LLC formation

February 09, 2022

by a searcher from Pennsylvania State University in Philadelphia, PA, USA

Hi everyone - I'm just getting started and I'm forming my LLC. I"m speaking with an attorney who I will likely engage for the acquisition process and they quoted me $1550 for the formation and the whole package. The operating agreement, the EIN, tax license completion and compliance, etc. This seems exorbitant but I thought I would need more help/support compared to the service I could get through legalzoom. Does anyone think you need to spend the extra money for the extra protction or not necessary?

Thanks in advance.

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Reply by a searcher
in Portland, OR, USA

^redacted‌, you can do all of that yourself for thousands less. You'll need a statutory agent, who is someone that will be served if you get sued. I wouldn't overthink this problem. I'd also just find a low-cost state since you're self-funding. An LLC is not a requirement to search using your savings account. I'm sure there are some attorneys that can discuss the finer points but my take was that it was just another tax and added legitimacy.

I used Arizona because it's a one-time fee and I don't have to file annually. Plus, I have a family of lawyers that will act as my stat agent so that's free for me too.

Register LLC in AZ here ($85, note that it should be $50)
https://www.azcc.gov/

Statutory Agent for AZ ($50)https://www.arizonastatutoryagent.net/?gclid=CjwKCAiA6Y2QBhAtEiwAGHybPdoE4T3pVTEQ71kQ41OPasgno6Hp6qTmaCsetepu5WNIo7cd7Vxm3hoCj9AQAvD_BwE

EIN:
https://irs-gov-ein-number.com/?gclid=CjwKCAiA6Y2QBhAtEiwAGHybPciWyXtMFIdrOhPAYKa3fnrd9eKBg0HilIMPK6Ym9fcDTmZJMs-d5RoCR9kQAvD_BwE

Reply by a professional
from William Mitchell College of Law in Minneapolis, MN, USA

I am a lawyer doing this kind of work and before answering, I am wondering what you mean by “tax license completion and compliance.”This can vary by state, but a normal organization package for a LLC is the filing of the Articles/Certificate of Organization, a simple Operating Agreement (assuming a single member LLC to start), actions by the organization and sole member for banking purposes and obtaining the EIN.Sometimes it includes getting the state tax ID as well.$1,550 for what I listed is pretty high.If the Operating Agreement needs to be more complicated at the start (multiple members so more complicated voting, distribution and buy/sell provisions), it can certainly go up.

while you can file in other states, you may be asked to convert into a DE LLC by your funders at some point.Similar to what was mentioned above, organizing in a state other than yours will require a statutory agent and that adds costs.

We will often do what I described above if you pay the filing fees with the state and around $500 for the rest, with that held until closing on the acquisition.

I would be careful about simply using a state default form or LegalZoom.You are virtually guaranteed to have to revise them before funders in this space will do a deal with you.It’s is a truism in the legal community that its a lot more expensive to fix something than to do it right in the first place.

Good luck.

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