I hired a lawyer to set up my LLC and is now charging me a $150 Annual Meeting Minutes for the property. Is this a legitimate

You is paying who this fee ?

The LLC is paying you to keep minutes? The lawyer gets the fee for recording minutes ?

What am I going to ask him, he wrote it up. Steve, are you paying this fee?

In MA the state extorts a $500.00 yearly filing fee.

What Ken stated - no "meeting fee" there is an annual fee for an LLC that is payable to the state.

The annual meeting can be you and the "partner(s)" sitting having coffee one day. You bring up "business", write down who was in attendance and what was discussed in a notebook.

You need minutes from an annual meeting, but you don't have to have a lawyer draft them. I had my attorney give me a template, and it says something to the effect of "we ratify everything management did last year." I just change the date each Dec 31, sign it, and put it in a binder. I'm 100% owner so there's no need for more formal procedings.

I disagree about the meeting fee.......

You absolutely need to hold a meeting every year.....even if you are a sole member LLC. I recommend that you even hold a monthly meeting.

Now to clear the air here is my logic:

I do think its crazy that any attorney is to be used as your secretary in an LLC.

I recommend that you hold that MONTHLY meeting in your own house. Since the home office deduction has been a closely watched area for IRS audits....I don't use a home office. You can however hold a meeting a in your house. In fact your LLC would have to pay for a meeting room.....while at the same time you are allowed to rent out your house for up to 14 days a year before it becomes a rental property.

Tying these two pieces together, sounds like a $1,200 reclassification of LLC income to personal income.

Obviously you have an agenda item for the next meeting. :) Ask for a copy of the meeting minutes, ha.

In TX, I have a one-time fee to set up the LLC. Each year afterwards, I have to file a "this is why I'm not paying franchise tax" form and a "this is my public information" form.

LLCs vary significantly by state. "Still Learning" is the only one in here with an answer that really matters much for you, IMO.

Also, in my opinion, LLC make little sense for single-member or all-managing-member situations. They MAY provide a slight distraction for bad lawyers, but otherwise do very little (and often complicate things to make it worse) for situations where all of the members are managing members. (In your case, if your partner is NOT a managing member and doesn't make any such decisions for your rentals, then an LLC can make sense.)

I hope you have a nice, big umbrella policy in place. If NOT, then that is much more important than an LLC. Especially when you clearly have little idea how the LLC should operate and what protection it likely provides (or doesn't provide). If you DO have a nice umbrella policy in place, then, in some states, an LLC might be a good idea (but I still think that is rare for most LLs).

- John...

Guess it depends on whether you want your name shielded or not. Ask your lawyer what you are getting for the $150.

I am a director for several corporations.

I insist that every one of the companies for which I am a director holds regular Board meetings and annual shareholders' meetings. If it falls on me to do so, I send out notices of the shareholders' meeting to all shareholders and notices of the Board meeting to all directors.

I often chair the meetings, and after the meetings, I generate minutes, which are read at the next meeting and approved.

This is a "waste" of my time, but it is necessary and appropriate for the protection of the owners of the corporations. I charge between $500 and $1,000 for this work. And I consider this a "loss leader" that I offer to the company.

If anyone tries to pierce the corporate veil of these corporations in order to get to the underlying shareholders, the fact that we meet the procedural requirements is important. We do not just pretend, we really do hold meetings and document the corporate proceedings.

In my corporate documentation, I preserve all of the notices, a copy of my calendar showing the time blocked out for the meeting, my time sheets billing the corporate client for sending out the notices, for holding the meetings, for preparation of the minutes after the meetings; I also keep a copy of the conference room reservation paperwork. It is all documented, and constitutes solid proof that we complied with the corporate formalities.

The fees I charge are over and above the fees that the State charges. My fees are for overseeing the corporation's compliance with the procedural requirements. I think it is worth the protection; any client who does not feel that it is worthwhile is free to dispense with it, but in that case, I will not remain a director.

Al: You're missing the point, I think. The fact is that when it comes to the PROTECTION that you THINK an LLC will provide for you, there is NOT a "huge difference" between you and what Mike45 is talking about. THAT is the real point here. LLCs are not some magic shield that mean that you won't be liable for negligence because you happened to pay a few bucks to set one up.

WAY too many people think that. Again, that is why I said that I really hope that you also have a large umbrella policy. That is 100x more important, IMO, than an LLC. Especially an LLC where you have to worry about $150 to do it properly. Again, most people with small LLCs (especially single-member LLCs) are very likely to NOT be protected in a lawsuit. That veil is easily pierced even when you DO the proper paperwork -- and even moreso when you don't.

