- You've done it.
You have decided you're gonna form an LLC for your business.
It's a big step.
So now comes the first big decision,
how are we gonna do this thing?
Are we gonna DIY our LLC formation?
I mean, the forms, they look pretty straight forward,
how difficult could this be?
Or should we maybe get some help with this
from one of these online filing services
that can walk us through the process.
Stick around,
'cause I'm gonna tell you some of the pros and cons
of DIYing your LLC, and when it might be a better idea
to use a service that can help you through it.
Hi everyone, I'm attorney Aiden Durham
with 180 LACO in Colorado.
Welcome back to All Up In Your Business.
Before we get into whether you should DIY your LLC
or get some help with it,
if you're new to All Up In Your Business,
welcome, please be sure to subscribe
if you haven't already done so and click that little bell
so you get notified anytime I post a new video.
Also quick legal disclaimer,
I am an attorney, but I am not your attorney.
None of the things that I'm talking about here
should be taken as a substitute for legal advice
because it's not.
You should always consult
with a lawyer who's licensed in your state
if you need help with any particular legal issue.
I also wanna give a huge thank you
to our very special partners for this episode,
our friends over at ZenBusiness.
ZenBusiness is an all in one platform
and team of experts that helps you set up your LLC quickly,
efficiently, and accurately.
And it keeps you on track as your business grows.
With ZenBusiness, you can not just start your LLC,
but you can get your EIN
and your registered agent for your LLC.
Stay on top of things and stay compliant.
And you can even get help
with business permits and licenses.
You can learn more about ZenBusiness
and how ZenBusiness can help you start and run your LLC
by checking them out using the link in the description.
So before we start talking about if you should DIY your LLC
or if you should get some help with it,
let's start by talking about what it takes to set up an LLC,
'cause how are you gonna know
if you can do something yourself
if you don't know how to do it in the first place?
The first step to forming an LLC
is going to be forming the LLC,
which you do by filing documents,
typically it's called the articles of organization.
Some states call it a certificate of formation
or something similar to that, but you'll file the articles
of organization with the secretary of state
in the state where you want your LLC to be formed.
This paperwork, these articles of organization,
these are what starts the LLC
(air gushing) breathing,
this is what creates its existence.
Once these papers are filed
and recorded with the secretary of state, our LLC is alive.
Now depending on your state,
there might be some additional requirements,
New York state, for example, they require publication.
So you have to publish notice of your LLC formation
in a local newspaper for some amount of time,
I don't know, I don't form LLCs there,
I'm not sure how it works, I just know that that's a thing.
Like in California as well,
I think 90 days after you form the LLC,
you have to file a statement of information.
So each state is gonna be a little different
about what they want specifically
on their articles of organization,
or if you have to do some extra steps afterwards.
So you're gonna need to check your state's laws
or consult with an attorney
who's licensed in your state
to figure out if there's anything extra you need to do.
But then once all that's done and once the LLC exists
and it's alive, the next thing we're gonna do
is apply for an EIN employer identification number
or a tax ID number.
This is something that we get through the IRS,
basically like the social security number for the LLC.
It is free to apply and most of us can do it online
on the IRS's website at irs.gov.
You're also gonna need to look into
any potential business licenses
or permits that might be required.
These very rarely are gonna be
some kind of like federal license,
unless there is a federally regulated license
that you're subject to, but typically these are gonna be
either at the state, county or local jurisdiction,
so your city or your town
or your county where your business is located
or operates, they might have some requirements
for maybe just a general business license
or a business permit.
If you're operating from your home, your city or your county
may have a home based business permit
or license requirement.
These requirements for permits licenses,
they're gonna depend,
they're gonna vastly vary depending on where you're located,
where your business is located
and the type of business that you operate.
Once you've got those things out of the way,
you're gonna make sure you have any additional documents
that you might need for your LLC.
Most often, this is going to be an operating agreement
which is the internal governing document
for the LLC and the members.
Even if you're a single member LLC,
you should still have an operating agreement.
You may also need an initial resolution
or a banking resolution
if you need to give authorization
to maybe someone who's not an owner or a member
so they can make transactions on your bank account,
you may need some initial resolutions for those as well.
And speaking of banking, once you've got your LLC set up,
you've got that EIN,
you've got that operating agreement ready.
You need to go open a business bank account.
This is an absolute necessity,
I don't care who you are, what you do,
you need a dedicated business bank account for your new LLC.
If you're still wondering, Aiden,
"Why do I need a business bank account?"
I did a whole video not too long ago
talking about why you need a business bank account.
So check that out.
I will link to it in the description.
And then after the LLC is formed, the job is not done,
there's continuing obligations
and responsibilities to our fresh new LLC.
Most states have some kind of annual filing requirement.
In Colorado, it's a periodic report.
Some states call it an annual report,
some states require it every year,
some require it every few years.
Whatever it is,
you need to be aware of your state's requirements
and make sure your keeping up with those requirements
so your LLC stays compliant and in good standing
and you don't get in any trouble
or have to pay some fines or find out one day
that your LLC has been dissolved by the state.
Okay, so now we know exactly what goes into it,
so should we do this on our own?
Should we DIY it or should we get some help?
What's the benefit?
Why would we DIY it?
I think of course, this should be pretty obvious,
the main benefit, the biggest pro to doing it yourself
is going to be the cost.
