What Does a Lawyer for an LLC Do?
It is not required by the law to hire a lawyer when registering as an LLC. Many states permit you to register your business as an LLC through the secretary of state's website and the Internal revenue service (IRS).
However, it comes with legal paperwork and hassle. Furthermore, each state has different laws regarding the regulation of LLCs, which may not be easy to comprehend without the help of a lawyer.
You can get into trouble with the IRS, the law, or your local tax authority if you do not proceed with LLCs with a thorough understanding of the law. A lawyer for an LLC can help you save time and avoid any problems. They do so by:
- Determining the eligibility of your business to register as an LLC in your state
- Find out which state you should register your LLC in. This is especially helpful if you have businesses running in multiple states.
- Providing you with details as to why LLC is the most beneficial legal structure for your business
- You are drafting and filing the articles of organization for your business. It is essential because this document forms the foundational workings of your LLC.
- Helping you understand state-specific LLC laws and how to comply with them
- Maintaining detailed records if needed for lawsuits or audits.
- Enlisting your business name and checking for the availability of the LLC name
Here is an article about Articles of Organization.
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What is an LLC?
A Limited Liability Company, or LLC, is a legal framework for small businesses and freelancing companies that turns them into registered business entities. It protects your assets and guards your company against any liability that might affect your business.
An LLC is a legal entity that has a hybrid structure. It contains attributes of both a partnership and a corporation. For example, when thinking about an LLC vs corporation, a corporation limits the liabilities of its owner, and so does an LLC.
Meanwhile, when comparing an LLC vs partnership, an LLC is also a pass-through entity for tax purposes like a partnership. It means that individual members will be taxed only once as a form of personal income on any profit the LLC makes.
Here is an article about Limited Liability Company.
What Types of Lawyers Form LLCs?
Corporate lawyers are the ones who should be consulted to form an LLC. This is because they have expertise in legal matters that the businesses they represent need to be aware of.
Corporate lawyers are well-versed in issues regarding business transactions. They help clients with contract negotiations, set up corporations, and deal with mergers and acquisitions. They may also represent clients in criminal cases.
Who Needs a Lawyer to Form an LLC?
Small and new businesses usually require a lawyer to form an LLC. LLC lawyers help set up your business in the first few years and provide you with the necessary ground for your business to succeed.
Lawyers are beneficial in cases where the company founders do not have absolute trust in each other. Such a relationship between founders warrants a lawyer. It can lead to messy fallouts that take a toll on the company.
Moreover, a lawyer is also needed when a company wants to raise capital and have multiple classes of stock.
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Benefits of Using a Lawyer to Form an LLC
There are many benefits of using a lawyer to form an LLC. A legal consultation can help an owner:
- Understand the advantages of forming an LLC.
- Determine how to get the most out of incorporating the business.
- Understand the shortcomings of different entities in terms of liability and tax.
- Get started and keep their business compliant as they expand, raise money, or hire employees.
- Help draft and file complex paperwork such as articles of organization.
- Understand business laws that govern the state the LLC is in.
What States Require a Lawyer to Form an LLC?
All states require a lawyer to form an LLC because their requirements vary. It isn't easy to navigate each state's laws and regulations as some states are strict with their laws. So, it becomes necessary to hire a lawyer to form your LLC.
For example, New York is an exhausting one and is known as one of the worst states to form an LLC. It needs thorough paperwork and takes 4 to 7 weeks to complete.
After naming an LLC and selecting a registered agent, the business must file the articles of the organization. They are then required to publish their mandates in two newspapers along with a copy of a notice to form the LLC.
Therefore, if you hire a lawyer to undertake these tasks, you will save a lot of time and energy, which could invest in your business.
How Much Does a Lawyer Charge to Form an LLC?
The amount a lawyer charges to form an LLC depends on factors such as:
- The state you are filing your LLC in
- The intricacies associated with your business framework
- The number of services you require from a lawyer
On average, a lawyer may charge about $425 owing to the complications present in the paperwork. In addition, lawyers usually charge a standard hourly rate which sometimes includes state fees. An attorney's usual services are drafting and filing complex documents while adhering to state laws.
Here's an article about the lawyer fee for an LLC establishment.
Difference Between an LLC and an S Corp
An LLC vs. S Corp are often discussed together, but they are two different things. An LLC can attain S Corp status if it meets a specific criterion. However, LLC and S Corp both require different management and shareholder structure. In addition, they have unique reporting requirements.
There are several differences; these are:
- LLC vs. S Corp: A limited liability company is a legal framework for businesses. At the same time, an S Corp is a tax classification.
- LLCs and S Corps are taxed differently: An S Corp is acknowledged as a separate entity and taxed. In comparison, an LLC is a pass-through entity for federal taxes. So, the owners' income taxes make taxation on profits or losses.
- S Corp has a more formal structure than an LLC: A corporation requires you to hold meetings for shareholders, file annual reports, put together a board of directors, and make other functional decisions. On the other hand, an LLC can be lenient regarding the formality and structure of a business.
- An S Corp is more complicated than an LLC to set up: LLCs usually require less paperwork than an S Corp setup. On the other hand, an S Corp setup requires a thorough inspection and must be filed with the appropriate authorities.
- Corporations can only issue Stocks: LLCs have membership interests. As a result, members have a share in the company's ownership. On the other hand, S Corp provides convertible preferred stock, so investors favor investing in such corporations.
Get Help With a Lawyer for an LLC
While it is not a legal compulsion to hire a lawyer to form an LLC, it is still a good practice if you do so, especially when you are a small business owner. Hiring a lawyer can help ease forming an LLC and give you the essential aid when protecting your enterprise.
Business lawyers are the ones that help you do that since they have expertise in business-related transactions. You can easily find lawyers for LLCs as it is the most common type of legal framework for businesses and so requires the most attention.
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