.

View the video below for steps and guidelines on how to go about doing this.  Plan on spending about 3 to 5 hours to handle this properly.  If you want to save time, The LLC Expert’s formation service only requires about 5 minutes of your time and is backed by a guarantee of compliance with your state’s LLC requirements.  Information on LLC Formation Services.

A recent example I am aware of involves Susan Jackson.  She started a business selling marketing consultation services to businesses looking to sell online.  She was only in business for 4 months and was not making any profits yet.  She had signed up less than 10 customers.  4 months into her business, she gets legal papers delivered from an unhappy customer suing her personally for allegedly providing unlawful advice that caused the customer damages in excess of $30,000 dollars. If Susan had a limited liability company, it would be her business being sued not her personally.

Now, there are extreme cases of the above example as well.  Some sole proprietors have found themselves liable for million dollar obligations that there insurance policies do not cover.  In these cases, the business owner has to sell his home, and liquidate his personal savings for business related obligations.  The LLC can help avoid business problems becoming personal ones.

Another common example is the trigger happy new business owner who signs onto long term contracts committing to substantial orders for supplies or products he is going to use to make his business successful.  If his business is a sole proprietor business, he is on the hook personally for these contracts.  On the other hand, if he forms an LLC and the LLC enters into the contracts, it is the LLC who is the business and is on the hook for contractual obligations.

Many mistakenly think the decision of whether to form an LLC relates to the size of the business.  This is wrong.  It relates to protecting what you own (your home, savings, cars, jewelry and other valuable assets). Also, starting a limited liability company later will keep you exposed to everything that happened before.  Liability protection only starts on the day the LLC is formed.

Many non-LLC owners are shocked every year when they get personally sued for business problems and find that they need to sell their personal assets (like their home, car, other property) or lose their personal savings to cover any resulting liabilities.

Other benefits of forming an LLC include: tax benefits and choices, a more professional and trustworthy business image, lower risk of tax audit, a simple to operate business vehicle, a legal entity that makes it easy to take in investors or other members.

If you are interested, The LLC Expert offers an excellent formation and education service for forming an LLC: The LLC Expert Formation and Liability Protection Package.

1. STATE LLC FORMATION REQUIREMENTS. Each state varies in its requirements ands some states only require minimal information, but most states will require some or all of the following:

• Name of the limited liability company
• Duration of the limited liability company, if less than perpetual
• Purpose of the limited liability company
• Registered agent’s name and address
• Principal Office address
• Initial members/managers name and addresses
• Whether the limited liability company is member or manager managed
• Organizer of the limited liability company

Please note that because the filing document to form a limited liability company is a matter of public record, in most cases, you only want to include what is absolutely required in the formation documents.  There are exceptions to this when the business or the ownership of the limited liability company necessitates the inclusion of additional provisions.

2.STRUCTURING A LIMITED LIABILITY COMPANY. Once you form a limited liability company, you will need to admit members to the limited liability company and impose a governance structure or set of rules for which the LLC will operate under.

• Any reservation or limitations of the right to admit new members
• Dissolution events and the right to continue business following an act of dissolution
• Management Structure Details
• Manager’s names and addresses, if managed by managers
• Contributions of members to the limited liability company
• Future contributions required of members to the limited liability company
• Voting procedures for approving limited liability company decisions
• Limitations on the ability for a member to sell or transfer ownership interests
• Possible buy-sell provisions (allowing for the limited liability company or certain members to buy back the ownership interests of other members)
• Obligations of any Member to the limited liability company
• Taxation structure for the limited liability company

The actual formation of a limited liability company with the state is a relatively straightforward process and can be done for you efficiently using The LLC Expert’s Services for Forming an LLC.

However, the area of limited liability planning regarding structuring can be quite complex and so it is always recommended that you seek the advice of an LLC lawyer to advise and help with this structuring.  Generally, most of the items are set forth in the LLC Operating Agreement but some matters can also be addressed in other written agreements such as loan agreements, services agreements, employment agreements or separate member agreements with the members.