why is an attorney needed to set up an llc

Why Hire a Lawyer to Form Your Texas LLC?

• 1. Set You Up for Success An attorney works to ensure your LLC begins on the right foot. ...
• 2. Correct Mistakes A qualified business attorney works to correct any mistakes when creating an LLC. ...
• 3. Avoid Legal Problems ...
• 4. Protect Your Interests ...
• 5. File Required Paperwork ...
• 6. Tax Advice ...
• 7. Protect Intellectual Property ...
• 8. Prepare Company for Audits ...

Full Answer

What do you need to file an LLC in NY?

Starting an LLC in New York is EasySTEP 1: Name Your New York LLC. ... STEP 2: Choose a Registered Agent in New York. ... STEP 3: File Your New York LLC Articles of Organization. ... STEP 4: Follow New York LLC Publication Requirements. ... STEP 5: Create a New York LLC Operating Agreement. ... STEP 6: Get a New York LLC EIN.

How does owning a LLC benefit you?

The main benefits of an LLC are liability protection, credibility, tax flexibility, and easy startup....Personal Liability Protection. The main advantage of LLCs is that they provide members with personal liability protection. ... Tax Options. ... Inexpensive to Form. ... Easy to Form. ... Less Paperwork. ... Management Flexibility. ... Credibility.

What is the purpose of having LLC?

The LLC has two main advantages: It prevents its owners from being held personally responsible for the debts of the company. If the company goes bankrupt or is sued, the personal assets of its owner-investors cannot be pursued. It allows all profits to be passed directly to those owners to be taxed as personal income.

What should I put for purpose of LLC?

Most states do not require you to be specific about the purpose of your LLC. Instead, a statement such as "The purpose of the Limited Liability Company is to engage in any lawful activity for which a Limited Liability Company may be organized in this state" is usually sufficient.

What are 3 disadvantages of an LLC?

Disadvantages of creating an LLC Cost: An LLC usually costs more to form and maintain than a sole proprietorship or general partnership. States charge an initial formation fee. Many states also impose ongoing fees, such as annual report and/or franchise tax fees. Check with your Secretary of State's office.

What are the pros and cons of an LLC?

Pros and Cons of Limited Liability Corporations (LLC)The ProsThe ConsMembers are protected from some (or sometimes all) liability if the company runs into legal issues or debts.Unless you are running the LLC alone, the ownership of the business is spread across its members (this can also be a pro)5 more rows

What are the 3 types of LLC?

You can form multi-member LLCs/member-managed/manager-member LLCs in all 50 states.

Does an LLC protect your personal assets?

If you're an entrepreneur and considering forming a business, you may wonder “Does an LLC protect your personal assets?” The short answer is “yes, it does” in most cases. An LLC is a particular business structure that offers the liability protection of a corporation while giving you the flexibility of a partnership.

How are LLC taxed?

An LLC is typically treated as a pass-through entity for federal income tax purposes. This means that the LLC itself doesn't pay taxes on business income. The members of the LLC pay taxes on their share of the LLC's profits. State or local governments might levy additional LLC taxes.

Who has the most power in an LLC?

The President is essentially the highest ranking manager in the LLC. The Operating Agreement typically gives the President general management powers of the business of the LLC, as well as full power to open bank accounts. Other titles of LLC officers and managers are Secretary and Treasurer for example.

When did LLCs become popular?

1977Because the LLC is a fairly new option in the United States (it first became available in Wyoming in 1977, but most other states did not follow suit until the 1990s), the laws governing this business form are largely uninter-preted by court cases.

What should my business purpose be?

Your business purpose is the reason you have formed your company boiled down to a single sentence (or two). It can be industry-specific or general enough to include ancillary and future business activities. To understand business purpose, it is important to distinguish it from your company's vision or mission.

What are the four main advantages of an LLC?

AdvantagesIt limits liability for managers and members.Superior protection via the charging order.Flexible management.Flow-through taxation: profits are distributed to the members, who are taxed on profits at their personal tax level. ... Good privacy protection, especially in Wyoming.More items...

What are the disadvantages of having an LLC in New Jersey?

More expensive to create than partnership or sole proprietorship. State laws for creating LLCs may not reflect latest federal tax changes. Inability to obtain VC funding. Inability to provide employees with stock options.

