Accountant or Attorney to open LLC?

Question

Michael Plaks · Answer

@Ben C.

CPAs/Accountants should be consulted about the entity choice, but the actual formation is an attorney's job. I'm not an attorney, and I would not form an LLC for my clients.

Even though some CPAs do offer this service, I believe they should not. In fact, as far as I understand, in many (if not all) states it can be considered illegal: practicing law without a license.

Kyle J. · Answer

The primary purpose of a LLC is asset protection,  not tax savings.  It is, however, important to make sure you choose the right entity for taxes for your particular circumstances.  Personally I would consult my tax professional for his input but have the attorney draft the documents to open it.

Dylan Barry · Answer

Hello Ben C., I know that Garrett Sutton (corporate attorney) and a Rich Dad advisor recommends that you use an attorney to setup a LLC. Also, Mr. Sutton discusses the two member vs. one member LLCs on the Jason Hartman show. Link here:

https://www.jasonhartman.com/cw-481-garrett-sutton...

I guess the issue with single member LLCs were that the LLC was intended to protect the other partner in cases where a litigant was suing an individual partner. It prevented the litigant from seizing the asset in the entity and in some states were then subject to the "charging order".  Fascinating stuff, but I would listen to the podcast and then ask your attorney for advice.

Cameron Skinner · Answer

@Ben C.

If you are going to just be a single member LLC, you could really just set it up yourself or have your accountant do it. Its really no big deal because you are 100% in control and its not like you will get in a dispute with yourself, so you will only need Articles of Organization.  If you do go Multi member you defiantly need an attorney or at the very least a stock Operational Agreement from legal zoom or other type service.  Now warning every state is different but LLC are limited liability "companies" not corporations and were designed by state legislatures for individuals to easily set up a company with liability protection with out the all the technical corporate governance required by corporations.  In the 90s Mom and Pops were setting up S-Corps for tax and liability reasons and just ruining them same as they always had, without board of directors meetings minutes of meetings ect. so that's where the therm piercing the corporate vail came from.  But LLCs are different than Corps and as long as its a bonafide business interest you will have a level of personal liability protection from business activities.

Hope this helps, Good Luck

Michael Plaks · Answer

1. True - if you treat it as a partnership and file a separate tax return. Not a good enough reason to go the partnership route if this is the only reason.

2. Can't comment, not being an attorney. But I suspect it could be the same situation as with #1 - as in useful perk but not a big deal.

From what I heard from attorneys, the main reason LLCs fail is being sloppy, not being single-member.

Cameron Skinner · Answer

@Ben C.

Every State is different, but in general a Multi Member does offer a little bit, I mean tiny tiny bit more protection, but I think your over thinking it.  Any LLC Corp Trust ect could be possibly busted with enough time and litigation.  When you put your business in a separate entity, your just trying to make it difficult and expensive for someone to sue you.  And make it so expensive and hard that its not even worth trying.  In Florida, where I live, the only single member LLC ever broken was the Olmstead vs US.  and that guy basically just set up an LLC to try and shield his personal property and pay his personal bills to hide from creditors.  The court ruled his LLC was really not a business but an "Alter Ego"  Even with this obvious fraud it still took the power of the FTC and Federal government to break the LLC.  Unless you have multi-millions, it would not be worth an Attorney trying to spend hundreds of thousands in legal fees trying to crack your LLC, and even after they crack it they still have to win the case.

Set up your LLC

treat it as a separate business (no personal bills)

get a 500K liability policy

buy your flip and get going

when you get more than  500,000 in assets in one LLC open another when you get to 10 LLCs private message me and I will help you from there.

Hope this helps

Good Luck!

Ben C. · Answer

@Cameron Skinner What if the two member LLC was a husband and wife? I have heard it is much more secure from a litigation stand point when you have a two member LLC vs a single member LLC.

Jason Hartman · Answer

Thanks @Dylan Barry - Garrett has been on several times and I like his advice. I'll see him at Meet the Masters on Friday and mention this. I thought his prices were pretty reasonable too.

Michael Plaks · Answer

No way to answer this question other than - it could have some benefits, but it depends. I would need to find out your overall financial situation, your plans for this LLC etc.

Accountant or Attorney to open LLC?

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