who shoild i talk to to form llc cpa or tax attorney

Your CPA should tell you that if you want to make sure an LLC is right for you legally, and not just from a financial and tax perspective, you need to consult with an attorney. An attorney is licensed and trained and can provide you with the latest information pertinent to your state; a CPA cannot.

Full Answer

Do I need an accountant or tax attorney to form an LLC?

One of the attractive characteristics of an LLC is the potential pass-through tax treatment. Having an accountant or tax attorney advise you during and after the LLC formation process will allow you to best take advantage of this benefit.

Should I hire a tax attorney or a CPA?

Tax attorneys and CPAs can both assist with a variety of your tax needs, yet there are distinct limitations to what roles they can play on their own.

Do I need a lawyer to set up a LLC?

Technically, you do not need a lawyer or accountant for creating a LLC. If any of the above relate to you, then I would recommend you consider accountants and/or attorneys to help advise you.

How do I get help filling out an LLC form?

Contact an attorney for legal advice about setting up an LLC. For help filling out an LLC form, is it best to consult with an accountant or a lawyer? You should not have an accountant form your limited liability company. If you need help, retain a lawyer.

Should I talk to a CPA before starting a business?

Before starting a business, most people know they should consult an attorney, but many don't think to consult a CPA. In fact, it's not just a good idea to meet with a CPA before starting your business – it's a must.

What should I ask a CPA when starting an LLC?

5 Questions to Ask Your CPA When You're Starting a Business“What's the best way to set up my company?” ... “How can we reduce expenses?” ... “What can we do to improve our cash flow?” ... “How can I protect my business from theft, fraud or fiscal mismanagement?” ... “How well can the company weather a recession?”

Can a CPA help with IRS problems?

Yes. Anyone who is accepted to practice can represent a taxpayer and negotiate on their behalf.

Can a CPA write an operating agreement?

While a CPA cannot write a partnership agreement or operating agreement, (it would be prohibited as unauthorized practice of law or UPL); they can provide valuable insights into aspects of the business agreement document.

When should I consult a CPA?

Key takeaway: You should plan to meet with a CPA before you start your business, at tax time, when you have complex financial decisions to make, or when you plan to make major changes to the ownership of the business.

How do I interview my CPA for my business?

Our Top 13 Questions to Ask When Hiring a CPA For Your BusinessDo you have a PTIN. ... Who will actually sign my tax return? ... Are you, or is your firm, licensed in this state to practice public accounting? ... What types of clients do you work with? ... What is your tax background and/or specialty? ... How do you determine your rates?More items...•

What is IRS Fresh Start Program?

What Is the IRS Fresh Start Program? The IRS Fresh Start Program is an umbrella term for the debt relief options offered by the IRS. The program is designed to make it easier for taxpayers to get out from under tax debt and penalties legally. Some options may reduce or freeze the debt you're carrying.

Does the IRS hire enrolled agents?

Enrolled Agent Duties They can work with corporations, individuals, trusts, non-profits, or a variety of other entities, and can work in tax areas ranging from calling the IRS on notices to helping clients strategize to legally maximize tax benefits.

How do I get the most out of my LLC?

These include:Create an operating agreement.Get an Employer Identification Number (EIN)Open business bank accounts and credit cards.Get an accountant.Learn more about LLC taxes.Research and apply for business licenses and permits.Get insurance.Establish your web presence.More items...•

Can a CPA incorporate a business?

If you are a chartered professional accountant or certified general accountant then there are both tax and non-tax reasons for considering the corporate form of a business organization.

Can accountants draft legal documents?

Accountants and CPAs are simply not qualified to prepare important legal documents. If your accountant or CPA drafted legal documents for your business you should review them with a skilled business attorney to determine whether they should be changed or replaced.

What is a Tax Lawyer?

A tax lawyer is a legal professional who graduated with a law degree and specialized in the very complicated world of tax law. A tax attorney must...

What is a CPA?

A CPA, or certified public accountant, does not have a law degree, but a five-year business degree. CPA programs require at least 150 hours of lear...

Tax Attorney vs CPA: When is a Tax Lawyer the Better Choice?

Trying to decide between hiring a tax attorney or a CPA? It depends on your business’s tax situation. Keep in mind that a tax attorney can do basic...

What to do if you need a tax professional?