How are LLC taxed?

An LLC is typically treated as a pass-through entity for federal income tax purposes. This means that the LLC itself doesn't pay taxes on business income. The members of the LLC pay taxes on their share of the LLC's profits. State or local governments might levy additional LLC taxes.

What does LLC mean for dummies?

Limited Liability CompanyA Limited Liability Company or LLC is like a corporation regarding limited liability, and it's like a partnership regarding the flexibility of dividing profit among the owners. An LLC can elect to be treated either as a partnership or as a corporation for federal income tax purposes.

What is a business lawyer?

Business lawyers if you need to change your business structure to a single-member LLC, S corporation, or another type of business, or need help with another business-related legal matter. General counsel to review compliance with state laws, state agencies, state fees, or annual fees.

How much does it cost to register an LLC?

Your LLC will give you tax benefits and protect your personal assets if anything happens to your company. It costs between $50-$500 on average to register your business. You do not need an attorney to form an LLC.

How much does a business attorney cost?

A business attorney can save time and money when business owners create a new business. For around $200 to $5000, they can handle the items you may not have time to consider, such as: 1 Creating an LLC operating agreement that explains the who, what, when, where, why, and how of your company (this is required in some states) 2 Creating articles of organization that list the registered agent, LLC management, and the date of formation 3 Keeping detailed records in case of lawsuits or audits 4 Filing fees and registering with the correct people 5 Registering your business name and checking that the LLC name is available 6 Completing and filing all legal documents

What is an LLC operating agreement?

An LLC operating agreement is an internal document that allows you to establish company rules, layout members' rights and responsibilities, and more.

What is an employment law attorney?

Employment law attorneys to create employment contracts and HR policies.

What is a registered agent?

Acting as your company's registered agent. A registered agent is a person who receives legal documents, tax forms, and service of process for your company. Service of process is when someone notifies your business that there is a lawsuit pending against your company. Some law firms will act as your registered agent as part of their business formation services. As your registered agent, they will collect your legal correspondence at their physical address. This frees you up to move locations or use a post office box without missing essential documents.

Can an LLC be sued?

Once you register, you can buy or rent a building and have company bank accounts. Unfortunately, your company can also be sued.

Why is it important to have an attorney on board?

Having an attorney on board at the start of your new endeavor can help mitigate (or eliminate) this additional expense.

Why do you need a limited liability company?

The entire purpose of the corporate (or LLC) structure is to limit an investor’s exposure solely to the assets it puts into the entity. In other words, to make sure you don’t lose your house.

Why is it so expensive to repair a company?

In the law, “repair or replacement” is absolutely the more expensive, because any mistakes made at the outset of formation must be reviewed line by line and corrected either through new or revised documentation. Even mistakes that may have appeared “correct” at the time (such as issues with the structure of the company) will need significant documentation to modify later on. Because of this, what may have cost only a small amount to draft at the outset of the company’s formation can easily cost five times as much (or more) when it needs to be revised.

What is the value of having a good attorney?

There is significant value in that experience, in knowing how to read between the lines and the difference between how things can be done and how they actually are done. A good attorney can give you the benefit of that experience without your having to build 100 companies yourself.

What do I need to run a small business?

Running a business (and funding one), is not an easy task. In the course of a given year, the average small business might need: (i) general company counsel, (ii) accounting services, (iii) banking services, (iv) payroll services, (v) labor counsel, (vi) IP counsel, (vii) real estate services (or counsel), (viii) funding sources (angel, institutional, or otherwise), etc.

What is the good news about forming a U.S.-based business in the 21st century?

The great news about forming a U.S.-based business in the 21st century is that you literally have more options than ever before. That’s also the bad news.

Is a good attorney on call good?

Having a good attorney on call can be useful for more than just asking questions about the Delaware General Corporation Law. Your attorney will have seen many businesses grow and succeed, and, likely, many more falter and fail.

What does it mean to run an LLC?

Running an LLC also entails following numerous federal and state regulations, and an attorney can ensure you comply to all of them. He or she can also advise you on matters regarding expansion and changes in structure.

What is the best way to protect your business from lawsuits?

Business owners face a high risk of litigation from employees, clients, shareholders, and other companies. An attorney can help you create solid contracts to prevent lawsuits and can defend you if someone sues you. Running an LLC also entails following numerous federal and state regulations, and an attorney can ensure you comply to all of them.

