Do I Need a Lawyer to Start an LLC?

What is an LLC lawyer?

An LLC attorney is a legal professional who specializes in formation, compliance, and other legal matters related to an LLC. They have the knowledge to guide you on topics like:

• Which business structure to pick—an LLC, a traditional corporation, or an S corp
• How to file articles of organization with the Secretary of State
• How to remain in good standing with the state
• How to protect your personal assets when you start a business
• How to secure an employer identification number (EIN)
• How to draft an LLC operating agreement
• How and why you should open a business bank account
• Which business licenses and permits you will need

What does an LLC lawyer do?

Forming an LLC involves numerous legal considerations that a small business attorney can help with. Let's take a closer look at the key services they can provide.

Business formation services

The process for LLC business formation generally entails finding a memorable business name, filing the formation papers, appointing a registered agent, and securing the right licenses and permits. However, depending on your state, there may be some different or extra steps you need to complete. For instance, in New York, LLCs need to meet a publication requirement announcing the formation of their LLC. 

Attorneys can make the process of forming a legal business entity, like an LLC or a corporation, more efficient and painless. An LLC attorney, as part of their LLC formation services, will get to know your unique situation and advise you on which business structure is best for your small business.

They can also assist in naming your business. For instance, they can check to make sure the business name meets the state's legal requirements while verifying its availability and ensuring it's not protected by any trademarks.

Securing business licenses and permits is an essential component of LLC formation. Plus, you may need a license from multiple regulatory agencies at the federal, state, and local levels, and finding out the requirements can take some research. A lawyer possesses in-depth knowledge of these specific requirements and can take this time-consuming task off your hands. They can identify the licenses and permits you'll need to acquire and assist you through the application process.

Operating agreement drafting

An LLC operating agreement is a beneficial—and sometimes, required—legal document that outlines how the internal operations of the LLC will be managed. This agreement typically includes specifics about LLC members, their roles and responsibilities, profit distribution protocols, and the overall decision-making framework. This written company rulebook can help reduce disputes between LLC stakeholders by laying out clear procedures.

Working with a lawyer to draft your operating agreement ensures that the agreement is comprehensive, customized to your specific needs, and legally sound.

Regulatory and compliance guidance

A business formation lawyer makes satisfying any compliance measures easier. Most states require that the LLC maintain a registered agent, file annual reports, and file any necessary taxes to maintain their good standing with the state.

The lawyer can not only handle the annual report filings on your behalf but also update you on any legal changes that may impact your business. For instance, if there's a new license required for bakeries in your locality, your lawyer can promptly notify you of this new ordinance and explain what steps you need to take to avoid penalties.

Some attorneys also offer registered agent services as part of their business formation and compliance services. Your articles of organization must list a registered agent—someone who is the main point of contact for all government communications, such as tax notifications and service of process. While you could fill this role yourself, listing your attorney will give you privacy, peace of mind, and more time to focus on tangible business matters.

Dispute resolution

While no one wants it, your business journey could have arguments or conflicts. A payment issue with a vendor or a disagreement between you and the other business owners can quickly escalate. At such times, it may be wise to seek legal help.

A business attorney can legally represent you and help you build a strong case while also offering alternate solutions, like mediation or arbitration, that can lead to a faster resolution that serves the interests of all parties.

Do you need an attorney to form an LLC?

The short answer is, no, you don't need an attorney to form an LLC. All allow you to form a limited liability company on your own through the Secretary of State website. However, a lawyer can help make the process more smooth. There are a variety of decisions you need to make, and a lawyer can offer reliable legal advice.

It's especially advisable to consult an attorney if your LLC will have more complex arrangements. For instance, if you're unsure about whether a member-managed or manager-managed management structure is better, or whether you should select an S corp status, a lawyer can help you weigh the pros and cons of each. Other situations that warrant collaborating with a legal professional including filing a patent, operating a business across multiple states, or operating in a heavily regulated industry

Benefits of hiring a lawyer

When you start a business, there are a lot of important decisions you have to make. There are not necessarily straightforward answers to questions such as "How do I reduce my personal liability?" and "What's the right business structure for tax purposes?"

This is exactly where the expertise and legal services of an LLC attorney can make the difference.

How much does an LLC lawyer cost?

Lawyers are known to employ different pricing methods—hourly rates, flat fees, or a retainer. A lot comes down to the case complexity, location of the lawyer, and experience level. For instance, a San Jose, CA, business attorney's average yearly income is $268,570, which is four times the annual earnings of a lawyer in the U.S. territory of Puerto Rico. Likewise, if you need a lawyer to set up a multi-member LLC over a single-member LLC, you can expect to pay a higher rate.

How to choose the right LLC lawyer

While Google search and online legal services (such as LegalZoom’s Business Attorney Plan) have made finding an experienced lawyer easier, no two small business lawyers are the same. Consider the following factors as you vet lawyers to find the right one for your needs.

• Look for attorneys with a proven track record. Research their expertise and credentials. Ask them if they have experience dealing with businesses similar to yours. Also, seek out a lawyer that has skills in the area you most need help in. If you need more assistance with tax issues, seek a business tax lawyer.
• Read reviews from previous clients. Do your due diligence on what their previous clients have to say via their Google reviews or LinkedIn page. This will help you gauge their competence and get a better idea of whether they are best suited for your particular situation.
• Understand their billing practices. Attorneys are an investment, and you want a lawyer who fits in your budget. Don't shy away from asking how they bill clients, whether it's an hourly rate or a flat fee, so there are no surprises when you get your bill.
• Ensure the lawyer is accessible. Determine how easily you will be able to reach your potential lawyer. How long is their standard response time? You want to pick someone who will get back to you within a time frame that works for you.
• Consider their communication skills. You will be working closely with this lawyer and sharing sensitive information, and communication is essential to any successful partnership. Speak to the lawyer via a phone call or online to gauge their communication skills. Are they able to make you break down legal issues for you and make you feel at ease?

Forming an LLC with LegalZoom vs. an LLC lawyer

Hiring a lawyer has its advantages, but it can quickly become a large percentage of your LLC startup expenses. Working with an LLC formation company is the more budget-friendly option that allows you to get the necessary legal help without breaking the bank. 

LegalZoom has been collaborating with small business owners from across the U.S. for years to get their businesses off the ground. We offer a range of affordable legal services that can help you with almost any issue you may face as you start or run your business—from picking a business name and securing an EIN to drafting operating agreements and ensuring that you stay compliant with applicable laws. With LegalZoom's unified platform, you get a single point-of-contact for all your business needs, eliminating the headache of managing multiple resources. 

Our Business Legal Plans also allow you to get unlimited and individualized legal guidance from the right lawyer on any business issue you may have. For instance, if you are unsure how to define voting rights among multiple owners, or which management structure to choose, you can schedule a consult at any time.