If you need a tax professional who is an expert in accounting and tax preparation, seek out a CPA. If you have a specific legal concern or are dealing with an IRS dispute, seek out a tax attorney. It may behoove you to have an ongoing relationship with both types of tax professionals if you encounter complicated tax situations frequently in your line of work.

What is a CPA?

A CPA's role focuses on maintaining your small business's financial records, preparing financial statements, and preparing tax returns. CPAs are an ideal business partner to have for day-to-day accounting and tax issues. Your business's CPA can also offer tax planning advice throughout the year to help minimize your tax liability. You can strategize together on business decisions such as appropriately timing your major asset purchases.

What is the advantage of having a tax attorney?

On the other hand, while a tax attorney can also provide tax planning advice to clients , the distinct advantage of a tax attorney comes in the form of dispute resolution assistance with the Internal Revenue Service (IRS). Tax attorneys have an in-depth knowledge of tax law principles and current case law precedent. They are experts in negotiations and arguing your case in court.

What to do if you have a dispute with the IRS?

Additionally, if there is the potential for criminal charges from the IRS as the result of the dispute, seek the help of a tax attorney. Your tax attorney is protected by attorney-client privilege, so your conversations will remain confidential. Your business's tax attorney will not be forced to testify against you as a result of your conversations.

How long does it take to become a tax attorney?

Tax attorneys complete a bachelor's degree and three years of law school. Some law schools offer a joint law degree and Master of Laws (LLM) in taxation program, which is one semester longer than a typical law school program. Additionally, all tax attorneys must pass the Bar Exam in their state and have a legal focus on tax issues within their practice.

Who is Alicia Tuovila?

Alicia Tuovila is an accounting and finance writer based in Tennessee. She holds an active Certified Public Accountant (… Read more

Do CPAs need to have experience?

Because states determine the qualifications for CPAs, certain states may require additional educational or work experience beyond this minimum. Some states have an ethics exam requirement as well.

What is the difference between a tax attorney and a CPA?

While a tax attorney is typically reserved for more specific and complex tax issues whereas the CPA is usually utilized on a more regular basis to keep your financial records in order and prepare your taxes , the advantages of having a two-in-one professional are hard to overstate.

What can a CPA do?

However, one of the most beneficial services a CPA can offer is the ability to review or audit a business’ financial records to identify problem areas that need improvement, as well as where you are in good standing.

What is the role of a tax attorney?

The role of a tax attorney. Tax attorneys are lawyers who have gone through law school, passed their state’s bar exam and emphasize tax issues in their practice.

What is the role of a CPA?

The role of a CPA. CPAs dedicate their education — which is extensive — to a broad range of accounting fields. From auditing and taxation to bookkeeping and business strategy, CPAs are one of the most versatile financial planners available.

Who can help with tax issues?

However, two of the most reliable and well-known professionals that can aid you with various tax problems are the tax attorney and the CPA, both of which offer different — though often overlapping — services.

Do CPAs have to be dually licensed?

Not only do dually-licensed Attorney-CPAs have the financial background to understand the intricate details of your company’s balance sheets, but they are also able to advise on business structure to reduce tax liabilities and hopefully help you avoid any trouble with the IRS.

What can a CPA do?

When it comes to the legal side of taxes, CPAs can negotiate and represent a taxpayer before the IRS or a revenue officer. Additionally, some CPAs are specially qualified to be able to help with litigations and tax controversies that need resolved in a U.S. Tax Court, so if you’re already working with a CPA, you should ask if the accountant is qualified to help with the specific legal issues you are facing. Of course, tax attorneys are also able to help with these legal issues. Some areas where you may choose a CPA or an attorney to assist are: 1 If you owe large amounts of back taxes 2 If you are facing liens or levies due to unpaid taxes 3 If you want to halt wage garnishment 4 If you want to negotiate with the IRS 5 If you need help with trusts or estates

What can a CPA do for tax?

When it comes to the legal side of taxes, CPAs can negotiate and represent a taxpayer before the IRS or a revenue officer. Additionally, some CPAs are specially qualified to be able to help with litigations and tax controversies that need to be resolved in a U.S. Tax Court, so if you’re already working with a CPA, you should ask if the accountant is qualified to help with the specific legal issues you are facing. Of course, tax attorneys are also able to help with these legal issues. Some areas where you may choose a CPA or an attorney to assist are:

How long does it take to pass the CPA exam?

