Do You Need a Lawyer to Start an LLC?

As your side hustle grows, you may ask yourself, what's next? For many, the answer is forming an LLC. This step creates a legal separation between yourself and your business, helping limit your personal liability and opening up new possibilities for taxes and investment. However, many first-time business owners never make it official because they think forming an LLC is too expensive, takes too much time, and requires the help of a lawyer.

The reality is, forming an LLC may be easier than you think and doesn't require the use of an attorney or any other legal professionals. In most states, all you need to do is pay some state fees and file the correct paperwork with your Secretary of State. Then, your business is off to the races.

If you are considering paying a lawyer to form your LLC, keep reading. We'll explore the pros and cons of using a lawyer to form an LLC, as well as some popular filing alternatives.

What Is an LLC?

A limited liability company, or LLC for short, is a type of business structure in the United States. For example, suppose you operate a small business already but have not filed articles of organization with your state. In that case, your business is considered a sole proprietorship, which means there is no legal distinction between yourself and your company.

This relationship can make you legally liable should your company be sued and provides limited options for paying your taxes on business income. An LLC, however, separates you legally from liability and can provide additional opportunities for tax filing.  

What Are the Legal Requirements To Start an LLC?

How to start an LLC can vary depending on the state where you register. Generally, the steps to form an LLC are as follows. However, be sure to check your Secretary of State's website for further details.

1. Choose a business name

2. File articles of organization with your state

3. Name a registered agent

4. Get an IRS Employer Identification Number (EIN)

5. File ongoing annual reports

6. File ongoing annual taxes with your state and the IRS

Is Hiring a Lawyer To Start My LLC Worth It?

Before the internet was readily available to entrepreneurs, forming an LLC, S Corp, C Corp, or DBA was a more mysterious endeavor. However, now every detail is readily available online, and small businesses have options when forming an LLC.

Whether or not a lawyer's service is worth it depends on your objectives and budget. If you are bootstrapping and looking to save cash to put back into your business, then maybe pass on the expensive lawyer fees.

However, if money is not an issue and you are looking to save time and get in-person, professional advice for filling, then a lawyer may make sense. Hiring a lawyer can certainly cut down on research time, and they may be able to provide additional advice surrounding your business formation. Ultimately, you'll need to weigh the pros and cons for yourself.

Pros of Using a Lawyer

While hiring a lawyer is not necessary when forming an LLC, it can be beneficial to the process in some cases. Below are some potential pros of using a lawyer to form your LLC.

• Helps you determine whether a business name is available

• Helps with filing all necessary documents

• While not required by most states, a lawyer can also help you establish an operating agreement for your business

• Helps avoid filing mistakes or errors

• Helps keep records and proper documentation of the process

• Helps assist and advise with additional business formalities if needed

• Provides ongoing legal advice

Cons of Using a Lawyer

With other options at your disposal when forming an LLC, hiring an attorney won't make sense for everyone. Below are some cons of using a lawyer to form your LLC.

• Expensive, costing between $1,000 and $1,500 on average

• Not all lawyers have the same knowledge or experience

• Not all lawyers will be familiar with filing requirements in every state

When a Lawyer Could Make Sense

While online filing companies have made registering your LLC online simple, there may be complex business questions or other instances where the right lawyer could help, including:

• Your LLC wants to have foreign investors or venture capital funding

• You plan to take your LLC public later on

• You need assistance with additional business contracts

• Your LLC includes complex intellectual property (IP) such as technology, creative work, or other trade secrets

When a DIY Approach May Be Better For Your Business

For most sole proprietors and small business owners looking to form an LLC, the process is fairly simple and straightforward. You will have multiple options to file at your disposal, and likely your single-owner business won't require any outside counsel to move forward.

Filing yourself makes sense for any owner looking to save some money compared with hiring a lawyer — potentially saving you thousands of dollars when all is said and done.

Popular Alternatives To Hiring a Lawyer for an LLC

If you choose not to use a lawyer to form your LLC, you will still have other options at your disposal, including:

• Filing yourself with your Secretary of State

• Using an online incorporation service

Some entrepreneurs choose to save the attorney fees when forming an LLC and instead use that money to hire a lawyer to help with other aspects of their new business, including:

• Employment Law Attorneys for employment contracts

• Intellectual Property Attorneys for protecting products, services, and creative work

• Tax Attorneys for proper tax structuring and filing

• Business Attorneys for general counsel and compliance

Bottom Line, Do What Makes Sense For You & Your Business

While deciding whether or not to use a lawyer is a personal choice, every business owner will have to determine what's best for them. Try looking at all the angles and carefully weighing your pros and cons before making the decision.

We're Here to Help You

Swyft Filings is here to help make filing an LLC fast and easy. We've helped thousands of entrepreneurs file their LLC in every state and can help you do the same. We've made the process simple to understand, with no prior experience or legal training needed. Simply tell us about you and your business, and we can help your LLC get registered in just minutes.

You can get started today using our Incorporation Wizard.