If Tom Hanks taught us anything in Cast Away, it’s that you don’t always need to get a professional involved. As long as you are desperate or determined enough, you can do just about anything, including performing oral surgery on yourself with a rock and an ice skate blade. While most of us (if we’re lucky) will never find ourselves in such a dire situation, many people tend to avoid professionals and go the DIY route when starting a new business.
Truth be told, forming an LLC is not all that difficult, and unlike self-guided oral surgery, there is very little risk of death or serious personal injury. So, can you do it yourself? Of course. Most 12-year-olds can navigate the internet to find the basic forms necessary to set up an LLC. But the real question is: should you do it yourself? The answer is usually no.
The actual formation part of setting up an LLC is reasonably straightforward. Most states only require three or four things – filing articles of organization, paying a filing fee, naming a registered agent, and obtaining an EIN. If that was all that was required to operate your LLC, then there would be little need to involve professionals.
But running your company requires much more than simply registering it to do business with the Secretary of State. There are several key documents that every LLC should have and first among those is an operating agreement. It is not enough, however, just to have the “right” documents – you need to carefully follow the terms of the operating agreement, set up and maintain separate accounts for the LLC, and keep accurate records, books, and meeting minutes. While you (or your 12-year-old) can easily find examples of these documents on the internet, those documents will likely not be tailored to your business, state law, or personal situation.
Consider this cautionary tale: A colleague recently told me about two friends who formed an LLC using an online service. The operating agreement they found and signed did not include a deadlock provision. Later, when they couldn’t agree on a significant decision about the best course for the LLC, they ended up in litigation. The court eventually appointed a receiver to run their company, costing their LLC (and them) tens of thousands of dollars and ruining their friendship. This terrible yet entirely avoidable result is a prime example of how not to do-it-yourself.
Turning back to the first question, can you do this yourself? Yes. You sure can. You could even get everything right. But you might not. And sometimes you may not realize how wrong you got it until it’s too late. While there are ways to fix some of these problems, it’s almost always easier and cheaper to do it right from the beginning. That’s why it’s typically a good idea to get a professional involved.
If you are thinking about forming an LLC or want to get a detailed business checkup on one that you already have, contact English & English today. We can help.