LLC Formation and Amendment
Explanation and Engagement Letter
Legal Fees
Traditional and Series LLCs. We form traditional LLCs ($1,250 plus $300 filing fees plus company book) and series LLCs ($2,150 plus $300 filing fees. The company book (with seal and membership certificates) is an additional cost of around $200 depending on supply chain availability.
Amendment and Re-Doc of an Existing LLC. An example of this is the conversion of an LLC from member-managed to manager-managed. This also involves bringing the LLC current with annual meetings to date. Fees are: Less than 3 years old $850 plus $175 filing fee plus costs if any; 3 to 5 years old $950 plus $175 filing fee plus costs; more than 5 years old$1,050 plus $175 filing fee plus costs.
Conversion of a Traditional LLC to a Series LLC. This conversion process is more work than doing an initial series LLC formation, not less. It involves filing a Certificate of Amendment and replacing all documentation including the company agreement. Other steps may need to be taken depending on the individual case, including (for example) bringing the company up to date with annual meetings from the past through the current year. Fees for LLCs less than 3 years old: $2,150 plus $175 ff plus costs; 3 to 5 years old $2,250 plus $175 ff plus costs; and more than 5 years old $2,350 plus $175 ff plus costs.
Filing Fees and Costs Not Included in Legal Fees. Texas LLC filing fees are $300 for a new LLC and $175 for an amendment. In Nevada, filing fees are $425 which includes their business license for the first year. Legal fees quoted always exclude filing fees and other costs.Shipping the LLC book is around $40.
Extensive Customization Not Included in Flat Fees. Our LLC documents are very high quality and appropriately customized to suit the client, but they nonetheless follow a certain pattern and format. Asking us to prepare a company agreement, for example, is not an opportunity for the client to redesign or reinvent the way we generally draw up such documents. If the client desires a significant re-write that significantly departs from our usual format, then a higher custom document preparation fee would apply. Custom company agreements begin at $1,500.
Itemized Statement. We provide an itemized statement of fees and costs for your review before proceeding. Items not expressly shown on the itemized statement are not included in LLC formation fees. In other words, a flat-fee for LLC formation is not the same as a retainer or an open-ended arrangement for continuing legal services into the indefinite future. In a flat-fee system, services end when the items on the itemized statement are delivered. The client’s alternative is hourly billing.
Hourly Rate. In complex cases, we reserve the right to quote our $350 hourly rate instead of a flat fee. In hourly arrangements, there is no partial-hour accounting for the first hour, which is entirely non-refundable. Billing is in quarter-hour increments thereafter.
Our Goal is Maximum Transparency on Fees. Our website posts an extensive flat-fee schedule at the “Fees & Policies” tab. We offer as many flat fees as we reasonably can. If a flat fee does not apply, then our regular $350 hourly rate will apply.
Legal Fees Shown are Guidelines. Posted fees are subject to change without notice. Also, we reserve the right to vary quoted fees based on circumstances and to decline any case at our sole discretion.
LLC FORMATION PROCESS
Online Process. All LLC formation and amendments are now handled online by email, not in the office. Office visits are not included in quoted fees. We have an established online process:
(1) be sure that we have accepted your case (We are a small and specialized law firm and regret that we cannot accept every case);
(2) complete the LLC Formation Checklist;
(3) read, sign, and return this engagement letter; and
(4) make advance payment of the amount due as indicated on the itemized statement we will provide.
Initial Consultation Recommended. An initial paid consultation ($250) is the best way to discuss an overview of an asset protection plan. In complex situations, we may, at our discretion, require a paid initial consultation in order for us to gather facts and documents before proceeding.
Proceeding without an Initial Consultation. Proceeding with LLC formation without an initial consultation is at your own risk. We will follow your instructions; however, if you have chosen the wrong legal approach, the wrong documentation, or selected the wrong type of entity, we do not absorb the loss of re-doing the project. Additional fees and costs will apply.
