LLC set up cost

[Omar Bibian]

I had a real estate lawyer quote me $700 to set up a LLC. Any idea of what the actual cost is? Omar

[Joseph B. Davisson]

Define "set up" and list what you are getting for the fee. Filing an LLC and actually operating an LLC are two different things. Filing establishes the existence of an LLC-(easy... point, click, pay about $300), but now what do you do? How the LLC operates is determined by the operating agreement.  This is the soul of the entity. Drafting the operating agreement and any other initial organizational docs is the reason you pay an attorney.  More often than not it is cheaper to hire counsel to do this in the beginning rather than pulling some boilerplate off the internet and running wild with it.  The operating agreement needs to consider the laws of the state where the entity is formed and where it operates.  There is no one size fits all when it comes to operating agreements.  Also, READ the operating agreement and understand what it says and how it affects YOUR business.  It is likely that along the way your operating agreement and resolutions will be scrutinized by a title company or lender.  If it is not adequate, it will cost you more to hire counsel to amend it than it would have cost initially to get it drafted correctly.  

The cost to form should include: filing fee, initial consultation to discuss your current operation and aspirations to gain an understanding of what the LLC will be doing (1 hour), drafting the agreement and other docs (probably around 2 hours but could be more depending on the number of members and the complexity of the operation) and and another consultation to review the documents and discuss what the LLC can and can't do and how to manage the entity as a manager or member. Total, you are looking at $300 + about 4 hours of legal work. (This is a baseline and it can certainly go up from here but this should get most investors up and running with adequate protection)