Why Would You Need an LLC?

Whether you are about to start a business or have been operating as a sole proprietor or a partnership, you probably want to know: How do I know if I need an LLC?

Why was the LLC created?

The LLC was mainly created to limit the personal liability of the owners (like a corporation), but also to allow the business to be taxed like a partnership. LLC owners are called members (comparable to shareholders in a corporation).

Can an LLC be sued for personal debt?

With an LLC, only the assets owned in the name of the LLC are subject to the claims of business creditors, including lawsuits against the business. The personal assets of the LLC members cannot be claimed to satisfy business debts. For most people, this is the most important reason to form an LLC.

Who owns a corporation?

In many ways similar to an LLC, a corporation is owned by the investors (called shareholders or stockholders ), who provide the funds, assets, or services used to operate the business. The shareholders elect a board of directors, who are primarily responsible for major business decisions.

Is LLC a partnership?

LLC profits or losses are generally passed on to the members, as they would be with a partnership. You should also compare your state's fees associated with both LLCs and corporations, to see if one or the other is less expensive to form and maintain.

Can an LLC be claimed as personal assets?

The personal assets of the LLC members cannot be claimed to satisfy business debts. For most people, this is the most important reason to form an LLC. Raising capital from investors. This can be done by bringing in other members who contribute funds, property, or services to the business. Tax advantages.

Do I Need an LLC to Start a Business?

It is not necessary to form an LLC in order to start a business. An LLC is only one of several ways of organizing a business. Other possibilities include:

How to organize a corporation?

There are multiple benefits to organizing your company as a corporation: 1 A corporation limits your personal liability and may make tax breaks available to you. 2 Your corporation can take tax deductions for the cost of health insurance and life insurance. 3 Incorporating also means people will take your company seriously and you can set the stage for future expansion of your business. 4 You can raise capital for the business through the sale of stock. 5 Ownership in a corporation can be transferred easily should you decide to sell.

Who can guide you through the incorporation process?

Owners who are unclear about the process of incorporation may want to hire an attorney. Peter Home, with the firm Geoff McDonald & Associates, says, "An attorney can guide you through the process as well as teach you the ins and outs of how your company will need to operate once incorporated."

What is a legal consultation?

A legal consultation can help an owner determine which corporate entity will be most advantageous and how to get the most out of incorporating the business. Attorneys can also highlight the downfalls of different entities in terms of liability and tax, as well as show you how each different option will have varying effects on the business.

What are the benefits of a corporation?

There are multiple benefits to organizing your company as a corporation: A corporation limits your personal liability and may make tax breaks available to you. Your corporation can take tax deductions for the cost of health insurance and life insurance.

Is it worth it to have an attorney for incorporation?

Dolman offers some perspective for those contemplating DIY incorporation versus using an attorney. "Ultimately, if you have the money to spare, it's well worth it to have an attorney guide you through the process of incorporating. You'll not only save time but also stress, as you'll have a live expert available to both answer your questions and advise you on how to proceed. However, if money is tight, the process is absolutely something you can do yourself."

Is it easy to incorporate a business online?

In addition, in most states, the process is easy, available online, and doesn' t necessarily require guidance from an attorney. "For a solo owner, when you are just starting and are too small for a major lawsuit risk, there is nothing wrong with saving a little money by doing a DIY incorporation," says Ryan Reiffert, a Texas-based attorney.

Is it cheaper to incorporate on your own?

It is definitely tempting to incorporate on your own because it's less expensive than hiring an attorney. "While state fees generally total between $100 and $250, the average attorney charges that by the hour," says Matthew A. Dolman, a Florida-based attorney with Sibley Dolman Gipe Accident Injury Lawyers, PA.

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.

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.

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.

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.

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.

Expertise – Navigating The Sea of Options

Experience – They’Ve Seen It Before

Cost – Saving More Than You Spend

Consigliere – A Sounding Board

Networking – The First Professional

Limited Liability – The Reason For All This

• Though last on this last, the concept of “limited liability” is perhaps the most important one to discuss. In general, you are putting yourself through all the effort, expense, and time commitment of creating a separate legal entity because you don’t want your new business’s liabilities to be your own. The entire purpose of the corporate (or LLC) s...

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