LLC Formation Checklist. As a first step, you will be asked to complete our LLC Formation Checklist. The checklist offers certain choices (e.g., traditional LLC versus series LLC) plus additional add-on options (available at additional cost) that the client can select. These will be reflected on the itemized statement.
Filing the LLC. The LLC (the Certificate of Formation) is filed electronically with the Secretary of State, then it is out of our hands until they approve or disapprove the filing. Takes usually about 3 days although this can vary.
Secretary of State Rejection. Rarely, the S of S will reject a filing, usually because the proposed LLC name is too close an existing LLC name. The client is advised not to incur costs until the LLC name is properly approved by means of a Certificate of Filing. Incurring any such costs before formal approval is at the client’s own risk. We usually re-file at no cost to the client; however, if a filing needs to be extensively re-done for some reason then a $250 re-do fee will apply.
Company Book. An LLC company book along with seal and printed membership certificates is part of the package (passed on to you at our cost) to hold your LLC documents in one place. After LLC approval, we will insert our documents into this book and ship the package to you. You then sign the documents where flagged and issue the membership certificates. As a matter of professionalism we do not deliver loose LLC documents without a book or membership certificates (The cost of the company book may not be deleted). Note that there are repeated supply-chain issues with these books. Vendors may occasionally run out of stock on any particular type or color of book, so we reserve the right to substitute another type of equal or greater value. Books are passed along to the client at our approximate cost.
Available States. At present, we only form LLCs in Texas and Nevada. Future states may be added.
Two-Company Structure. When forming our recommended two-company structure for real estate investors, a traditional LLC is used as a management company (to deal directly with the public) and a series LLC is used as a holding company (to own properties and other hard assets). This classic approach is ideal for investors with multiple properties. Read our web article on this subject.
Warranty Deeds. We usually handle warranty deeds of properties into the LLC as a separate second step and a second billing event, so deeds are not included in the above statement. Most deeds are $450 excluding recording (so long as there is no unforeseen complication) but the fee reduces to $375 for three or more at the same time. We will need to see the existing deed(s) in order to finalize that quote. Note that clients do their own recording of signed and notarized original deeds in the county clerk’s real property records.
Registered Series. Registered series for series LLCs are optional and not commonly selected by our clients. There is an in-depth article on registered series on our website for your information. If this additional feature is desired, we will handle filing for a registered series as a separate step and billing event, after the LLC is initially formed. Accordingly, a registered series filing is not included in the first itemized statement. Fees and costs for registered series are $250 plus $300 filing fee = $550. Inquire.
Finality of LLC Documents. LLC document preparation fees are for document drafting/review/correction in the immediate time frame. Three business days after delivery of documents to the client, all documents provided are automatically considered final. A flat document preparation fee is not a lifetime retainer for an indefinite number of document changes forever – at least not in a flat-fee system. Requesting changes weeks, months, or years later (yes, this happens) will incur additional charges. An alternative is to choose hourly services.
Documents are Proprietary and Supplied PDF Format. All documents we prepare (excluding a limited number of Word templates) are supplied in pdf format. These are proprietary documents subject to copyright and are licensed (not sold) to the client for single use in a specific transaction. They may not be copied, disseminated, or re-used.
Deeds into the LLC. Deeds of properties into the LLC are not included in the initial formation of the LLC. Our method is to do this a separate, second step that is billed separately.
Assumed Names (DBAs). Assumed names are not included in our fees. This is more of a clerical than a legal task and is usually handled directly by the client. We suggest that you read our web article on this subject for details.
Anonymity and Layering. Some clients seek anonymity and we do our best to accommodate them, although increasing government regulation is making this harder and harder to achieve. Layering with other entities will likely be necessary to get the most out of an anonymity structure, which will add considerably to the expense. Anonymity on a modest budget is no longer realistic in today’s world.
