How To Start an LLC
The three ways to start an LLC are: (1) use an online LLC formation website, (2) do-it-yourself, or (3) hire an attorney to handle the LLC filing for you. Each option has its pros and cons. Over the last decade, the online LLC formation services like IncFile have become the most popular option, so we’ll discuss the online option first:
1. Online LLC Formation Services
The launch of LegalZoom in 2001 turned the business formation world upside down. Although LegalZoom was not the first online business formation service, they quickly became the most well-known as a result of a massive marketing budget which revolutionized the way LLCs are created. Fast forward to the present date and there are now hundreds of online options to start an LLC. We assembled a side-by-side comparison chart (button below) so you can compare the best online LLC formation services. During the course of our research, we located several promo/discount codes that lower the cost of forming an LLC and make the online option even more appealing.
2. Start an LLC Yourself
Many states provide Articles of Formation templates that can be used to create an LLC without an attorney. Use the map to get state specific LLC information for your desired state. The Secretary of State cannot provide legal advice, but many questions that arise during the LLC creation stage can be answered through a quick Google search. If that doesn’t work, we highly recommend using Avvo.com to get a cheap ($39) phone consultation with a local business formation attorney.
The biggest issue with starting an LLC on your own is not finding the Articles of Formation template, but rather the other documents like the Company Agreement (aka Operating Agreement); the organizational meeting documentation; and other state specific documentation that may be needed in your state. We have located a free (and customizable) operating agreement through RocketLawyer.com:
3. Hire an Attorney
Before LegalZoom and the other online options for starting an LLC, attorneys had a monopoly on the LLC formation business. Even with the cheaper online alternatives, attorneys still get a healthy fee in the neighborhood of $1,200 to start an LLC. Just like the online players, attorneys use templates and, at the end of the day, it really boils down to the quality of the template. We were surprised to find that attorneys (as well as the online services) have huge variations in the quality of the templates they use.
Attorneys have the ability to make major modifications to their templates to fit the needs of their clients. While most online LLC services will provide personalized documents (to include the name of the LLC along with names and addresses of members, etc), they typically only have the ability to select between a few predefined options and make minor adjustments. As such, if your LLC is (1) going to have a complex ownership/management structure or (2) require very specific terms then a business formation attorney is going to be your best bet.