Many new business owners wonder: Do I need a lawyer to form an LLC? The short answer is no, but the long answer--more accurate and more complicated--is maybe. Simply put, forming an LLC does not require a lawyer. Most states allow business owners to form an LLC on their own.
Some lawyers offer LLC formation services as part of their professional services to small business owners, but it is not legally necessary to hire a lawyer to help you with this aspect of starting your business. However, there are a variety of circumstances in which it does make sense to hire a lawyer to help with issues related to forming or operating your LLC.
WHEN YOU NEED A LAWYER: COMPLICATED BUSINESS FORMATION ISSUES. For many small business owners, forming an LLC is the best choice of legal business entity. LLCs are simple and flexible, and they give you the ability to manage your business as a single member/owner or with additional partners. However, if you have more complex questions about which business entity is right for you, then it might be worth hiring a lawyer to consult about your options and help you make the right choice of business structure. This could be the case if you have investors who want an ownership stake in your LLC, if you want to get venture capital funding, or if you want to eventually go public with your company and issue publicly traded stock.
LAWYERS CAN HELP WRITE CONTRACTS. Contracts are one of the fundamental elements of the business world. A well-written contract can protect your legal rights and ensure that both sides of a business transaction get what they were promised: your business delivers the goods or services, and your customer delivers the cash.
There are many websites promising to offer templates for various contracts, and in some cases you might be safe enough with those. But if you want to make sure your legal rights, intellectual property, business reputation, and other aspects of making money are protected against the worst-case scenarios and liabilities, you may consider hiring a lawyer to help craft a standard contract for your business. A customized contract would be specifically tailored to your industry, target market, and frequently encountered business issues. Experienced lawyers are well-versed in the law and can draft a contract that will protect your rights while anticipating (and buttressing against) the possible ways a deal can go sour. Spending a few hundred dollars today on legal services to craft a well-written contract for your business can potentially help you save many thousands of dollars in the future.
HR ISSUES: HIRING AND MANAGING EMPLOYEES. As your business grows, you might get to the point where you’re ready to start hiring employees. Going from a single-member LLC to a larger company with full-time employees is a major step in terms of legal obligations and regulatory compliance, and this is an occasion where you will probably be better off hiring a lawyer to help you navigate the complexities. For example, when hiring employees, there are a variety of legal issues related to things like:
* Complying with state and federal labor laws
* Maintaining a safe workplace
* Paying into the unemployment insurance system
* Managing your company in a fair and equitable manner (to protect yourself from lawsuits for workplace discrimination)
If you’re going to invest thousands of dollars per year in hiring employees, you should be prepared to invest some money up front consulting with a lawyer who can advise you on how to manage your employees, create an employee handbook, comply with relevant labor laws, etc.
HIRING THE RIGHT LAWYER. Hiring lawyers for your LLC is similar to hiring other professionals: Sometimes the best way is to ask around for referrals. If you don’t know any lawyers who have the relevant experience or expertise, consider joining a local business association, or attend some lunch-and-learn seminars where local lawyers are giving presentations. You could also start by reading some relevant articles by various lawyers in legal journals, business publications, or law firm websites or social media to get a sense of their style and expertise.
Good lawyers are not cheap, but they’re often worth more than they cost. A smart, efficient, experienced lawyer can help you save a lot of money in the long run by anticipating problems before they happen, filling the gaps in your legal protections, or crafting customized solutions that fit the unique needs of your business. Don’t be afraid to call upon your lawyer to help with the various business and legal issues that might affect your LLC; it will help you stay in compliance with the law, stay in good standing with regulators, and stay ahead of the competition while protecting your rights and income from some of the worst-case scenarios of being in business.
We have been representing small businesses and their owners since 1996. If we can be of service to you, your friends, family, neighbors, or co-workers, give us call at 253.858.5434 to set up an appointment today. We present clients throughout Washington and Idaho and are available to meet in person, by phone, or via Skype or FaceTime.