When I started Sublime Computer Services in 2008 I wanted to be an LLC but I had no idea how to form the company. So I contacted a lawyer that I know who forms corporations for a living. I asked him if I needed his services to form the corporation. (Shame on me) He told me to come by the office and we could discuss what needed to be done. I did. In the back of mind I wondered how much this was costing me. We had a 30 minute meeting 15 minutes about kids and life and 15 minutes about the corporation. He told me that he would write up the paperwork but he would not file the paperwork for me and that would run me $1400 plus the filing fees. I told him “Wow.” I would have to get back to him. A couple of days later I was doing some more research on the topic and I wanted to make sure that my personal finances were separated from my business finances. I emailed the lawyer that I spoke to earlier and asked him should I wait to open a checking account until we have filed the LLC paperwork. I also told him I was not ready to file yet. (still didn’t have the $1400) He did not just reply back with a yes or no. He replied back with a “no” and an entire paragraph of legal jargon……. I knew it was coming……. The Bill.
I received a bill for $359 of legal services. I “assumed” one didn’t have to pay for services until they were rendered. Talking about working together really means billable hours for lawyers. I promptly paid the lawyer (what choice did I have) and told him that we are no longer doing business in any form or fashion he was out of my price range.
I didn’t give up there. I continued my research. I found http://www.tennesseeanytime.org/osbr/ You can go to the website and create your company and file your paperwork all for $300.
Now I was very confused. Why in the world would it cost $300 to file the paperwork that was going to cost me $1400+ from the corporate lawyer? In my experience when things are too good to be true they usually are. I marched myself downtown to hear it from the Secretary of State. They told me fill out my paperwork and write them a check for $300. In the afternoon I had my paperwork. They told me that I could have filled out the site online and formed the LLC. I have since checked out Tennessee Anytime and it is great.
Unfortunately that wasn’t the only thing I did wrong with the LLC. I filed the paperwork in November. I “assumed” that it would last for a year. It does. But that year is from January to December, period. I got to pay another $300 in January for my LLC paperwork. I should have waited until January to file.
The lessons I learned from the LLC process:
- Take your time and do your research.
- Don’t “assume”.
- Don’t try to take it on alone. (Take pride in your service, don’t be too proud to ask for help)
- Talk to other business owners. As long as they are not competitors they are happy to talk with you about getting started.
- Get a good accountant.
- Use caution before seeking legal advice. (it will cost you)
- Make lawyers and everyone else clarify their billing process.
- When filing online call your Secretary of State and confirm that the website you are about to use is legitimate. I found some sites that take advantage of ignorance.
- Tennessee has good resources for starting a business
1 comment:
Just to clarify I am not recommending that folks start companies without legal advise. I am suggesting that new business owners do the research to determine if they need legal advise and if they do make sure that they know how much that is going to cost.
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