Idaho business attorney Wyatt Johnson highlights 10 questions you should be asking before you form a limited liability company (LLC).
What is an LLC?
LLC stands for limited liability company. A limited liability company provides liability protection like a corporation. It separates the liabilities of the company from the owners. It’s unlike a corporation in that it doesn’t require the owners or members to adhere to rigid formalities in a corporation. It’s an ideal type of business entity for nimble and efficient business and it’s suitable for business in almost all levels. Going from a solo practitioner to a company with thousands of employees.
Do you need an attorney to help form an LLC?
In almost every case, yes. There are certain clerical functions to forming an LLC that are not difficult. There are always substantive questions to forming an LLC that got really should have an attorney assist you with. The simple parts of forming an LLC are going down to the secretary of state’s office and filling out the articles of organization, it’s a single-page document and you file it and you pay the fee for the LLC. That’s simple. The real questions are what you do with that LLC and how you organize it. That’s usually addressed in an operating agreement. The operating agreement is not a standard form, it is not something you can get at the secretary of states’ website and if you pull it off the internet, what you’re pulling down a form that somebody else put together for their situation which may have nothing to do with you.
So when you come in to see an attorney about an LLC, one of the things that they do will be to speak with you to help decide what needs to be in your operating agreement. It will change depending on a number of factors.
10 Common Challenges Experienced in LLCs:
- How many people are going to be involved in the company?
- Who do you want to have management control over the company?
- How are you going to treat the company for tax purposes?
- Who is required to put money into the company and when?
- Who gets money out of the company and when?
- When do you allow in new members?
- When do you let out members?
- How long is the company going to last?
- What if the company runs into trouble and needs more money?
- Are you going to enforce a non-compete between members?
There is not one answer to any of those. Those all depend on your specific circumstances and that’s why you need an attorney every time you form a limited liability company.
If you are forming an entity, come down, see us, we’ll help you walk through this and get you set up and once you know that you’ve a company that fits your needs, you’ll be off on your way.