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LLC and dba

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Jan 15, 2009 3:32 am

I looking into going independent and was wondering how soon before I make the move should I set up my dba and LLC.  I am a little concerned that it may become public information and I would rather my current b/d figure out that I am consider leaving.  I would like to set it up prior to jumping, but don’t want to do itt too soon.  Any thoughts from someone who may have done this lately?

Jan 15, 2009 6:06 am

It doesn’t take long…an accountant friend set mine up nine days before I jumped and it was ready in plenty of time.

Jan 17, 2009 6:27 am

I did mine in just a day!

Jan 19, 2009 2:21 pm

This can be a little touchy.  If your current B/D doesn’t allow you to operate your own RIA Firm and they catch wind of it (it has happened) they can hold you in violation of unauthorized outside business activity and throw dirt on your U5.  I would proceed with caution.  Another strategy to consider would be to resign from your current B/D and join another which has a very friendly outside RIA policy then get started.  If you plan on going strictly RIA Independent (No More B/D) – you can always resign and jump immediately into forming your own advisory practice.  Best of luck to you!

Jan 19, 2009 2:34 pm

I concur that it isn’t difficult to get an LLC and DBA established. You can get the ball rolling and make sure that the names you want are available, then actually legally establish these names within a short period of leaving. That being said, I advise you to definitely get it done in time to get it on all your new, letterhead/envelopes, etc.  for approval. Your transition person may well try to tell you that all this can be done after transition (they don’t care if you use an LLC or DBA, they just want to get their job completed). I strongly suggest you get it done, and done right, the first time, BEFORE the actual transition. Having to re-create and re-print everything during the most stressful part of your working life is just more than you need to worry about. I’m not a big “Black Helicopter” person, so the old firm finding out didn’t ever worry me. You are the one in control. Hell, you’re quitting their firm! Good luck! I can’t imagine you’ll regret the move.

Jan 19, 2009 4:33 pm

I concur with YHWY–I set mine up after I reserved the name…I reserved the name 60 days before I left Jones–I then paid my fee the day I resigned via email–I had it approved the same day by the state—it really isn’t a big deal!

Jan 19, 2009 5:27 pm

Just make sure you check your name vs the list already on your states… For example my name(as uncommon as I thought it was) had similar LLCs, and the state had to review it against the current names to see if it would cause problems… took 4 weeks…

Jan 19, 2009 7:59 pm

If you are leaving a wirehouse it is also not unusual to have the legal entity formation, SEC registration and related start up accomplished using a legal stand-in’s name instead of your own in order to make sure you stay under the radar, as most of those are publicly available databases that the wires or anyone can access and review.  You don’t want that premature discovery when you are still several weeks away from D Day and not ready to jump.  Everything is legally and easily transferred into your name(s) after your safe exit.

It adds a small amount to the legal costs, but saves a lot of potential headaches.