Should I hire a lawyer to set up an LLC?
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Should I hire a lawyer to set up an LLC?
Our business will consist of 2 equal partners one of whom resides in IL; the other is a resident of Austria and both of share equal responsibility in making decisions for the business. Our business address will an IL address. I want to make sure LLC is really the correct business entity for us to form
and I want to make sure our operating agreement will cover all pertinent laws and so will limit our liability. I am not certain if we need a lawyer to prepare these documents or if our business is simple enough that hiring a lawyer is not necessary. It appears that preparing the documents is something we are capable of doing but I’m finding conflicting information about whether it is necessary to have a
lawyer to look over these documents particularly the operating agreement before they are filed.
Asked on April 22, 2018 under Business Law, Illinois
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 6 years ago | Contributor
First, an LLC is generally the best form for a two-person business: it provides liability protection and "pass through" or disregarded tax treatment (no double taxation) with less formality and paperwork than a corporation.
Second, while you *could* draft the operating agreement and set up the LLC yourselves, you really should have an attorney do this. The lawyer will know questions to ask and issues to consider that you will not, and will understand how to resolve any issues. Some things that an attorney can help you with, for example:
1) What if one of you wants out: must he be bought out by the other partner or by the LLC itself and, if so, for how much money?
2) What if one wants to sell his interest or share to a third person: can he do that without the other partner's consent?
3) If you are 50-50 partners, what happens if you deadlock about a decision?
4) Taking money out from the business--does that require mutual consent? If so, what happens if one partner never wants to take profits out--does that mean the other one is out of luck?
Etc.--Even simply business structures have more potential issues that you may think at first glance, and a lawyer can help you address them.
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