- John...

Still Learning: I mean an umbrella liability policy. The amount depends on your personal assets. It needs to be high enough to cover most lawsuits without it affecting your personal assets. So, for me, I'd still be fine with a $1,000,000 policy. (Although, a $2,000,000 policy does not appear to be that much more in my area, oddly enough.) For others, it would need to be more than that.

Al: I think "thinking that an LLC was enough" is a huge mistake that too many people make. Especially people that are asking about whether or not they need to take minutes and such.

Listen, we've discussed this 100 times here and people fall on both sides of the argument. I'm not a legal expert on LLCs. People will disagree with me. However, in the end, when we've discussed it before, the general consensus was that the BEST thing to do would be to have an umbrella liability policy in place and then also do the LLC. Most of us seem to agree that if you HAD to do only one, then do the umbrella. In my OPINION, there is just more protection there.

Put simply, in most states, LLCs were never designed to "limit the liability" of MANAGING members. LLCs were designed to allow NON-managing members to have their liability protected. To be shielded from lawsuits when a managing member of the LLC was negligent in some way. The intent was to protect those non-managing members of the LLC from being held PERSONALLY responsible for someone else's negligence if they literally had nothing to do with the decisions involved.

So, contrary to what the name might imply, LLCs were simply not created to "limit liability" of ALL of the members of the LLCs. Only the non-managing ones. So, for most of us here (including Al), who would very clearly be MANAGING members of the LLC, we very likely likely could still be held personally liable for negligence.

So, as an example, let's say that you have a rental under an LLC. A tenant informs you that the screws have come loose on the stairs. You ignore this for a few weeks deciding that you have better things to do. Another tenant in the same building goes to use the stairs, slips and falls because of the loose screws (which you were clearly made aware of weeks ago), and breaks their hip.

You are very likely to be sued for negligence. They will sue BOTH your LLC and you personally. A good lawyer will argue that the LLC "protection" should be pierced because you were negligent on a personal level. That is why they sue both you and the LLC. In my OPINION, the judge would actually be CORRECT to allow them to collect from your personal assets beyond the LLC holdings. Again, because you were personally negligent.

LLCs are not meant to shield managing members from personal liability in the case of negligence. Otherwise, it would just be hiding assets. That isn't what an LLC does.

There ARE a few exceptions if a FEW states when it comes to single-member LLCs -- but those are pretty rare and, in my opinion, a good lawyer would still be able to pierce the veil of the LLC in the vast majority of cases.

So, the short version of my opinion on LLCs is this: If you have some partners that don't actually make critical decisions about the rentals, then an LLC makes sense to protect THEM. But, for yourself, you should not rely on an LLC to protect YOU. You can and often will still be found personally liability for negligent decisions that you make and your personal assets WILL be included in judgments when that happens. So, a personal umbrella policy makes the most sense -- with or without an LLC.

- John...

Also, just to note it, in MANY states, owning a rental in an LLC means that you cannot personal act in any legal regard for that entity. In MY state (Michigan), I cannot file for eviction myself if the properties are an in LLC. Most states require that legal entities be represented only by legal counsel, of course. Therefore, a lawyer would have to handle every eviction or other such legal action because you would not be allowed to represent the LLC -- because you aren't licensed to so.

Granted, I've seen judges in some states where this isn't technically allowed just ignore it and allow an LLC member to represent the LLC in court. But, again, as soon as you do that, you're taking an action to make it easier to pierce that veil should anything big ever happen. You can't have it both ways. You can't want to treat it like it isn't a legal entity when it is convenient -- and then treat it like it is a protective shield when you need it later. Everything you do in an LLC is something for a good lawyer down the road to analyze and use to pierce that "protection."

- John...

Thanks for your insight John. We have a personal umbrella and the LLC has a commercial general liability business policy and an umbrella of 5M. The 5M LLC umbrella costs under $1000 a year. Unfortunately having used many of my insurances for large claims, I believe in being insured.

Has anyone tried legal zoom to set up an LLC? If so what are the costs for it

Al,

My suggestion:

Until you know and understand the rules of an LLC I suggest you continue with your atty, watch everything over his/her shoulder, and ask him/her a ton of questions. Ask if you can do your own meetings.

Never assume.

Legal matters are not about logic - they are about the fine details of the law as it is written.