The CPA exam has a high degree of difficulty and breadth of subject matter, and applicants must pass all four parts of the exam within an 18-month period. Additionally, CPAs in most states must also work for 1,800 hours under the supervision of a licensed CPA.

How long does it take to become a tax attorney?

Law students earn a Juris Doctor degree (J.D.), which typically takes three years to complete. Then, to obtain a state certification, tax attorneys must pass their state's bar exam. Many tax attorneys also go on to obtain an advanced degree in tax law, which can take up to five additional years of study.

Why do tax attorneys focus on one area of expertise?

Because of the extreme complexity of tax law, many tax attorneys often focus on one area of expertise, so it's important to ask about their experience in those areas when deciding on the attorney you'll hire.

What to do if you are facing liens?

If you are facing liens or levies due to unpaid taxes. If you want to halt wage garnishment. If you want to negotiate with the IRS. If you need help with trusts or estates. You should most likely hire a tax attorney if you need: Legal advice in writing. Representation in court.

Do tax attorneys have to be licensed?

Additionally, licensed attorneys must complete continuing legal education to maintain active bar membership in their states . Each state bar association provides guidance and mandates regarding who can advertise themselves as tax attorneys. Tax attorneys must abide by rules and regulations or risk losing their license to practice law.

What are the similarities between accountants and tax attorneys?

The similarities. Knowledgeable accountants and tax attorneys will be able to provide tax advice and planning strategies to individuals and businesses. The U.S. Tax court allows attorneys and certain non-attorneys, including qualified accountants, to represent clients in cases.

What is the difference between an attorney and an accountant?

The training of attorneys, which includes an emphasis on studying case law, legal writing and research, may equip attorneys with an edge on specialized tax litigation and appeals and issues related to liability. The training of accountants in financial planning, and tax regulations and codes may give them an edge in financial strategy.

Can accountants practice both?

Best of both. Can't decide? Consider choosing both. There are a growing number of accountant-lawyers who have studied and are certified to practice in both fields. These practitioners will likely be highly specialized in a particular area of tax law and, while they may charge higher rates, may be invaluable in addressing your unique legal issues.

What is an operating agreement for an LLC?

The negotiation of these terms will depend on the relationships and relative bargaining power among the parties. In any case, the financial understanding between you and any investors should be fully memorialized in an operating agreement (referred to as an LLC Agreement in some states) signed by you, the investors, and the other members at the time you form the LLC. See The LLC Operating Agreement. The operating agreement will also include any other rights demanded by the investors regarding control of the company's management, selling the company, preventing other members from transferring their membership interests, and other matters.

What is initial ownership of a company?

Initial ownership of the Company is typically based on what capital, talent, or other assets people are bringing to the business. Because membership interests in a company are its most valued assets from a control and profit perspective, you will typically want to relinquish as little ownership interest in your LLC as possible. For example, instead of giving away membership interests, you can instead offer alternative compensation arrangements (for example, commissions, wages, salary, or profits interests) to persons you need to operate your business. However, note that it is standard for investors to be members because they're putting up the money and have the most financial risk. The number of membership interests given to each member will usually be based on such member's proportional contribution to the LLC. After the members negotiate their ownership amounts, each member's membership interests should be reflected in the operating agreement.

What can a tax adviser do?

Your tax adviser can also guide you on how to make and record periodic cash distributions to members, if applicable.

What are the advantages of an LLC?

One of the attractive characteristics of an LLC is the potential pass-through tax treatment. Having an accountant or tax attorney advise you during and after the LLC formation process will allow you to best take advantage of this benefit.

How to manage an LLC?

Management of the LLC can take many different forms, particularly if there are multiple members are investors. Generally, management of an LLC will fall into one of the following categories: 1 You are the sole member, with no investor, and you fully manage the company. 2 The LLC has multiple members (possibly including an investor), but all the members agree that one person manages the company. 3 The LLC has multiple members (possibly including an investor), all the members agree that one person manages the company, but that person needs their consent before taking certain actions that are outside the ordinary course of business (for example, borrowing money, selling the company, declaring bankruptcy, and the like). 4 The LLC has multiple members (possibly including an investor), and all the members agree to manage the company together, perhaps by forming a board of managers (which is similar to the board of directors of a corporation).

Why do companies use fictitious names?

Fictitious names can be very useful if you want to vary your business' name by geographic location, or assign different names to separate divisions within the company. This allows you to avoid having to formally create new subsidiaries.