No Returns. All our LLC documents are proprietary intellectual property. Once delivered, LLC documents are not returnable or exchangeable because of the unique and valuable intellectual property involved in our documentation. We are serious about this. Our firm has done this work for many years and developed extensive asset protection devices and provisions that are simply not available anywhere else at any price. No exceptions.
Client Illegality. We do not condone nor will we assist any illegal, unethical, or wrongful activity by a client. This seldom occurs, but if it does, then we may immediately cease delivering all services without refund and resign as both the client’s attorney and registered agent. We will not risk being charged as an accessory or co-conspirator in a client’s wrongdoing.
No Assistance with DIY. Note please that we do not get involved with DIY LLC formation or amendment projects. We are committed to professionally handling the entire project. We do not handle only parts of it, nor do we supply individual documents on a separate basis.
REGISTERED AGENT SERVICES
Registered Agent Services. Registered agents are persons officially designated to receive service of process (lawsuits) involving the LLC. Unless otherwise expressly agreed in advance, that is the extent of a registered agent’s duties. Registered agents are not attorneys-in-fact for the LLC. They are not legal or business representatives of the LLC. They are not general mail forwarders.
Choice of Registered Agent. Clients may act as their own registered agent, or their CPA can do so, or our firm can act in this capacity for an annual fee of $250 for the 12-month period to come. Annual meeting minutes, along with updates to the company agreement as they may occur, are available to our registered agent clients annually upon request. Our firm does not accept clients who wish to use another law firm or a commercial business as their registered agent. If this is your intention, please use another law firm for your LLC formation.
Client Must Maintain an Office Address or Postal Box for General Business Mail. A registered agent address is NOT your business mailing address, nor is a registered agent a general mail forwarder.Do NOT rely on the registered agent for routine business correspondence. A registered agent does NOT forward bank statements, personal correspondence, HOA correspondence, utility bills, credit card correspondence, magazines, and junk mail. All of these senders should be given your LLC’s business mailing address. Also: mass-mailed reminders to pay franchise taxes are not forwarded even though they come from the Comptroller (We all know that we need to file a tax return, even if no taxes are due).
Signing or Filing Annual Reports or Filing of Tax Returns NOT Included. Signing or filing annual LLC filings or tax returns or any other document is not included. We do not file annual state tax forms as part serving as registered agent. CPAs are much better set up to do this. Please engage a competent CPA to handle your tax matters. We expect all of our LLC clients to have a professional tax advisor.
The IRS. Do NOT list our law firm’s address as your company’s official address with the IRS. We do not interface with the IRS for such purposes. Consult a CPA or tax lawyer.
Opening Some Correspondence. Our firm is granted permission, if we consider it to be necessary, to open correspondence to determine its nature (It is sometimes it difficult or impossible to tell from the envelope). Attorney-client confidentiality applies.
Litigation Involving the Client. In the event a client is sued, our duty as registered agent is to forward a copy of the lawsuit to the client. That ends our registered agent duty. It is then the client’s duty to promptly obtain representation in the case and timely file an original answer. If the client does not do this, we do not then become the client’s attorney and forwarder by default. There are potentially dozens of events in a lawsuit that involve sending notices. Unless we are also retained as attorney of record in the case, we do not have a duty to continue forwarding these supplemental lawsuit notices. Our obligations as registered agent cease when we forward the original petition in the lawsuit.
The Registered Agent Annual Fee is Not a Retainer for Legal Services. The registered agent fee is not a retainer for any kind of legal services beyond the receipt of service of process. Legal advice and services are not included.
R/A Services Are for State-Level Services Only. Registered agent services are Texas state-level only (i.e., there is no such thing as a registered agent at the federal level). While we will forward any official notice and demand letters, including certified IRS mail, our legal services do NOT include interfacing with the IRS or any other federal agencies.
Keep Contact Information Current. If we are acting as registered agent, it is essential that the client keep us up-to-date concerning contact information, especially email. If mail to the Company or client is returned by the U.S. Post Office “not deliverable as addressed,” and the file does not reflect any other way to get in touch with the client, we are permitted to resign as registered agent.
