What are LLC Formation Services?
LLC formation services are administrative and compliance tasks required when setting up an LLC. They are conducted by companies that you can hire to handle all the paperwork involved, giving you more time to focus on other aspects of setting up your LLC.
Do you require LLC formation services? Read the rest of this article to learn what LLC formation services usually entail, when they’re a good choice for you, and when you should consider hiring a lawyer for help.
What Do LLC Formation Services Include?
LLC formation services usually include tasks such as filing your paperwork and registering your business. Here is what they typically offer.
- Speedy service. Some companies promise to set up your LLC quickly, which can expedite the process.
- Business setup. LLC formation services aren’t just about filing documents for registering your business. Many include other features, such as setting up your business website.
- Low fees. Some LLC formation services don’t cost anything, except for state filing fees.
- EIN acquisition. These services can help you get an Employer Identification Number (EIN) from the IRS.
- Compliance alerts. You’ll be reminded before your annual report filings are required, helping you to stay legally compliant.
How Do You Start an LLC?
To help you figure out if you should start your LLC yourself or hire LLC formation services for assistance, it helps to understand what’s involved in the process.
- Select a formation state. You will have to choose a state for your LLC, and it might vary from the state in which you do business. Understand that your chosen state will affect your formation fees and taxation.
- Conduct an LLC name search. You should do this before choosing a name for your business, through your state’s Secretary of State website.
- Choose your management structure. This could be member managed (in which all LLC members run the business) or manager managed (in which managers have been appointed by the business owners).
- Draft an operating agreement. This outlines important information regarding how the business needs to run.
- File Articles of Organization to form your LLC. This should be done with your local Secretary of State.
- Get an EIN. Apply to the IRS to receive this number, which will be used on all your tax filings.
- Open a business bank account. This will keep your personal and business accounts completely separate, protecting your personal finances from business debts.
What are Potential Pitfalls When Forming an LLC?
There are some challenges you might encounter when setting up your LLC, and which might make you want to choose an LLC formation service to help you.
- Business name issues. Your state might have certain words you can’t use in your state. If you’re unaware of these, you’ll cause delays to your formation.
- Naming yourself a registered agent. Although you can select yourself as your registered agent, it could cause you to miss important legal notices or documents.
- Being unaware of compliance duties. If you’re unsure of what’s required when setting up an LLC, this could land you in problems. You might have to pay penalties or could fail to maintain your LLC status.
- Choosing the incorrect management structure. This can hamper your business operations and make it less effective.
When Should You Consider LLC Formation Services?
While it’s not always necessary to make use of an LLC formation service, if you feel overwhelmed with setting up your LLC — or any of the following apply to you — it’s worth considering.
- You don’t have time to complete and file your paperwork, and don’t want to miss deadlines.
- You’re hoping for someone to take over the entire process, such as getting help with securing an EIN and filing your paperwork.
- You know little about LLCs and want professional guidance on how to set up your business.
- You don’t feel like you’re organized enough to complete all that’s required, and want to avoid making mistakes.
Do You Need to Consult with a Lawyer for LLC Formation?
You might wonder if you should consult with an LLC formation service provider or a lawyer. While we’ve included some benefits you stand to gain from using LLC formation services, there are times when you should consult with a lawyer.
Here are some instances when a lawyer can greatly benefit you.
- They’ll assist you if your LLC formation is complex, such as if there are multiple owners involved in the business.
- They’ll help you draft your operating agreement so that control and rights are clearly defined.
- They’ll assess all liability protection strategies, which is especially essential if you’re running a high-risk business.
- They’ll help you convert from another entity formation if required, such as a partnership, so that everything is done correctly.
- They’ll consider your tax duties so that you reduce risks and costs.
- They’ll decipher confusing state laws to ensure your compliance.
- They’ll provide legal guidance based on your specific situation.
It can be beneficial to start the process of an LLC formation by consulting with a lawyer. Depending on your needs, you could then work with LLC formation services so that they can handle your filing.
How do you find a lawyer for help with an LLC formation?
If you want legal guidance when setting up your LLC, you should consult with a lawyer from ContractsCounsel, an online legal marketplace that connects clients with vetted lawyers who have the skills, legal knowledge, and experience to assist you through the whole process.
They can also draft and review your operating agreement and other business documents to ensure they’re legally sound. For a document review, here are the steps to follow:
1. Go to the ContractsCounsel marketplace.
2. Post a project requesting what you need (it’s free to do).
3. Specify details of your project so lawyers know how to help you.
4. Review lawyer bids. Lawyers on the platform will send you bids to work on the project.
5. Check the lawyers’ profiles. Review their experience, expertise, and credentials to choose the best one for your requirements.