Why should the terms of an operating agreement be reflected in the operating agreement?

Again, after you and the other members negotiate the final management arrangement, the terms should be specifically reflected in the operating agreement so that everyone is clear of their rights.

What is MCL 600.916?

Specifically, (1) A person shall not practice law or engage in the law business, shall not in any manner whatsoever lead others to believe that he or she is authorized to practice law or to engage in the law business, and shall not in any manner whatsoever represent or designate himself or herself as an attorney and counselor, ...

Does Michigan have a limited liability law?

He is stuck with the basics of Michigan’s Limited Liability law, which requires court intervention for almost any act which would transfer property out of the company. As I was explaining to him about the issues surrounding the piercing of the corporate veil he told me that the CPA he used closed the business for him for another $500. As he told me this I was able to pull out my phone and show him that the State of Michigan still considered the business active and in good standing, to dissolution document was filed.

Is it cheaper to hire an attorney to set up a business?

If there should be one take home from this blog entry it is that retaining an attorney to set up your business is always cheaper than having major issues down the line which almost certainly will entail the incurring substantially greater costs. This is true even if the quoted cost is higher than $500 to $1000, normally I quote a higher cost if there is some special issue or if the needs of the business are greater than the traditional small business.

Is the practice of law a lucrative business?

It is a lucrative business indeed. The statute limited the practice of law to lawyers is a consumer protection law; it is not a law to protect lawyers. In my above example, protections could have been added to the operating agreement to provide for protection for both members and ensure that there would be no question of control ...

How to create LLC?

There are several options to create an LLC: 1 to hire a Lawyer/CPA 2 to use independent filing service 3 to file it yourself at the SOS portal.

How much does it cost to file an LLC?

This cost to file the Articles of Organization for an LLC costs between $40 and $500.

How much does it cost to reserve an LLC name?

The ability to reserve an LLC name is available in every state (for a fee). Alabama is the only one that requires the name to be reserved at a cost between $10-$28. Reserving the name is optional in all other states, but is usually not worth the expense unless it will be some time before you plan to start your LLC.

What is LLC in business?

A company such as LLC is just an organization and facilitates the business. It is not too much work, just have to remember to pay your tax and file tax forms, if you have a company with no active business. Like they say, easy come, easy go. Anything you can get for no cost have literally no value.

Which states require LLCs to publish a legal ad?

There are some states like Arizona, Georgia, Nebraska, Nevada, New York, and Pennsylvania that require new LLCs to publish a legal ad notifying the public of the LLC formation in a local newspaper and supplying the affidavit of publication. Publishing costs vary depending on the state and newspaper.

Can I create an LLC in NJ?

In a way, no. You could create an LLC on your own on the Secretary of State’s website. However, NJ has a very large number of requirements for companies and these requirements can be overly difficult to understand and navigate through. Thus, based on the fact that you are in a state that has a lot of requirements, I would recommend that you get an attorney.

Can an LLC be created without an attorney?

Not technically, no. But every single LLC I have ever seen that was created without an attorney has not had its documentation in order. No corporate book, no unit certificates, no company agreement, no organization minutes. Which is fine if everyone agrees with everyone and has no disputes whatsoever for eternity.

What does a good CPA do?

A good CPA will explain the different structures for business setup, such as a corporation, single proprietorship, or LLC. Once you’ve explored your options, the CPA might also offer to complete and file the documents you need to create an LLC in your state. While this might seem like a nice gesture on the part of your CPA, ...

Why is clear resolution management important?

Clear resolution management information is also an important component for handling disputes as they arise. Failing to have an operating agreement is one of the “veil-piercing” liabilities that could cause your business to lose legal protection. An attorney can help create this agreement with your input, a CPA cannot.

Is it cheaper to have a CPA set up a business?

At first glance, it can seem easier and cheaper to allow your CPA to set up the legal structure of your business. However, the risks involved by not consulting an attorney far outweigh any cost savings. You wouldn’t ask an attorney for tax advice, ...

Can a CPA be an LLC?

An attorney can deliver this advice, a CPA cannot. While the documents to file for LLC status might seem direct at a glance, they can involve tricky legal issues that are buried below the surface in legal language. If there are issues that apply to your business, an attorney can handle them for you; a CPA cannot .

Can a CPA be pierced?

Those steps can vary by state, and can be confusing to navigate. An attorney can advise you of these steps and help you implement them, a CPA cannot .

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