Change of Registered Agent. The registered agent may be changed with the Secretary of State’s office at any time by filing form 401 and paying a $15 fee. This is a clerical task and does not require a lawyer’s assistance.
LLC TAXES, ACCOUNTING, AND BANKING
No Tax, Accounting, or Book Keeping Advice. Our firm does not give tax, book keeping, or accounting advice at all. We require all of our clients to have a qualified CPA as part of their professional team. Our focus is on legal liability and keeping the client out of the courthouse. A CPA focuses on keeping the client out of trouble with the IRS and the state comptroller.
IRS EIN. This is not included but is easily obtained by the client at irs.gov.
LLC Bank Accounts and Series LLCs. Banks have differing policies and levels of familiarity with respect to series LLCs. We make no guarantees about what your bank’s policies may be on the subject of series LLCs or about the willingness of your bank either to open an account or make a loan to the LLC or any of its series. We are absolutely not in the business of guaranteeing what banks will do.
Note on the Availability of Loans to Real Estate Investors. This firm does not make any assurances that you or your LLC will be able to get a loan from any particular lender.Lawyers never make any such assurances or guarantees. It is occasionally necessary for an investor to “shop” lenders (just as he or she might need to shop title companies, insurers, and other providers) in order to determine which of these is most friendly to the investor’s structure and business model.
DOCUMENT TRANSMISSION
Supporting Documents. Please provide legible and relevant copies of supporting documents in easily downloadable form. Please scan/email in the usual manner, each as a single document and a separate attachment, and NOT as multiple individual pages or separate jpegs.
Email Attachments. Email attachments should be in pdf, Word, WordPerfect, Excel, or other common software. Please do not send documents in the physical mail. Avoid Dropbox or any method that requires us to get a password and enter a third-party site in order to gain access to your documents. Do NOT apply any form of encryption. We will decline to deal with any of that.
Data Dumps. Send us only the information or documentation that we request. Dozens or hundreds of extra and unnecessary pages make your file much more cumbersome and time-consuming for us to download, read, and manage. We rely on you to screen out irrelevant material. The time it takes to sort through large data dumps of irrelevant material may result in a flat fee being increased.
GENERAL TERMS OF SERVICE
No Texting Please. We do not offer consultations or any other legal services by text. While texting may be suitable for casual communications, texting of sentence fragments and one-liners is not suitable for a nuanced legal case. Please use a keyboard device and take your time.
No Group Consults Please. We do not offer group consultations with multiple persons at different email addresses. Group discussions may work in a law office conference room but they quickly become chaotic and unproductive by email. We work with one client (or married couple) at one email address.
No Consults on Behalf of Third Parties. We occasionally receive inquiries from persons who are asking about the legal situation of another. For liability/confidentiality reasons, our policy is to deal directly with the actual client and not through an intermediary.
No Guarantees. Lawyers do not make guarantees. We cannot guarantee that forming or amending an LLC will produce any particular outcome for your business, nor can we guarantee that our guidance will be what you want or expect to hear. No exceptions.
Business Hours, Weekends, and Holidays. We take business hours seriously.Traditional business hours apply (Monday through Friday, 8-5 CST) subject to our posted vacation schedule.After-hours emails are viewed as being received on the next regular traditional business day.
Client ID. The requirement of government-issued photo ID is now common at law firms, medical offices, and other professional firms everywhere. Fraud is rampant. We do not work with anyone who declines to provide ID.
Engagement Letter. This document is our engagement letter setting out the terms and conditions of this LLC matter. If you wish to proceed, your signature is required below.
Terms of Service. All of our firm’s general terms of service (found at the “Fees & Policies” tab on the website) apply without exception to all persons receiving legal services in addition to the TOS set forth in this engagement letter. Inquire if you have questions.
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