Forming an LLC

Forming an LLC can be a quick and painless process. The laws that govern this type of corporate identity are found in MCL 450.4102, et seq. The process is only painless when you have an experienced hand to guide you through the necessary filings, forms, articles, and legal implications.

Often business planning for LLCs requires a careful consideration of the short-term and long-term goals of the business members. Each LLC is its own creature. Each LLC requires unique adaptations of the “template” forms and articles that some attorneys and start-up services use. Frequently, new businesses are handed “kits” to start their LLC with little-to-no instruction or explanation of the legal consequences of key decisions.

In fact, one of the most important questions is typically not asked when a person purchases a start-up “kit”: Is a LLC even the right type of commercial entity to form for your business?

Unfortunately, over the last decade LLCs have been given this “cover-all” type of designation by entrepreneurs. An LLC is only one of many types of entities that can be used to grow your business. Were you instructed on the tax implications of using an LLC versus an S-Corp? Are you willing to pay a self-employment tax on top of income tax? Typically the answer to both those questions is “No”. Well, then a LLC is likely not the appropriate commercial vehicle to grow your idea.

Another example of what information a “kit” company won’t give you is that LLCs in Michigan do not require operating agreements under MCL 450.4102, et seq. However, an operating agreement can be a vital tool in accomplishing certain goals for the management, capitalization, distribution, and dissolution of the organization. It can allow you to have a written agreement to handle the affairs of the LLC and determine the standard processes for handling important legal and commercial issues.

To provide an example of the “kit” companies to avoid, I’ll reference At its site, they offer a three step LLC formation system. It goes as far as to reference successful and known business names as “satisfied customers.” I will not endorse their services, but will agree that it is possible to form an LLC in three steps. However, it does not provide you with guidance, advice, counsel, or even an explanation of the implications of the forms you are filling out. LegalZoom provides this clear disclaimer: “The information provided in this site is not legal advice, but general information on legal issues commonly encountered. LegalZoom’s Legal Document Service is not a law firm and is not a substitute for an attorney or law firm.” It’s the best advice it has to offer. LegalZoom is not a lawyer, it does not care about your business’ long term (or even short term) viability. LegalZoom cannot, and will not, provide you with an understanding of the decisions you are making during the ever so important infancy of your company’s existence.

My leeriness is not limited to “kit” services offered by certain websites. It extends even to attorneys who practice “quick and easy” business formation law with a form bank and secretary. Forming a business is a legally significant process. However, some attorneys treat business formation like a plug and play act. Take data from a client, input, press enter, get a company started. Without delving into the ethical protests I have against this type of legal practice, I have to say that Wilson Law Group, PLC does not believe in, or agree with, this type of business formation. Your business is unique. It has its own distinct needs and should not be treated as a run-of-the-mill entity. It doesn’t matter if you are trying to sell crafts on or cars on a lot. You deserve to have attorneys fighting to ensure the long-term success and legal viability of your hard work while providing you with a complete picture of your legal options.

You should have an attorney holding your company’s hand from the cradle to the grave. An attorney who is willing to answer your questions (you’ll have more than you realize over the life of the business). Additionally, you should find an attorney who is willing to take a hit on his/her fees at the onset of the relationship. At Wilson Law Group, PLC we offer simple to sophisticated business planning. We go the extra mile and offer inexpensive options to have an attorney a phone call away. Our goal is to get you through the best times and the worst times. We build relationships with businesses and their owners and members, keeping them apprised of the important changes in the laws of their industry. Providing them with the information that is required to make hiring/firing, franchising, real estate acquisition decisions, while fighting to protect the investment of time and money of the business and its owners.

We don’t offer legal advice in this blog, but give us a call and we will offer a free consultation of your issues.

1 (866) FIGHT 01 or 1 (248) 247-1123

2000 Town Center, Suite 1900

Southfield, Michigan 48076

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