Setting up an LLC thru attorney or online

[Audric Crouch]

We are preparing to set up an LLC for our investments. We currently only have one property but plan to grow that in the next few years. Would you guys recommend using a website, such as LegalZoom or should we pay to go to an attorney? I want to make sure we are properly covered.

[Jon Holdman]

Many states will let you do it online at the secretary of state's web site. That avoids extra charges from one of these online services or an attorney for doing the part you can easily do your self.

It may be worthwhile to use an attorney to help you with your operating agreement. If "we" is two unrelated partners, you have a LOT to think about for how to run the company, make decisions, handle disagreements and what happens when someone wants out, wants cash, marries, dies, divorces, etc. Best if you discuss and consider this before going to an attorney.

It may also be worthwhile to discuss the LLC with a CPA, especially if "we" is two or more unrelated persons. Your LLC will be a partnership in the eyes of the IRA and will need to file a tax return. The profits and losses are passed through to the members, unless you elect to be taxed as a S or C corporation. That affects each member's tax return. In particular, if the LLC makes a profit but holds onto it for future investments, the tax bill will still go to the members.