LLC yourself or form an LLC company without a lawyer? Sure, you can do it yourself. The forms are not complicated and can be easily filled out and filed. In fact, most states have a set of “fill in the blank” Articles of Organization available on the state website, making it simple to get the correct Articles of Organization for your state and then you just have to file them and pay the fees. Sounds easy, doesn’t it?
Unfortunately, to “LLC yourself” requires a bit more knowledge. It isn’t sufficient to just file the Articles of Organization. To stop there will mean that you do not get the full asset protection or tax advantages an LLC has to offer. To LLC yourself the right way means that you must make all the correct elections. It is not difficult, and can be completed sequentially, but you should consider each step carefully to make the correct choices for what you are trying to achieve.
LLC Yourself – Liability Protection
When you LLC yourself, and you are serious about liability protection, you will need an Operating Agreement. All too often a business owner will file the Articles of Organization and think they are done. The Operating Agreement defines how your LLC is set up and run. By including the correct language and structure, if your LLC is involved in a lawsuit, your Operating Agreement can level the playing field in your favor. Why would you take the time to LLC yourself and neglect this critical step? Let’s face it, the main reason to have an LLC is for liability protection.
Another important liability question to answer when you LLC yourself is how many partners to have. For instance, if your business could easily have a liability problem, you should get at least one more partner and open a multi member LLC. Multi member LLCs can qualify for charging order protection. I explain charging order protection and how to benefit from it in the LLC Wizard. On the other hand, if your business doesn’t have a great liability exposure, say you are selling multi-level products or buying art, or some other activity and you’re acting alone, then you should probably just act as a sole member- manager, at least until you are making money.
LLC Yourself – Get Tax ID Number
Finally, when you LLC yourself, you should file for a company tax id number and make the proper tax elections. A word of warning! Do not get the tax id until you actually start in business. I have seen the IRS come back and sue for back taxes before the company was even working. This is a difficult thing to prove, so don’t get caught in this trap.
Once you file your articles of organization, it is vital to make the proper tax elections before your opportunity to determine how your LLC will be taxed expires. If you neglect to make your elections the IRS will choose how to tax your LLC.
These are just a few of the important considerations that you should be aware of when you LLC yourself. In my completeLLC Wizard I give you everything you need to LLC yourself and walk you through how to customize your forms and then how to use them. Remember, your little business can be your best tax saving tool!