The process of running a business can mean having to understand and wade through complex laws and regulations, managing employees and customers, staying on top of your taxes, and much more.

As a new business owner, understanding the nuances of business law, handling state-specific regulations, and making sure your business is compliant can be challenging.

One major challenge that new business owners face is deciding on the right structure for their business entity. The advantage of Limited Liability Companies (LLCs) over other business entities has made them the most widely acceptable choice for new business owners. In the United States alone, over 21.6 million LLCs are proof of this.

However, creating one can be complicated and intimidating. This is why hiring an experienced business attorney plays an important role and can be a wise and beneficial investment, especially in the long run, as your start-up business seeks to grow and operate business successfully. 

This article will explore the structure of an LLC, the benefits of forming an LLC, and the role of a business attorney in helping you form an LLC. Without much ado, let us begin to understand the structure of an LLC.

Understanding The Structure of An LLC

An LLC is a hybrid business entity that combines the limited liability features of a corporation with the tax efficiencies and operational flexibility of a partnership. This structure is particularly appealing to small businesses because of its simplicity and the protection it gives to the personal assets of the owners.

Advantages of LLCs

Before diving into how to create an LLC and how a business lawyer can help, it is essential to understand the benefits of forming one for you:

1. Limited Liability Protection: One of the primary advantages of an LLC is that it offers limited liability protection to its owners (members). This means your personal assets are generally protected from business debts and lawsuits.
2. Tax Flexibility: LLCs provide flexibility in how they are taxed. Depending on what best suits your financial situation, you can be taxed as a sole proprietorship, partnership, S corporation, or C corporation.
3. Operational Flexibility: LLCs are less rigid than corporations in terms of management structure and compliance requirements. This flexibility allows you to run your business more effectively and efficiently.
4. Credibility and Growth: Forming an LLC can enhance your business’s credibility with customers, suppliers, and investors, potentially facilitating growth.

However, if you are to form an LLC, there are several steps you have to take, each requiring careful consideration and precise execution.

Forming an LLC

Creating an LLC involves steps for you to follow to ensure that your business is legally compliant. 

1. Choosing a Name: Your business name must be unique and comply with state-specific naming requirements. This often involves conducting a thorough name search.
2. Filing Articles of Organization: This legal document must be filed with the state where you intend to do business. It includes vital information about your LLC, its name, address, and members.
3. Creating an Operating Agreement: Although not always legally required, an operating agreement is essential. It outlines the ownership structure and operating procedures of the LLC.
4. Obtaining an EIN: An Employer Identification Number (EIN) is required for tax purposes and to open a business bank account.
5. Meeting State-Specific Requirements: Each state has its own set of rules and regulations for LLCs, including potential publication requirements and annual reporting.
6. Compliance with Federal, State, and Local Laws: Beyond state-specific requirements, you must also comply with various federal, state, and local laws, which can be a burden.

This step may be too complex for a layman, which is why hiring a business lawyer to help you through the process might be your best call.

How Can A Business Lawyer Simplify Your LLC Formation?

1. Business-Oriented Advice and Guidance

A business lawyer brings years of experience to the table. They can provide invaluable advice on whether an LLC is the best structure for your business based on your specific circumstances and goals. If another structure, such as an S corporation or partnership, is more advantageous, they can guide you accordingly.

2. Name Availability and Registration

Choosing a name for your LLC isn’t just about creativity, it’s also about legality. A lawyer can conduct a comprehensive name search to ensure your desired business name is available and complies with state regulations. They can also assist with trademark registration if needed, protecting your brand from future legal disputes.

3. Preparing and Filing Documents

Filing the Articles of Organization is a critical step in forming your LLC. A lawyer ensures this document is accurately completed and submitted to the appropriate state agency. This reduces the risk of errors or omissions that could delay the process or result in additional costs.

4. Drafting an Operating Agreement

An operating agreement is essential for outlining the internal workings of your LLC, including member roles, decision-making processes, and profit distribution. A business lawyer can draft a comprehensive and customized operating agreement that protects your interests and minimizes conflicts among members.

5. Taxation and Compliance

Taxation can be one of the most complex aspects of running a business. A business lawyer, often working in conjunction with an accountant, can help you understand the tax implications of different LLC structures and ensure you comply with all relevant tax laws. They can also assist with obtaining your EIN and advise on state-specific tax requirements.

6. Ongoing Legal Support

Forming an LLC is just the beginning. As your business grows, you’ll encounter various legal issues, from contract negotiations to employment law compliance. Having a trusted business lawyer means you have ongoing legal support to address these challenges promptly and effectively.

7. Handling Unique State Requirements

Each state has unique requirements for LLCs. A business lawyer who knows your state’s laws can ensure you meet all requirements, from publication notices to annual filings. This localized expertise is important for maintaining good standing with state authorities.

8. Avoid Stress

Hiring a business attorney provides peace of mind. Knowing that an experienced professional is handling the legal aspects of forming your LLC allows you to focus on what you do best—growing your business.

Conclusion

Forming an LLC is a strategic move for many new and aspiring entrepreneurs. Although the process has several steps, a good business attorney can guide you through each one and ensure your LLC is properly formed efficiently. 

A lawyer offers much more than drafting agreements and providing counsel. Investing in professional legal help to create your business entity isn’t just about founding a company — it is setting a cornerstone for the success of your future business. If you’re ready to dip your toes in the entrepreneurial waters, consider partnering with a business lawyer to form your LLC with confidence and ease.

Disclaimer: The content in this article is provided for general knowledge. It does not constitute legal advice, and readers should seek advice from qualified legal professionals regarding particular cases or situations.

Published by: Nelly Chavez