It’s not uncommon at all to hear about entrepreneurs forming their own limited liability companies (LLC), or using an online business formation service. After all, some LLCs are rather simple business structures, and may not require the expertise of an attorney.
However, if you don’t have much experience forming businesses, or if you just want to make sure that each step of the process is completed correctly, it’s never a bad idea to enlist the assistance of a qualified business attorney.
As long as you have the budget for a lawyer, their experience can provide a tremendous amount of peace of mind. Additionally, their efforts free up more time for you to focus on actually building and developing your business, rather than spending time filling out paperwork.
But how do you find an attorney to form an LLC? How do you choose the right lawyer for your business? In this article, we’ll answer these and many other important questions about hiring a lawyer to form your new LLC.
First off, let’s quickly outline what an LLC is. A limited liability company mixes elements of sole proprietorships, general partnerships, and corporations, essentially giving entrepreneurs the best of these worlds.
LLCs are typically taxed similarly to sole proprietorships and general partnerships, in that the owners include any company profits or losses into their personal returns — the LLC itself does not owe income taxes. An LLC may also elect to be taxed like a corporation, although this is not a very common option.
There are similarities to corporations too, especially when it comes to financial responsibilities. In an LLC, the owners or members are not usually personally accountable for the financial status of the business. This means that if someone sues your LLC, your personal assets are not at risk.
It’s true that many LLCs can be formed by their owners, or by an online business formation service. In this case, why would you pay hundreds or even thousands of dollars to have a lawyer tackle this process instead?
To begin with, an attorney can inform you whether you’re making the right choice by forming an LLC in the first place. Perhaps a corporation or limited partnership would be a better option, and that’s not a conversation you’ll get to have with the DIY route or an online service.
In addition, a lawyer can help you figure out what should be done if your business operates in multiple states. An attorney will know all about which state you should form your LLC in, and how to file your foreign qualifications for the other states you conduct business in.
When it comes to the actual formation of your business, there’s no better way to make sure your formation documents are correctly drafted and filed than to hire a business lawyer to create them for you. Furthermore, we always like having a lawyer draw up our operating agreements.
An operating agreement isn’t legally required in most states, but it’s tremendously helpful to have a good one created for your LLC. The operating agreement is an internal document that outlines how your business will be run, and it’s a vital document whether you’re operating a single-member or multi-member LLC.
Overall, there’s no single aspect of LLC entrepreneurship that demands a lawyer’s expertise. However, an attorney can help you make sure everything is completed correctly. They also streamline the entire process, freeing you up to focus on running your business.
Sure, it might be an expensive option, but hiring an attorney to form an LLC is often worth the price tag.
It’s important to find a lawyer who has experience with business formations, first and foremost. One good way to choose an attorney is to ask around.
Have any of your clients or partners hired an attorney to form an LLC before? If so, who did they hire, and would they recommend them? Word of mouth is still an incredibly important resource, even in the digital age.
Some other options include contacting your region’s bar association, as they keep records of all the attorneys offering business services in your area. In addition, if there’s a law school near you, check to see if they provide entrepreneurship outreach programs. This can be a great way to get your business formed by a law student, without the high expenses of hiring an actual practicing attorney.
Another increasingly popular option is to take advantage of the resources offered by online legal services companies, like Rocket Lawyer or LegalZoom. These companies can connect you with qualified business attorneys at discounted rates that can slash your overall costs considerably, compared with hiring a lawyer out of the phone book.
You can also turn to Avvo for assistance. Their interactive search tools make it easy to find exactly what you’re looking for. You can sort their attorney directory by location, specialty, experience, and more. Avvo’s search functionality allows you to handpick your lawyer more than Rocket Lawyer or LegalZoom does, although they don’t offer the pricing discounts that those services offer.
Once you’ve found an attorney that you think could be the right fit for you, it’s always best to schedule a consultation so you can ask them some questions. Make sure to find out how much experience they have working with small-business entrepreneurs, get a feel for their fees, and ask them some basic questions about how they should proceed.
Asking the attorney some questions about taxation structures, and the length of time it will take to get your business formed, can help you determine if they are the right lawyer for you.
There are three main options when it comes to forming a new LLC. You can tackle the DIY route, you can hire an online business services company, or you can hire an attorney. Of those three options, hiring a lawyer provides your business with the highest degree of professional assistance, and it also likely saves you a considerable amount of time and energy as well.
Of course, some startups don’t have the financial capacity to hire an attorney, and that’s fine too! That’s exactly why online business formation services exist. If you’re interested in saving some money while still gaining access to professional assistance, check out our comprehensive guide to the top LLC formation services available.
Whether you choose to hire an attorney to form your LLC or not, we hope this article helped you develop your understanding of how to select the right lawyer to form your business!
We think you should start an LLC before you begin conducting business. While it is entirely legally acceptable to operate your business as a sole proprietorship or general partnership before forming an LLC, doing so subjects you to a number of risks that LLCs don’t have to worry about.
For example, informal business structures don’t have limited liability protection, so any lawsuit filed against the business can include the owner’s personal assets as well as the business assets.
The answer to this question lies in your personal preferences, but we can give some general pointers. An attorney will cost the most by a mile, but also provides expertise you won’t find with the other options. The DIY route is free of charge but can require quite a bit of legwork and provides no peace of mind that the process is being completed correctly.
Using an LLC service means your business will be formed by professionals who know what they’re doing, while also costing significantly less than a lawyer. This “best of both worlds” attribute is what makes LLC services our preferred option.
Using an online LLC service removes much of the hassle from the business formation process. With these services, all you need to do is provide them with the name, location, and industry your business operates in, along with some info about yourself and your registered agent.
The service then creates your Articles of Organization (or similarly named document) and files them with your state to create your new LLC.
Absolutely. There are quite a few reputable companies offering LLC formation service these days, including the three best LLC services we discussed earlier.
In fact, while we certainly have our opinions about which ones offer the best pricing and features, every one of the incorporation services we discuss on this website is entirely legitimate and trustworthy.
In some ways, using an LLC service does protect your privacy, especially if you choose to also have that company serve as your registered agent.
This is due to the fact that, if you serve as your own registered agent, your personal address will often become part of the public record. Using a registered agent service not only provides the privacy of using the agent’s business address as your own, but it also significantly cuts down on junk mail.
This is why we’re such big fans of companies like Northwest Registered Agent that include a year of registered agent service with their LLC formation packages.
This is an impossible question to answer in an across-the-board manner, as each business type has its own advantages and disadvantages. That said, the LLC is typically the more suitable option for small businesses and solo entrepreneurs, while the corporation is usually a better fit for large companies. For more info, speak with an attorney or check out our complete comparison guide between LLCs and corporations.
Disclaimer: The content on this page is for informational purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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