Price Of An LLC
The price of an LLC is one of the top questions for individuals about to start a new business. The price for an LLC gets a little too much priority. The more pressing question that should be asked is “what’s the value of an LLC”?
All of us have budgets, financial limitations, and concerns over keeping expenses from going through the roof. Paying attention to overhead is a function of good management. However, there is more to getting a “good deal” than merely the amount you paid. The cost of a product or service may serve as part of the preliminary research, but the wise and prudent are really shopping for value.
Bargains Aren’t Always Better Deals
Growing up as a child, there was a family we knew who always loved this one meal my mom fixed. The mother in the other family was given the recipe. But, when it was prepared at the other family’s house, it just wasn’t the same. It tasted different and even they would comment on how my mother’s always had this uniqueness that no one could replicate.
While mom was a great cook, she didn’t have some secret touch or special magic that made the dish better. It wasn’t that she held back the one ingredient so no one else could prepare the meal with the same result. The difference was in the shopping practices at the grocery store. Mom spent just a little more on certain things. The other family shopped for the lowest price on the can or jar — with no exceptions! The out-the-door price was the controlling factor.
What made the difference was the brand of tomato paste. The other family always purchased an off-brand. They had even convinced mom to try the cheaper version, once or twice. It was decidedly a little less expensive as the cashier rung up the purchase price versus the brand mom typically bought.
To be fair you have to consider the amount of inflation since those days, but the cost of the brand that gave mom’s
You may be wondering how we know. Well, the same conversation occurred a number of times. Mom kept being asked what she did that made her’s taste better. Eventually, mom stood and observed the other mother cook the meal. She did everything just like my mom except the off-brand tomato paste.
But, the story doesn’t end here. Now there was a lot of hoopla and discussion of wanting to make the dish taste just like mom made. You would think that allocating a few more pennies in order to gain the value of a better product would not have been an issue. Strangely, the other mother couldn’t get past the “price” on the can. Never mind that both families agreed it wasn’t as good! When the family friends cooked, “price” always prevailed over “value”.
The price of your LLC will not be your concern if you find yourself defending the family assets against a legal attack. In years of practicing law, we have never heard a client whose LLC was being challenged interested in the price for the LLC set up. When the lawsuit gets filed, clients are suddenly more concerned about the quality of the LLC and its ability to shield personal assets. In short, it’s no longer a discussion about the “LLC’s price”. The monetary worth is determined by how much of the personal assets will be lost.
Price And Value Are Not The Same
The value of your LLC and the price you are willing to pay for complete and full protection looks so different in the initial shopping and research phase than the value of the LLC when it’s the sole separation between you and a lawsuit.
If you’re concerned enough about liability to have an LLC, then you should be interested in an LLC that delivers value, not just a cheap upfront cost. In discussions with new entrepreneurs about LLCs and the cost of starting an LLC, it’s good to mention maintenance. An LLC that is not given suitable attention isn’t going to be much value in a legal challenge. The price of an LLC involves the ongoing expense of running the LLC in a legitimate fashion. It means following the rules and doing things the right way.
If you’ve ever sat on a jury in a car accident trial, one question that is always asked involves seatbelts. Was the injured person wearing his or her seatbelt? If not, then many jurors attribute high percentages of fault to the person who gets hurt. The reality is the seatbelt may not have made any difference at all in the severity of the injuries. Experts may testify the use of the seatbelt would not have changed the outcome.
The evidence that wearing a seatbelt would not have lessened the injuries doesn’t matter. The jury verdict is affected and the result is a lower verdict. Juries can’t seem to get past what they have been taught – – that seatbelts are critical to saving lives and preventing injuries.
Businesses that are formed as LLCs, but that aren’t used properly should expect to receive scrutiny and negative treatment by the courts. You can argue it’s not fair or that it shouldn’t work that way. Okay, try to change the world if you want, it’s your bankruptcy! Judges are people just like jurors. If your LLC isn’t going to wear its seatbelt, then you need to be ready for the consequences. Otherwise, the true price of an LLC isn’t only the price to start one. It’s the cost to keep the LLC up-to-date and in full compliance with the LLC laws, rules, and statutes.
So What’s The Price Of An LLC?
In our judgment, the price of an LLC is a question asked by an individual who doesn’t have enough knowledge to recognize the right questions to ask. The real question you should be asking is, “how much does it cost for my LLC to keep my personal assets safe”? With the numerous liabilities that come with owning a business, you shouldn’t skimp on the quality of your LLC.
What’s the price you’re willing to pay for an LLC after you’ve been in business for 5 years and it’s been a huge success? You need to ask the question because once you put the imitation tomato paste into the mixing bowl, it’s too late to do it over again. The way you treat your LLC and the value it delivers is dependent upon the price you’re willing to pay in setting up the LLC correctly from the start and the amount you spend to operate your LLC the way you should.
We provide legal consultations to businesses that already have an