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A lawyer for limited liability company (LLC) assists with filing paperwork correctly since an LLC’s legal structure is complex. At the very least, you will need a lawyer to make sure your LLC has been properly registered with the state where it is located. It is a good idea to have a lawyer review any contracts or agreements between you and other people or companies before signing them. It will help ensure no hidden clauses are there once the deal is done.
What is a Limited Liability Company?
A Limited Liability Company (LLC) is a business structure offering legal and tax advantages to its owners. It combines features of partnerships and corporations. A Limited Liability Company (LLC) has many of the same characteristics as a corporation (such as limited shareholder liability) while also offering some of the tax benefits associated with partnerships.
From a legal standpoint, an LLC is formed by filing Articles of Organization with the state where it will conduct business. Once this has been done, owners can start operating their businesses under the protection of their company's name and even make purchases in its name without exposing themselves to personal liability. In addition, LLCs have flexibility in distributing profits and losses. The operating agreement can specify how and when distributions will be made.
What is the Difference Between a Limited Liability Company and Other Businesses?
The difference between a limited liability company (LLC) and other businesses is that the owners of an LLC are not personally liable for any debts or claims against the business. It means that if your LLC gets sued, you are not on the hook to pay any liabilities. The owner of an LLC is known as a member, who may be called a member manager or member employee, depending on the specific features of an LLC. Unlike corporate shareholders, members of an LLC have flexibility in managing the company. The operating agreement can outline specific voting rights and decision-making processes.
Another key difference is that LLC members can elect to have their business taxed as a corporation, partnership, or as a disregarded entity. A corporation is subject to double taxation, once at the corporate level and again when its profits are distributed to shareholders as dividends. However, as an LLC member, you're only taxed once on your share of profits (as long as they are distributed).
What are the Requirements for Filing as a Limited Liability Company?
To form a limited liability company (LLC), you must file articles of organization with your state. Each state has its requirements for filing and registration.
- Step 1: Find out what you need to know about forming an LLC in your state.
- Step 2: Decide how many owners you want to have in your LLC and how much they will contribute to it financially.
- Step 3: Gather the names and addresses of all the people who will be owners of the LLC.
- Step 4: Create an operating agreement explaining exactly how the business is run and other important details about it. This document creates a contract between all members that states what each one's rights are and what responsibilities they have to fulfill for the other members.
- Step 5: Fill out and file articles of organization with your Secretary of State office. This document includes information such as when your business was established, who owns it, where it operates from, and whether it's taxed as a corporation or partnership (or both).
Do You Need a Lawyer to Start a Limited Liability Company?
If you're starting a limited liability company, you may need to hire an attorney. It is especially true if the LLC is large or complex or if you plan to sell shares in the business to other individuals. The Small Business Administration recommends that every business owner obtain at least one professional opinion before making any major decision.
Limited liability companies are complicated legal entities. They combine features of corporations and partnerships with some additional protections for individual members (owners). The owners of LLCs are referred to as members and have limited liability for the debts and claims against the company. In contrast, corporations have shareholders who are liable for all corporate debts up to the value of their shares in the corporation.
Benefits of Hiring a Lawyer for Your Limited Liability Company
Even if you're well-versed in the law, you must hire a lawyer to represent your company. Here are five benefits of hiring a lawyer for your limited liability company (LLC).
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Avoid Legal Issues
An attorney will help you avoid legal issues by ensuring your paperwork is done correctly and that you have all necessary permits and licenses before you open for business. This way, if there are any problems with your paperwork, such as an IRS audit or lawsuits from disgruntled customers, it will be easier for an attorney to fix them.
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Protect Your Business
LLCs are designed to protect owners' assets from any claims made by creditors. However, if you're not careful about setting up your LLC, it can become vulnerable to claims from creditors who want to go after your assets for debts incurred by the business. A lawyer can help ensure that your LLC is properly formed and does not expose your assets to claims by creditors.
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Protection from Liability
A lawyer will draft your articles of organization or operating agreement so that you don't expose yourself to liability. The articles of organization and operating agreement should specify that you're not personally liable for any debts incurred by the LLC.
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Ensure Consistency of Formations and Contracts Across States
Many states have specific regulations governing how limited liability companies must be formed and operated. These regulations vary from state to state and can be quite complicated. An experienced lawyer will know exactly how these regulations apply in your state so that they can help guide you through the process of forming an LLC without inadvertently exposing yourself or your business to unnecessary risks or liabilities.
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Help Avoid Problems with Partners
Many people form LLCs to protect themselves from personal liability if their business fails. However, this protection only goes so far if there are problems within the company itself. Accordingly, it is important to have an attorney review your operating agreement before signing it and before making any major decisions that could impact your business or its future profits. This will help ensure that all parties understand their rights and responsibilities and what they can expect from each other regarding financial contributions, voting rights, and more.
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Key Terms
- Administrative Dissolution: An administrative dissolution occurs when all members have agreed to dissolve the business, and its assets have been distributed among them.
- Certificate of Good Standing: A Certificate of Good Standing is issued by the Secretary of State to LLCs. The certificate confirms that the company has paid its annual fee and is in good standing with the state.
- Fiduciary Relationship: The fiduciary relationship is a legal relationship in which one party holds the trust and confidence of another in a manner that imparts on that person a duty to act primarily for another's benefit. The term describes a relationship of trust between two or more parties, usually when one party (the fiduciary) must act primarily for another's benefit.
- Limited Liability Partnership: A limited liability partnership (LLP) is a business structure that combines the characteristics of a corporation and a general partnership. Like a corporation, it offers limited liability to its owners; like a general partnership, it does not issue stock, and its owners are not personally liable for the company's debts.
Conclusion
If you're considering starting a Limited Liability Company (LLC), you'll need to work with a lawyer. There are many different kinds of lawyers and even more types of laws that lawyers specialize in. However, when forming an LLC, you can contact ContractsCounsel for this and other related matters.
ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
