Here is my answer to a question posted on Linked-In:

QUESTION: Should I use an online LLC formation service?

ANSWER: I think this question can only be addressed if we know the level of business sophistication of the Company’s Organizer. In my experience, setting up LLC's is not rocket science, but making sure the Company does what it is intended to do is. Here is where online legal formation services fall short. There is no professional relationship established when you do-it-yourself. There is no one to turn to when you have a question. There is no one to turn to to help make sure you are operating the Company correctly. It's not the creation of the LLC that is challenging, it’s the on-going implementation and real-world issues that come up when the Company is dealing with third parties and vendors that make it difficult.

Over the years I've seen and read hundreds of do-it-yourself corporations, limited partnerships, and limited liability companies. For the most part, these documents are complete and look good in their pretty kits. But many times, the Company assets are not properly titled, the officers and managers are not signing documents properly, corporate formalities are not being respected, accounting and record keeping requirements are not being followed as required by the Bylaws or Operating Agreement. Why? Because nobody ever explained these things to the Owners. Their "understanding" of what the documents say, and what the documents "actually" say are many times inconsistent.

So how much are you actually saving by using these online services? 50% of legal fees? 75% of legal fees? Is the savings going to matter when the Company gets sued and a new lawyer fresh out of law school can "pierce the corporate veil" because you had no idea what you were doing? So you saved 75% of the legal fee (probable a $1,500 savings), but you lost the Company, your personal life's savings, and your home because you had no advice on how to operating and maintain the Company correctly. You didn’t mess up the Company's formation, you messed up the Company's operations and management; and it’s here that we nail you. Was the savings worth it?

You need to understand that whenever you deal with the public, or put some product into the stream of commerce, you face being sued. 94% of all the world's litigation occurs here in the United States. Our laws provide you with limited liability. Pay the extra $1,500 and get good competent legal advice. There is no such thing as a "one-size-fits-all" Corporation or LLC. Your corporate attorney should form the Company with your specific goals in mind, and should be available to answer questions from time-to-time to make sure your Company will be there to protect you when necessary. After all, that's why you set it up in the first place.

To schedule a complimentary teleconference with me to discuss the formation of a LLC, or other asset protection matters, click here.

Hope this helps,

Bradley Barth, Esq.