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Do I need an attorney to form an LLC? – The short answer
No, involving an attorney is not a legal requirement for setting up an LLC.
Do I need an attorney to form an LLC and file the necessary forms?
In most cases, the answer to this question is no because filing out the forms are quite straightforward. In most states, you only have to fill in one single page, the Articles of Organization, and then proceed to pay the filing fee.
Do I need an attorney to form an LLC and take care for ongoing paper work?
In most states, the mandatory paperwork consists of a one page annual statement; you simply fill it out and pay the annual fee. Most people can handle this themselves without involving an attorney.
Do I need an attorney to form an LLC and deal with the IRS?
This is where it gets tricky. There are no rules that force you to involve an attorney to deal with the IRS, but many LLC’s still choose to do so because handling IRS can be quite tricky and a simple mistake can cost you much more than the price of an attorney. In most states, the IRS can decide to tax you as a corporation if you do not comply with certain LLC guidelines. Since one of the main reasons for setting up an LLC instead of forming a C Corporation is to keep the benefits of partnership taxation, being taxed as a corporation is naturally highly undesirable. To avoid this type of problems, many LLC:s decide have an attorney look at their business and make sure that it complies with IRS principles. In most states, there are four “corporate characteristics” to be found in these guidelines. As long as your company has no more than two of these characteristics, the company will be taxed as an LLC (partnership taxation). An LLC that have three or more of these characteristics will on the other hand stand the risk of being taxed as a corporation. You can choose freely which two corporate characteristics to refrain from; they are all of equal value. Fully understanding the corporate characteristics and avoiding them can however be tricky and hiring an attorney is therefore often a good idea.
Do I need an attorney to form an LLC? – The alternative
Instead of hiring an attorney, you can turn to an incorporation service. This type of company is today found all over the United States and they can guide your through the entire start up process. Many incorporation services will also offer to help you in the long run, e.g. by being the Registered Agent for your LLC. Using an incorporation service is naturally not for free, but their fees should be compared to the cost of hiring an attorney to prevent IRS problems. Always compare the fee of several different incorporations services and attorneys before you make up your mind.
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