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Is legalzoom a bad way to start an LLC.?

Rancho Cordova, CA |

Isn't it more thorough to start one myself if I'm diligent and precise, or better yet with the help of a lawyer?

Attorney Answers 8


  1. I would not suggest you do this on your own. While filing for an LLC with the state is pretty simple, there are tax elections to consider and if a management agreement is necessary there are legal issues which you should discuss with an attorney.

    The general advice above does not constitute an attorney-client relationship: you haven't hired me or my firm or given me confidential information by posting on this public forum, and my answer on this public forum does not constitute attorney-client advice. IRS Circular 230 Disclosure: In order to comply with requirements imposed by the Internal Revenue Service, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. While I am licensed to practice in New York and California, I do not actively practice in New York. Regardless, nothing said should be deemed an opinion of law of any state. All readers need to do their own research or pay an attorney for a legal opinion if one is necessary or desired.


  2. I agree with attorney Schultz. Filing an LLC certainly something you can do for little money using services as Legal Zoom. Questions is how you are going to deal with "details" as tax consequences, drafting of an operating agreement and more important, who will assist you (and how much will they charge) later down the road, when you want to change or ammend your existing structure?

    You may want to use the avvo Search tool to find and interview a few business attorneys in your area.
    Good luck!

    Douglass Lodmell is the nations #1 Asset Protection attorney and has clients in all 50 states, protecting over $4 Billion in client assets. Answers given by him in this forum do not establish an attorney-client relation. He advises to seek a specialized attorney in the area of your interest for legal representation.


  3. As a general rule, LegalZoom cannot offer the appropriate legal and business development services. The decision to operate a business under a corporate or LLC umbrella is more than just an administrative decision. The process involves a robust discussion of management issues, tax concerns, liability assessment and various marketing and business development strategies. The problem with LegalZoom is that you, as the possible novice beginner, are in charge of the process...and they will most often simply do what you tell them to do....and that is a little like being assigned to be the captain of a sailing ship for the first time...and you get to sail from California to Hawaii...sounds good until you hit a storm or winds that you did not anticipate. Like any important decision, you will want to have a telephone or email conversation with an individual business development attorney who has experience in both the legal and business development of commercial enterprises.
    By Grace...
    Shawn Jackson ESQ. (707) 584-4529
    Business Development Attorney
    Attorneys@CaliforniaBusinessDevelopment.com
    www.CaliforniaBusinessDevelopmentAttorneys.com

    No communication resulting herein shall create an attorney-client relationship unless a separate retainer agreement is signed by attorney and client. The information provided neither is legal advice nor is it conveyed in the course of an attorney-client relationship, but is intended merely as a general overview with regard to the subject matter covered. You should not act upon this information without seeking professional counsel such as any attorney in this office in a subsequent email communication (agreement) and the formation of an attorney client relationship.


  4. Attorney Schultz is correct to the extent the formation part of the LLC (under State law) is quite easy and inexpensive to accomplish. In addition to the choices you need to make in terms of the LLC's tax classification (i.e., sole proprietor, partnership, association taxed as c-corp, etc.) you also will need advice on drafting an Operating Agreement ("O/A") which can be simple or complex depending on whether there is but one owner or multiple partners. If you are the only owner then you can obtain very simple examples of an O/A available on the internet. However, if you have at least two owners then it becomes a very complex matter to do it properly and you should not attempt to do without an experienced business attorney who understands the myriad of issues that decisions have to be made. Failure to address the material business points that all owners face is a mistake that is likely to cause problems at some point in the life of a business and its owners who may not see eye to eye on certain events that are sure to come (e.g., death, disability, divorce, bankruptcy, retirement, etc.)

    My answer is not intended to be giving legal advice and this topic can be a complex area where the advice of a licensed attorney in your State should be obtained.


  5. Even if your diligent and precise, you will process what is there but you won't know what is missing. Tax elections are not the only issue. Issuing your securities (membership interests) according to law, knowing what happens if you don't have a buy-sell with any co-owner, and many other issues can only be brought to your attention by an attorney. By the way, I don't think any of the lawyers here are just trying to "drum up business". Based on my experience it costs the client the same for me to fix an LLC as it would have cost them to have me form it, plus they would have had an initial consultation and some reasonable follow up for free.

    The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.


  6. One issue I've seen with clients who have used online platforms for incorporation is that the documents they are provided are kind of "one size fits all" and are not tailored to a Company's industry or specific needs. Thus, while the documents do accomplish the basic goal of getting incorporated - they are not generally that helpful if/when they are referenced by the Members to deal with a dispute, bring on or vote out additional Members, or deal with other issues that arise in the normal course of business.

    No lawyer wants to tell a client, "This is the procedure in your Operating Agreement for dealing with this," and have a client respond, "Well I didn't know that. This was just what was provided to me when I formed the company and we all signed it."

    Hopefully - if you retain good counsel - you will understand what you are being provided (and why), and the documents that govern your company will be well suited to deal with issues as they arise.

    Legal disclaimer: The answer provided above is for general information purposes only and should not be relied on as specific legal advice. This answer does not form an attorney-client relationship. You should consult with an attorney of your choice to fully advise you about your legal rights and obligations.


  7. As with all things, when you do it yourself, you get what you pay for. By using Legalzoom, you get "fill in the box" legal documents, which may not necessarily fit your situation.

    I would recommend that you take a look at Nolo.com's Forming a California LLC to give yourself some more information about what it takes to form an LLC in California. (The book should be available in your local library, or you can get one at a local bookstore for around $25.) Armed with more information, you can make your time with a business attorney more efficient and cost effective. Best of luck to you...


  8. Shawn is correct. Too often consumers assume too much and the provider assumes too little. As soon as you hit a snag or a conflict, the legal advice and counsel that could have helped avoid the problem is 'too late'. Look on Avvo.Com under Find-A-Lawyer and get competent counsel. Good Luck in your business,

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