Do-It-Yourself LLC Formation
by: Stephen L. Nelson, CPA
You’ve decided you need an LLC for your real estate investing or small business. But the attorney wants several hundred dollars or more to fill out the paperwork. Isn’t there a cheaper way to set up an LLC? You bet. You can do it yourself.
An LLC formation, by design, is very straight forward. To set up an LLC, you file articles of LLC formation or articles of organization with the state government agency in charge of corporations and limited liability companies. This document is sometimes a simple, one-page form. Typically, the document can also be a type-written list of descriptive bits about new LLC (the name of the LLC, the person performing the LLC formation, and so on).
Different states have different names for the offices or agencies that process the LLC formation articles, but the agency or office is usually fairly easy to locate through a web search. Typically, the agency or office is connected with the state's secretary of state office and is named something like "Corporation Division" or "Corporations Division." Note that some states (including Washington state where I live) let you file your articles of formation or articles of organization online.
States may also have additional setup requirements beyond simply filing the LLC formation articles. Some states such Arizona require that public notice be given in a newspaper. Some states such as New York require an operating agreement. Which raises an important point: It's really an excellent idea to have an operating agreement written up to describe how the LLCs owners, or members, relate to each other and to the LLC. Attorneys even recommend that single-member LLCs should have an operating agreement because the operating agreement, if honored, improves the liability protection.
After the state accepts your articles of LLC formation and you complete any other state requirements, you're done with your LLC formation.
About The Author:
Stephen L. Nelson, CPA
Bellevue WA tax CPA Stephen L. Nelson is the author of both Quicken for Dummies and QuickBooks for Dummies and an adjunct tax professor for Golden Gate University’s graduate tax school. He can contacted at http://www.stephenlnelson.com.
March 2006
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