I get this question all the time, and I’ll give you my standard answer. If you’re setting up an llc purely on general principles… or because it’s what your customers, employees and vendors expect…. or for indeterminate tax reasons you’ll focus on when the business starts making money, I think you can do the setup yourself using either free online resources or using do-it-yourself guides like I provide here.
Furthermore, if you’re someone who doesn’t like to take the “do-it-yourself” route, it’s also very reasonable to pay an online incorporation service or a paralegal service $300 to $600 or whatever, to correctly prepare the paperwork for you.
Note: If you’re on the fence about whether you can do it yourself, go ahead and buy the kit for your state. If you find “do it yourself” doesn’t work in your case, I’ll happily refund the purchase price.
If you’re setting up an llc for asset protection reasons, however, I observe that entrepreneurs and investors often feel like they get excellent value from spending the extra money on a good attorney who not only takes you step-by-step through the process but also explains the liability protection. In this situation, you’re probably overpaying for having some pretty simple forms filled out. But frankly, you’re also probably underpaying for the few minutes of asset protection planning you get from the attorney.
Let me also throw out a couple of situations where, if you’ve got the budget, investing in some great professional advice can really pay off.
Situation #1 Where Professional Advice Delivers Big Benefits: If you’re going into some new business or investment with several other partners or investors, you should receive huge benefits by having a wise local attorney advise you on how to structure the LLC’s operating agreement. In a nutshell, a veteran lawyer can help you and your partners come up with practical answers to questions like, “What if somebody dies or is disabled and can no longer work in the business?”, “What if we stop getting alone with each?”, and “How do we stop this operation when the day comes that we’re either burned out or ready to retire?”
Situation #2 Where Professional Advice Delivers Big Benefits: Another situation where an attorney (or maybe even more likely a good local business tax accountant) can help is with the tax accounting treatment for your new limited liability company. As noted in several other places on this web site, an LLC is a chameleon for tax purposes. Within reason, an LLC can be treated as just about anything for tax accounting–and often picking the right tax accounting classification can save the owners tons of taxes. In this situation, you want somebody advising you who understands enough about your situation and enough about partnership and corporation taxpayer to help you pick the best choice.