- Legal Steps to Create an LLC
- What to do After Creating an LLC
- Why Use an Attorney
Nowadays, almost every state has downloadable forms and instructions that help business owners create their own Limited Liability Company (LLC). With the ability to create an LLC yourself right at your fingertips, you might be wondering if there is any reason to involve an attorney in the whole process. The answer to that questions is yes, and here’s why:
Legal Steps to Create an LLC
Step 1: Pick a Name
Choosing a name for your company that suits your business is one of the most important steps in creating an LLC. Certain words, such as bank, school or clinic are restricted: this means that they require extra paperwork and potentially require a licensed individual like a physician or lawyer to be a member of the LLC. Words that might confuse your LLC with a state or federal agency, such as treasury, are prohibited.
Step 2: Elect a Registered Agent
A registered agent is someone who can send and receive legal papers on behalf of your LLC. While a registered agent can be yourself, or any other member of your LLC with a physical address in the state you do business, it is recommended that you choose someone with legal knowledge. Choosing an attorney or lawyer to be the registered agent of your LLC means that you will never have to worry about your company being compliant with the law. They will be able to help you find state-specific accountants, and remind you of any State filings that are due.
Step 3: File Articles of Organization
The founding document of your LLC is known as its Articles of Organization. An attorney can help you write out this document and ensure that it is properly filed with the State.
Step 4: Obtain an Employer Identification Number
An Employer Identification Number, or Federal Tax Identification Number, is essentially a social security number for your business. You will have to obtain an EIN from the IRS in order to file state or federal taxes. Your attorney can obtain this for you as well as obtaining and preparing the corporate “Kit” which contains the articles of organization, membership certificates and bylaws and operating agreement, if any, of the company.
What to do After Creating an LLC
After officially forming your LLC and legally registering it with the state, you are ready to operate your business. However, there are certain things that should be done after the creation of your business, preferably with the assistance of an attorney. These include:
Create an Operating Agreement
If you have more than one person involved in the ownership of the company, you will need an operating agreement that sets forth how the company will operate, who will operate the company, what will happen if one or more of the members wish to withdraw or sell his or her interest in the company, what will happen if one of the members becomes ill or dies. Your attorney should draft an operating agreement for you, so that there will be no disputes or litigation later on.
Registering for Taxes
Does your LLC require you to register for state income or sales taxes? Make sure you aren’t committing accidental tax evasion by hiring someone who is educated in the law to make sure that your business is sound.
Obtaining Permits and Licenses
All LLCs must comply with local, state and federal government regulations. Operating a business without the proper permits and licenses is illegal and will quickly result in your LLC being shut down.
Do you intend to hire employees to work for your LLC? If so, there are a lot of legal obligations that are required before you can start the hiring process.
Why Use an Attorney
When forming and maintaining an LLC, there are many different legal obligations that you will have to comply with. If you are not educated in the law, this can become daunting and even discourage you from creating your business. Rather than worry about complying with state and federal requirements, it is far easier to hire an attorney to assist you during the process. Attorneys also make good registered agents.
So, while you can technically create and maintain an LLC all by yourself, it’s always best to get help, and the best help comes from attorneys like Gary I. Handin.