Attorney wants $500 to create LLC

[justin0419]

The state forms for registering the LLC are basic.  You can fill that out yourself like Drew said. 

That is 5% of the work. The value of an LLC is the operating agreement. An LLC with a poorly drafted agreement has an extremely limited value. FWIW, I have seen people fill out the form incorrectly and got whacked later when something happened.

Understood.  I was just stating the form to file the Articles of Organization is usually pretty basic and H&B could do that himself if he wanted.

Besides, if you're dealing with banks, they won't lend to your LLC anyway, so it doesn't do much good to have one.

Are you saying in the beginning you won't get a bank to lend to the LLC without a personal guarantee or that a bank won't lend to an LLC at all?  We do all our mortgages in the name of the LLC, but we have to personally guarantee the loan too at this point since the LLC is relatively new.

[drewshirley]

Besides, if you're dealing with banks, they won't lend to your LLC anyway, so it doesn't do much good to have one.

Are you saying in the beginning you won't get a bank to lend to the LLC without a personal guarantee or that a bank won't lend to an LLC at all?  We do all our mortgages in the name of the LLC, but we have to personally guarantee the loan too at this point since the LLC is relatively new.

Yes, I mean that the banks will require either refuse to lend to the LLC or require a personal guaranty.

[HoldAndBuy]

The main purpose of including an operating agreement in a single member LLC is to bolster the idea that you're not just using the LLC as your alter ego, correct?

[BLL]

The main purpose of including an operating agreement in a single member LLC is to bolster the idea that you're not just using the LLC as your alter ego, correct?

There is already precedent to liquidate a single member LLC and it only takes an $11,000 judgment to do it. The operating agreement has nothing to do with it.

[HoldAndBuy]

This might be a dumb question, but what does the operating agreement accomplish in a single member LLC, since it's only one person?

[BLL]

This might be a dumb question, but what does the operating agreement accomplish in a single member LLC, since it's only one person?

Quite a bit until Ashely Albright. Her bankruptcy set the precedent to liquidate the single member LLC rather than allowing creditors of the debtor member only a charging order. Now, an $11K judgment against the single member is enough to liquidate the LLC.

I would only use a SMLLC when the single member is another entity and the operating agreement would spell out how the SMLLC is to be run.  Otherwise, they are just as effective as a sole proprietorship.

[torojd]

mycorporation.com

i only paid 300 bucks.  Why do it yourself?  Would you perform your own hip surgery or let a professional do it?

By the way, please enclose a check for 200 bucks for the tip.  I should be an attorney. lol

[John909]

Thanks. I'm feeling a bit frustrated because I went to see the lawyer and although he answered some questions I had, I'm still confused.

[Amish56]

Better to take legal advices.

[biophase]

Are you saying in the beginning you won't get a bank to lend to the LLC without a personal guarantee or that a bank won't lend to an LLC at all?  We do all our mortgages in the name of the LLC, but we have to personally guarantee the loan too at this point since the LLC is relatively new.

Yes, you would get the loan in your name and then transfer the property into your LLC.  This could trigger the due on sale clause in your loan, but from my experience the banks don't do this.  They usually find out because you have to change your insurance policy to add your LLC and a letter goes out to your lender when this happens.

[justin0419]

Biophase,
Rather than do the paperwork shuffle like that, why not just do what I said and personally guarantee the loan to the LLC?

[BLL]

Yes, you would get the loan in your name and then transfer the property into your LLC.  This could trigger the due on sale clause in your loan, but from my experience the banks don't do this. 

It does trigger the clause, but banks don't really care. In the few cases, I have seen issues, the bank allowed the LLC to assume the mortgage for a small fee. Another case was in a bankruptcy proceeding.