Starting an LLC without spending a fortune sounds attractive. You can save the initial cash upfront if you want to work hard doing everything yourself! There are online forms available; some are even “free”. The internet is full of websites crammed full of information for you to read. Videos and books abound, the information is there for you. Well, maybe. . .
We have observed untold numbers of business start-ups. Like the statistics that you hear, sadly the majority failed. The nice thing about opening up your own company is that you get to run it any
Cost – DIY or Hire A Lawyer?
Here are a
Time – The Time You Will Spend
The critical difference in whether “DIY” (or do it yourself) saves you money is the type of work. If it’s merely labor that doesn’t require much of a skill set, you are trading your time for what the labor would have cost you. So if a $10 per hour labor guy can do the heavy lifting in 20 hours, you save $200. For some folks, the trade of their time for $10 an hour is well worth it. For those willing to go this route, there are often other intangible factors like being outside in the sun and fresh air as opposed to strapped to a desk chair in an office.
If you’re running a business, time is the only resource that you can’t replace. You never get more time! For this very reason, you don’t see any businesses trying to make $10 per hour. It’s not worth the risk, trouble, and headaches. When you factor in the administrative time, marketing, etc., the $10 an hour is watered down to $3 an hour or less. The only way a genuine business can be profitable charging $10 per hour is to have scale. If you have 100 employees bringing in $10 an hour, this translates into $1,000 an hour.
Any business owner who doesn’t value his/her time as more valuable than doing the labor isn’t going to succeed in business. It’s simple math. If you can make $10 an hour working for someone else and you have to spend hours and hours unpaid for the administration, then you lose.
Learning Curve – You May have More To Learn
So what does all of the above have to do with cheaply setting up an LLC? Well, pretty much everything! First, you need to understand that an LLC isn’t simply a bunch of papers that are filed with the State and then stuck in a desk
Your LLC Is Not Just Some Paper
Unless you understand this concept, then you will only see an LLC as some ministerial or secretarial task of getting some paperwork done. You are welcome to hold to this view if it’s yours. If you have already made up your mind and you aren’t interested in learning, then you stop reading right here. Go do something that’s more fun.!
The steps to correctly operate an LLC in compliance with the laws and regulations isn’t some impossible feat. However, it’s also not like going to Home Depot one afternoon, buying some paint and paintbrushes, and learning how to paint your bedroom. The skills in learning to paint a bedroom can be acquired reasonably quickly. In the same
It’s a little more complicated to learn what is (or is not) acceptable in running an LLC. You don’t come by this knowledge reading a few website pages or watching a couple of videos. It may look that simple. Those companies selling you inexpensive forms want you to think it’s that easy, but it’s not. These form companies that market cheap “forms” for sale want you to believe you’re saving loads of money doing it all by yourself. They stroke your ego by telling you how smart the choice was to set up your LLC without a lawyer!
An LLC Is Your Emergency Exit Plan
Smart entrepreneurs go into business ventures with an exit plan. The first dollar is not invested until there is a clear understanding of “how do I get out of this deal if it doesn’t work”. Without an exit strategy, you haven’t accepted that you might fail. This principle is one of the key differences between a novice and an experienced business investor. The majority of first-time entrepreneurs skip the phase of business strategy that calls for an exit. These “wanna be” promotors know way down deep in their hearts that they’re special. The business they’re starting won’t fail.
Experience Matters – Novices Don’t Have The Experience
It’s actually a form of pride and arrogance that experienced investors abandoned long ago. You can never be sure a business won’t fail. “You” aren’t the sole factor in success.
If you’re over 35 years old, you may recall when GM (General Motors), the largest automobile manufacturer in the world and a Fortune 100 company filed for bankruptcy. Many shareholders lost big piles of money and 401K accounts across the country saw the negative results in their account balances. If your business simply cannot fail, then you should quit reading. If you already know it all, there’s really no reason to waste any more of your time. You are welcome to ignore that GM was forced to file bankruptcy having the benefits of untold numbers of accountants, lawyers, and MBAs.
The primary purpose
Your LLC – Why You Don’t Want Cheap
The concept of “limited risk” in using an LLC for your business only works if the LLC is properly set up and correctly maintained. If your LLC isn’t arranged according to the legal requirements, then the courts are going to ignore the LLC papers (probably buried in the back of your desk drawer) and let the creditors collect from you personally. Your family’s net worth is fully exposed.
This is where “cheap”, “free”, and other similar phrases take on an entirely new meaning. What was “cheap” or “free” really means you pay the price in a different way. The upfront cost is very, very low, but the backside of the deal is enormously expensive and costly. Entrepreneurs who go this route usually end up filing personal bankruptcy and losing pretty much everything. The LLC as the exit strategy doesn’t function as they had thought it would. The creditors go through the LLC and directly to the family’s assets.
LLC Certificate – The Paper From The State Isn’t An LLC
If I was giving a seminar on LLCs, about this point someone in the audience would raise their hand to ask a question. “Excuse me, but I set up my own LLC several years ago. My business is doing well financially. Just the same, I really do understand what you’re saying about how unexpected things completely outside your control come along to destroy your company. We had a near miss 2 years ago. What can I do to fix my LLC?” This is a great question! We help people who set up a cheap LLC years ago to correct defects. If you set up the LLC more than a year ago or bought a bunch of forms online, it’s time for a check up. Get in touch and we’ll be happy to assist.
If you are about to start an LLC (and want an LLC that works), then the cost is going to be considerably more than what you will spend on some Inexpensive forms. Any company that puts its focus on selling you pre-made templates or LLC kits is just “selling forms”. If you’re only looking to get a certificate back from the Secretary of State that says “Billy Bob’s LLC” (or something along those lines), then these companies make it really affordable. Just remember, an LLC is not a paper product or form that got filed. An LLC is a business structure with all kinds of legal components that aren’t necessarily “paper”.
What Do We Charge?
If you want to see prices for the initial set up for a new single-member LLC, see our starting prices.
Please keep in mind, your LLC will still require maintenance and proper operation. You can see our maintenance check-ups designed to help businesses do a quick mini audit of how they’re doing with their LLC.
We make it easy to schedule a time to meet using our online scheduler. Select a time that fits your schedule and let’s sit down together to find out if we’re the right fit for your business!