Craig's Corner - Wealth Planning Insights

Tuesday, December 2, 2014

Dangers of Do It Yourself Corporate and LLC Formation

If you are thinking about starting your own business, or your business is already operating but you are thinking about changing its structure, you might be considering do it yourself corporate or limited liability company (LLC) formation.  There is a wide variety of information, forms and services available to assist you in the formation of your entity so it might seem like it is something that you should handle on your own.  Take caution- it is not.  Checking out a book from the library or doing online research is not enough.  Business formation is a legal matter and should be handled by a qualified attorney and doing it yourself can have serious consequences.

Engaging in do it yourself formation could expose you to a multitude of risks.  It is always important to consult with an attorney to determine whether the structure you are considering is right for your specific situation.  These matters are not one size fits all and an attorney is best equipped to explain the benefits and detriments of each business form.  

Although it might seem simple, there are various laws that govern corporate and LLC formation and they need to be abided by in order for your business to be recognized.  For example, the governing documents, whether they be bylaws and a shareholder agreement or an LLC membership agreement, need to be drafted in a certain way in order to provide all of the benefits of these business structures.  An error in or leaving out a provision could cause the business not to be recognized by the state, have major effects on the operation of the business and even expose the owner of business to liability. There are many legal nuances that need to be considered during this process and that is why seeking legal counsel is the best choice.  

The hallmark of the corporation and LLC is the existence of a new entity, separate and apart from the owner, allowing the owner limited liability.  An owner could be held personally responsible for liabilities of the business if formation is handled incorrectly.  These structures also have certain tax benefits and you want to make sure you are taking full advantage of these while also complying with the applicable laws.  There can also be compliance issues depending upon the industry the business is operating in, making it important to consult with someone who has experience in the often intricate laws.  Many engage in do it yourself formation as a way to save money and mistakes end up costing them more in the long run than doing it right the first time.  Lastly, if you use a do it yourself method of formation, you have no recourse if something goes wrong.  

While business formation might seem expensive, it is a good investment. It is important to protect yourself and your business and seeking advice from attorney is a step in the right direction.  Contact Nevada business law attorney Craig Stone today by calling (877) 905-0890 for a consultation.

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S. Craig Stone II of Stone Law Offices, Ltd. serves clients throughout Clark County, Southern NV, Las Vegas, Henderson, Boulder City, North Las Vegas, Summerlin, Carson City, Reno, Washoe County, and Nye County. Also serving clients with asset protection nationwide.

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