The limited liability company (“LLC”) entity form has gained a lot of popularity over the last several years as an alternative to corporations. It offers owner protection from liability to the business creditors much like a corporation, but can be more flexible than the traditional corporate form. In Texas the Secretary of State charges $300 as a fee for creating an LLC. Of course that is the state’s fee and does not pay for an attorney consultation and drafting the organization documents such as the Company Agreement, Organizational Meeting Agreements, Resolutions, etc.
It is tempting to think that a DIY approach will suffice. In an effort also to save money those who know they need help opt for using an online service to draft their documents. Consumer Reports® did an article in its September, 2012 issue reviewing three such services and unsurprisingly did not find them to be a match for an attorney.
Under Texas law as set out in the Business Organizations Code certain provisions are defaulted to exist unless something different is provided in the Certificate of Formation or Company Agreement. For example unless the documents provide otherwise, each member of an LLC gets an equal vote, regardless of whether each owns an equal share or only a small portion. Another default provision is the prohibition of a member being expelled or withdrawing, and requiring unanimity to amend the company agreement. These are just a few of the provisions in the law that will take effect unless the agreement is drawn differently, i.e., in accordance with the wishes and needs of the client. Setting up a limited liability company without receiving proper legal help is like buying a suit without a tailor making sure it fits you. Whether it is a suit or a business agreement make sure it fits.
It is tempting to think that a DIY approach will suffice. In an effort also to save money those who know they need help opt for using an online service to draft their documents. Consumer Reports® did an article in its September, 2012 issue reviewing three such services and unsurprisingly did not find them to be a match for an attorney.
Under Texas law as set out in the Business Organizations Code certain provisions are defaulted to exist unless something different is provided in the Certificate of Formation or Company Agreement. For example unless the documents provide otherwise, each member of an LLC gets an equal vote, regardless of whether each owns an equal share or only a small portion. Another default provision is the prohibition of a member being expelled or withdrawing, and requiring unanimity to amend the company agreement. These are just a few of the provisions in the law that will take effect unless the agreement is drawn differently, i.e., in accordance with the wishes and needs of the client. Setting up a limited liability company without receiving proper legal help is like buying a suit without a tailor making sure it fits you. Whether it is a suit or a business agreement make sure it fits.