You only have to pay for the filing fees, which are, again,
are gonna vary state by state,
sometimes it's 50 bucks, sometimes a 100
sometimes a few 100, whatever it is,
if you're doing it yourself, that will be,
your only expense will be associated filing fees.
And maybe if you're in one of these states
that requires publication, a fee to publish,
the notice, whatever it is, but that's gonna be it,
you don't have to pay any outside service providers
or anybody else to help you with it.
But the downside to doing that of course
is that you might mess it up.
Even if some of these forms look very straightforward,
which a lot of them are,
they don't require a ton of information, some states do,
but even if they look super simple,
it's also super easy to do it wrong.
For example, things that I see happen all the time
when people form their LLCs on their own,
getting the management structure wrong,
selecting member managed
when they wanted it to be manager managed or manager managed
when they wanted it to be member managed.
In Colorado at least,
it's just one button that you click to select
but somehow people still end up selecting the wrong one,
it's wild.
Bad registered agent information
is another mess up that I see pretty commonly,
people either wanna be their own registered agent,
so they use their home address as their registered agent.
Then they realize, oh shoot, I didn't want my home address
to be on this public document that anyone can see.
And I don't want people showing up at my house
as the registered agent or they think,
"Well, I'll just gonna PO box them,
that's not right either friends.
The registered agent needs to have a physical address
in the state where the business is registered
and a PO box isn't gonna cut it,
yet, so often I see people using PO boxes
as their registered agent address.
And another thing that's super easy to mess up
if you're doing it yourself
is with that operating agreement, 99 out of a 100 times,
you're gonna end up
with a poorly written operating agreement
if you're trying to do it yourself.
Especially if you're cutting and pasting from the internet,
little bit from this document,
let's just put together our pretty operating agreement.
It's gonna be a mess, it's gonna look like garbage
and it's probably not gonna do you any good
if you actually had to dust it off
and use it to protect yourself or your business,
which is why we have it.
So overall, I don't recommend going the DIY route
if you can't tell.
It's probably not a big surprise
that I often recommend working with a lawyer
to help you set up your business.
But if you can't do it, if it's outta your budget
or if you just don't want to,
then using a trusted and reputable service like ZenBusiness
is a great option to ensure that you're doing
everything correctly
and to make sure you've got some extra help
from an expert when you need it.
ZenBusiness gives you the tools, guidance
and expertise to let you be your own boss.
They use technology
and automation to get your business formed
as quickly, easily and seamlessly as possible.
And they simplify all the legal jargon.
So you don't have to sit there wondering,
"Wait, what does this mean?"
ZenBusiness's LLC formation tool
walks you through all the details,
and all the important info that you need to know
so you can get your LLC set up properly.
ZenBusiness is gonna help you
with so much more than just forming your LLC though.
If you're looking for a reliable registered agent service,
ZenBusiness has got you covered.
Wanna make sure you never miss an important filing date?
They've got you covered there too
with their worry free compliance service
that's included with all of their LLC formation plans.
The worry free compliance service
sends alerts for important filing and compliance events.
It includes your annual filing
and up to two amendments per year
and gives you expert support
if you ever miss a filing deadline
and need some help to get your business back in compliance.
But that shouldn't happen
because their worry free compliance service
is there to make sure
you don't miss those important filing dates.
But what I really love about ZenBusiness
and what I think makes it stand out the most
amongst all of their competitors is of course the cost.
On average, users are gonna save about 641 bucks
when they go with ZenBusiness
versus one of their competitors.
Aside from the cost though, what I really love
is that ZenBusiness gives you your very own dashboard
where you can see all of the details
having to do with your business all in one place.
You can keep all of your important documents
like your articles of organization
and your operating agreement there in the dashboard
so you've got it handy whenever you need 'em.
And if you use ZenBusiness's registered agent service,
which I think you should,
if they receive any documents on your behalf,
they will upload 'em right there to your dashboard
so you can see them,
you don't have to wait for them to forward in the mail,
none of that mess, everything you need
is gonna be right there in your dashboard.
And you'll always be able to check
if you need to file some compliance documents,
you can look back to when the last documents were filed.
Again, everything you need
for your LLC is gonna be housed right there
in your ZenBusiness dashboard.
Listen you guys, I've been in practice for close to 10 years
and I've formed a lot of LLCs in that time.
And I've seen a lot of people screw it up
when they try to do it themselves.
No matter how easy it looks,
no matter how straightforward the paperwork looks,
trust me, it's not that easy.
So just don't do it yourself, okay.
Don't do it.
Work with a lawyer or use a trusted, reputable,
longstanding service like ZenBusiness
so you don't mess it up.
You know things are gonna be done properly
and you'll have someone there
to support you should issues or questions arise.
Then you can sit back and rest easy
knowing that your LLC has been formed properly
and that you've got a team of experts behind you.
Does it get any better than that?
I don't think it does.
So if you are ready to form your LLC,
do it today with ZenBusiness.
Again, you can learn more about ZenBusiness
and check them out using the link in the description.
If you learned a thing or two in this video,
go ahead and gimme a thumbs up.
And again, don't forget to subscribe
if you haven't already done so.
Click that little bell so you get notified
and check the description
for links to additional info and resources as well.
Once you've got your LLC formed,
there's still some other stuff
that you're gonna wanna take care of.
I've got a whole video
talking about all the things that you need to do
after you've formed your LLC.
You can check it out by clicking right here
and I will see you over there.
Thanks for watching,
I'm Aiden Durham, see you next time.