Do I Need an Attorney to Start an LLC?
One of the most common questions we hear from entrepreneurs is whether or not you need to hire an attorney to form a new LLC. The answer is considerably more complex than a simple yes or no, so we figured that an in-depth article could be a valuable offering to our readers.
In this article, we’ll dive into some scenarios that might lead you to hire a lawyer, choose an online LLC service, or even tackle the DIY method. Let’s figure out what the best option is for your new business.
When Is It Advisable to Hire an Attorney to Form an LLC?
Even though we just said that there isn’t a simple yes or no answer to this question, we’ll kick off this article by saying that legally speaking, you do not need a lawyer to form an LLC. However, there are several circumstances in which you may find it to be preferable, compared to trying the DIY option or hiring an online LLC formation service.
The best reason to hire a lawyer to help you form a new business is if you’re not entirely certain whether the LLC is the right structure for your business. After all, there are several different entity types available to business owners in America ― including sole proprietorships, partnerships, C corporations, S corporations, and more ― so it’s important to make sure you form your business in the appropriate entity. A good business attorney can explain the differences and help you choose which one is the right fit for you.
Furthermore, if the LLC is the correct structure, a lawyer can help you decide which type of management structure is the best choice for your business. An LLC can either be member-managed, meaning the member/owners of the company take on an active management role, or it can be manager-managed, in which you hire someone specifically to take over the managerial role.
Another reason many entrepreneurs choose to hire a lawyer to form their LLC is because they’ll create all the documents to run your business in compliant fashion, as well as explain their purpose to you. This includes the articles of organization which actually form your business with the state, along with an operating agreement to describe the ownership structure and operational guidelines for your LLC, and it may include other documents like a banking resolution, meeting minutes, and more.
Some people prefer to have an attorney form their business simply because they provide peace of mind that the startup process is handled correctly. Especially compared to the DIY route, sometimes it’s worth the money to make sure your business is formed by a true expert. Even an experienced online formation service doesn’t have quite the same level of expertise that a business lawyer does, so many entrepreneurs feel like they’re more confident in the LLC formation service they receive from an attorney.
Sometimes, it’s nice to hire an attorney to form your LLC because of all the time it can save you. Especially if you don’t have any experience forming businesses yourself, the time investment can be rather significant to go the DIY route. Along those same lines, it might make sense to have a lawyer form your business if they’re already going to be helping you with other services, like trademarks and copyrights, lease agreements, etc.
Why Is It Unnecessary to Hire a Lawyer to Form Your LLC?
Of course, seeing as we already said that it’s not legally required to hire an attorney to form your business, there are plenty of situations where it’s entirely unnecessary. First off, it’s probably not the best idea to hire a lawyer if you’re operating on a limited budget.
Especially in the startup phase, many businesses just don’t have the spare cash laying around to pay for a lawyer’s fees, which can cost thousands of dollars to form an LLC. You can form an LLC on your own for just the cost of the state fee, or you can hire an online LLC formation service for a fraction of the cost of an attorney.
In addition, if you have the time to prepare and file the formation documents yourself, you can learn a lot about the process. This knowledge could come in handy down the line, especially if you decide to form another LLC in the future, or expand your current business into another state. You can usually find helpful how-to guides online through your state’s business website, or even from online LLC formation service websites.
In many cases, an online LLC formation service provider will bundle in additional features with your formation package, which can make a good bargain even better. For example, many of these companies will include a year’s worth of registered agent service to receive and forward your important government documents. 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.
All told, the LLC formation process is rather simple compared to most other business types, so in theory it is something that you can certainly tackle yourself. The process varies by state, but in general all you need to do is supply basic information about your company, like the name and street address, along with the contact information for your registered agent.
In general, no one really needs an attorney to start an LLC. If you have the time to do the research and make sure your documents are completed correctly, there’s no reason you shouldn’t be able to form your own LLC. Or, if you want to find some middle ground between hiring a lawyer and tackling the DIY option, you can always use an incorporation service like IncFile or Northwest Registered Agent.
With a reputable LLC service provider, you can avoid the hassles of registering your own business, while also saving quite a bit of money compared to hiring a lawyer. If you would like to know more about your options in this area, we have plenty of resources on this site to help you decide which company’s services would best suit your needs.
Whether you decide to hire a lawyer to form your LLC or not, we wish you the best of luck with your new business!