Creating LLC - Posted by Judy

Posted by JHyre in Ohio on July 12, 2002 at 07:56:52:

Having both an accounting and legal background, I opine that most CPA’s haven’t the knowledge to properly structure entities, particularly the non-tax aspects. I’ve seen too many foul-ups by CPA’s in this regard…for example, few of them are aware of or understand fraudulent conveyance statutes…but trip over one, and your LLC goes “poof!”.

John Hyre

Creating LLC - Posted by Judy

Posted by Judy on July 09, 2002 at 22:54:18:

I’ve been told more than once at various boot camps that you can set up your own LLC at a fraction of the cost of using an attorney. We just paid $1,800 for our LLC and we have the need to set up another one but can’t spend that kind of money again. Has anyone had any experience in NY State setting up their own LLC?

Re: Creating LLC - Posted by Frank Chin

Posted by Frank Chin on July 10, 2002 at 10:04:34:

Hi Judy:

The filing fees for Corps and LLC’s in New York State is $160.00 if you check out the New York State Dept of State WEB site. They even take credit cards for payment. But I used a cut rate law firm in lower Manhattan to do the work for me for a total of $164.95. This includes the filing fee, corp book, seal, organizational minutes etc. For an extra charge, they’ll do the SS4 for the EIN#, and prepare another form for the state stock transfer tax.

As I only paid $4.95 for them doing the actaul work, I realize that its a ploy to sell additoinal services to me. But its no big deal as I threw all the promotional stuff in the garbage.

As I mentioned in the legal forum recently, there’s a publication requirement for the formation of LLC’s in NYS, which will run close to $400 upstate, and around $1,000 in the NYC area. Notice of an LLC formation has to be published in several papers for I recall three weeks, including a metropolitan paper.

One thing I have to mention is that if you have a NEW corp or an LLC, it may be useful to have a REAL attorney or CPA doing work for you. I had to get medical insurance through my new entity, and the company wanted a letter from either an attorney or CPA indicating its a “real but new” company and its no BS. Fortunately, I was able to get a letter from both the CPA and the law firm.

Frank Chin

Re: Creating LLC - Posted by Rusty

Posted by Rusty on July 10, 2002 at 07:40:51:

I believe if you go to the IRS web site you can download the forms you need. It should have instructions. I don’t know the New York market but In Louisiana my CPA charges about $500 to set up an LLC. You also might be able to get a book keeper to do it for less.

Good Luck

Uh, LLC formation has nothing to do with IRS - Posted by SueC

Posted by SueC on July 10, 2002 at 07:53:41:

Creating an LLC has nothing to do with the IRS (once you’re formed, you can choose your tax scheme under the check-the-box rules). Your state’s Department of State or Corporation Bureau should have the forms and be able to tell you the fees; many state DOSs are online with all their forms etc. Bronchick has a course about it too which you can buy on this site for a couple hundred I think.

And a CPA who is setting up LLCs may risk being charged with practicing law without a license…I’d avoid any CPA who’s doing this, without the assistance of an attorney, speaking just for myself. But your CPA CAN help you decide how you want your LLC to be taxed (partnership, S corp, C corp, etc), and file the forms accordingly.

Good luck!

Re: Uh, LLC formation has nothing to do with IRS - Posted by Peter_MD

Posted by Peter_MD on July 10, 2002 at 08:19:13:


Forming and establishing a business is one of the major areas a CPA can do best. It does not require an attorney with a law degree. The CPA will not be charged with practicing law.

CPAs are required (by the licensing State) to perform Continuing Education every year (just like Lawyers and Doctors). They are familiar with all the facets associated with Corporations (S & C), Partnerships, Sole Proprietorships, and LLCs.

I suggest you contact several CPAs and interview them regarding the establishment of LLCs. You’ll learn a whole lot about the procedures in your State. Get the initial consultation for free and decide which CPA you feel is the most knowledgeable and informative. Ensure they speak to you in terms you understand, if not, stop them and make them explain. If they don’t, thank them for their time and move on to “interviewing” the next one.

My experience is that attorneys do the same thing that I do but charge several times the amount. BTW, when you go to a law firm, you never really know who is putting the forms together and establishing the package. It could be an associate or a third year law student. This could happen with a CPA firm, but talk to the CPA and find out who will be handling the assignment if you choose to use their firm.

On reflective thought, include one or two initial consultations with an attorney and discuss this issue and the related costs for comparison. Talk to both the CPAs and attorneys to see if they are familiar with real estate investing.

Don’t forget that you need a CPA and attorney on your “team” in this business…if only for those times when one is needed quickly to “handle” a situation or problem.

Take your time and shop around wisely. It will be money well spent now rather than later.

Just the way I view this…

And another thing… - Posted by SueC

Posted by SueC on July 10, 2002 at 09:27:33:

Can a CPA get away with as many typos as a lawyer can??? :slight_smile:

Re: Uh, LLC formation has nothing to do with IRS - Posted by SueC

Posted by SueC on July 10, 2002 at 09:21:21:

Peter, I am a lawyer, and would not feel comfortable that a CPA would be well-versed in all of the default rules, the variations and exceptions and alternatives thereto for LLC formation, just as I would not be comfortable that a CPA would be well-versed in structuring the articles of incorporation for a C-corp. Does a CPA’s malpratice insurance cover them if they screw up the drating of the organizational document for an LLC formation? And can a CPA assert a priviledge similar to that of the attorney-client priviledge against disclosing the confersations with clients during the decisionmaking process?