Do you need a lawyer to set up an LLC? This is a common question for those who are looking to form their first small business. Technically, you don’t have to hire a lawyer; no states have a law that requires this. You can create your LLC on your own if you wish, or you can hire an LLC formation service. But there are pros and cons to all three methods.
In this guide, we’ll cover the essential benefits and drawbacks of hiring a lawyer, doing it yourself, or hiring a service.
There are three options that you can use when forming your limited liability company (LLC): doing it yourself, hiring a business lawyer, or using a business formation service. All three are perfectly legitimate and legal. But every small business owner has different needs. By weighing the pros and cons of each method, you can pick the method that works best for your unique business.
No matter what state you’re forming your business in, there’s nothing stopping you from filling in your Articles of Organization and doing everything on your own. It’s a very common choice, especially for small, standard LLCs. But the method isn’t right for everyone.
Creating your LLC on your own is an attractive option simply because it’s the quickest and most affordable. Generally, all you’ll have to do is fill in the information requested on your state’s Articles of Organization and pay the accompanying filing fee. You won’t have to pay someone else for their expertise, spend time in consults, or wait for someone else to complete your paperwork.
If you file online, there’s a good chance that you can have your LLC started in a matter of hours. No other method is faster.
There are, of course, drawbacks to the do-it-yourself approach. If you’re not familiar with the legal requirements in your state, you could accidentally make errors or skip steps — mistakes that might cost you down the road. Granted, you can take the time to familiarize yourself with the process, but not everyone has that option.
And even if you do study carefully, there are still complex aspects to some LLCs that can require legal expertise. For example, you might want detailed guidance on what tax method to use; choosing between pass-through taxation or electing S corporation or C corporation status can feel overwhelming. Specialty limited liability companies like nonprofit LLCs, series LLCs, or professional LLCs often require a lawyer’s expertise.
Hiring a business attorney is arguably the safest method to start your LLC. A lawyer’s expertise can help you avoid a lot of legal compliance pitfalls. But even so, it’s not right for every business.
On the plus side, a dedicated business attorney can give you all the individualized guidance you need. They can guide you to the best type of LLC for your goals and walk you through your state-specific LLC laws. They can also walk you through the numbers for which tax classification — pass-through taxation, S corporation status, or C corporation status — will save you the most money.
Business attorneys can also help you with other legal services. For example, they can assist with maintaining a registered agent, drafting employment contracts, writing an operating agreement, or creating other important legal documents.
The LLC is an incredibly flexible structure, so when you form one, you’ll have some decisions to make. For example, you’ll need to decide whether you want your LLC members/owners to manage the company, or if you’d rather assign designated LLC managers. A lawyer can outline the pros and cons of each option, helping you decide on your optimal management structure.
And let’s be honest, as an entrepreneur, you simply might not have the time to form an LLC yourself. You no doubt have a lot on your plate, and it can save time to outsource your formation process to an attorney or online service. If you already have a business lawyer helping you with other services – like trademarks, copyrights, lease agreements, etc. — it can be easy to roll formation duties in, too.
There are drawbacks to hiring a business attorney, however. For one, hiring a lawyer is arguably the most expensive start-up option. Lawyers charge expensive hourly fees that can add up quickly. Especially in the startup phase, most businesses simply don’t have the spare cash lying around to pay for a lawyer’s LLC formation fees, which can cost thousands of dollars.
Even if you find a lawyer who offers a package formation service, you’ll usually find it’s pricier than doing it yourself or hiring a service. And between meeting with your attorney for consultations and waiting for them to file your paperwork (they’ll likely have other clients to attend to, not just you), it can take longer to get your LLC running, too.
Additionally, it’s important to note that not all attorneys have the same expertise. Some lawyers focus on business law specifically, and others offer business formations as a supplement to their primary services. Even a “good” lawyer might not be the right fit if business isn’t their specialty.
Last but not least, you can opt to hire an LLC formation service like ZenBusiness to form your LLC for you. An LLC formation service is a happy medium between doing it yourself and hiring a legal professional. Basically, you’ll answer a few questions about yourself and your new business, and they’ll complete your state paperwork for you.
Even so, you’ll want to weigh the pros and cons to decide if you should use them.
On the plus side, LLC formation services are far less expensive than hiring a licensed attorney. But like an attorney, these services can help you avoid costly filing errors. That’s because formation services have a wealth of experience in creating businesses. Most have helped create hundreds of thousands of new LLCs.
These services can also file your formation documents quickly, getting you up and running in a day or two. Plus, these companies can offer other services, such as registered agent services, filing for an employer identification number (EIN), creating an operating agreement, and much more. Usually, these extra perks cost less than what an attorney would charge. Since every LLC needs to designate a registered agent anyway, these LLC service providers can eliminate multiple items from your to-do list in one fell swoop.
Ultimately, services like these can be a great choice if you want a little help but don’t want to break your startup budget.
There are some negatives to using an LLC formation service, however. For one, while it might be cheaper than hiring a lawyer, it’s still more expensive than doing it yourself.
And if you’re looking for specific, personalized advice for complex legal and accounting questions, you’ll find that these services don’t quite meet your needs. Let’s say you’re on the fence about what type of LLC you have to create, or you’re thinking about forming a series LLC. Formation services typically can’t handle these complex, unique circumstances.
Starting an LLC can feel overwhelming, but you don’t have to do it all alone. It doesn’t have to be expensive, either. Here at ZenBusiness, we can help you start your LLC for $0 (plus state fees). And we’ll continue to support you. Whether you need an operating agreement template, a registered agent for service of process, annual compliance help, or anything in between, we have your back.
$0 + state fee and takes 5-10 minutes
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.
There are no legal requirements to hire a lawyer to help you start your LLC. So if you want to do your formation on your own, you legally can. That said, some soon-to-be LLCs may benefit from asking a legal professional about their business formation questions. Legal advice can be especially helpful if you’ll need a complex operating agreement or need tax advice.
Not necessarily. Texas state law does not explicitly require you to hire a lawyer to create an LLC. Hiring one is up to your personal discretion.
Legal fees ultimately depend on which lawyer you hire and how much assistance you need, as most lawyers bill by the hour. In California, it’s not uncommon to spend between $500 or even thousands of dollars to form your LLC.
LLCs are highly favored by small business owners because they offer personal liability protection because they’re a separate legal entity. But they’re still simple to run and maintain, and they’re taxed as a pass-through entity. Even so, they aren’t right for everyone.
Corporations also offer personal asset protection plus the ability to raise funds through selling shares of stock. They have corporate formalities to uphold, however, such as appointing a board of directors, holding shareholder meetings, corporate bylaws, and more.
Unincorporated businesses like sole proprietorships and general partnerships are the easiest to start and run, but they don’t have personal liability protection. If you’re not sure which business entity type is right for you, we highly recommend consulting with an attorney.
Using an online LLC service removes much of the hassle from the business formation process. With these services, usually 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.
Yes, most are. There are quite a few reputable companies offering LLC formation services these days, including ours. At ZenBusiness, we’ve helped form almost half a million businesses and have earned a Trustpilot rating of Excellent.
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