When it’s Time to Form an LLC
Posted by: Copenhaver, Ellet & Derrico
Starting a business takes hard work and a lot of perseverance. It’s gratifying to see your business grow by taking on new clients, hiring employees, or leasing a new commercial space. But at that point, you need to consider whether it might be time to form an LLC. The main benefit of an LLC is to separate your personal and professional lives, by giving you limited liability.
Forming an LLC is often the choice of sole proprietors, but it isn’t the only business entity option to consider. Whatever your need, an experienced business lawyer, like those at Copenhaver, Ellett & Derrico, can help you determine what’s best for your business. If we decide an LLC is right for you, we will handle drafting all the necessary forms and complete the filings so you can concentrate on your business.
Understanding an LLC
With a Limited Liability Company (LLC) business structure, you can shield personal assets from business liabilities and provide the business with pass-through treatment of income. Your personal liability is limited as to the debts or legal claims against the business, with a few exceptions.
Limited Liability Protection
Without the protections offered by an LLC, you and your business are legally the same “individual.” Your business debts are also your personal debts. Additionally, if your business or an employee is accused of negligence or wrongdoing, your personal assets might be at risk.
An LLC separates you from the business. LLCs are responsible for their own debts, but personal assets like your home and savings can’t be used to collect on business debts. These personal assets are also protected if the business itself is exposed to a lawsuit.
Tax Benefits of an LLC
There are tax benefits to an LLC as well. Because of “pass-through taxes” as an LLC owner you don’t have to file a corporate tax return. Instead, you can just report your profit and loss on your individual tax return.
How to Set up an LLC
An LLC is set up in a multi-step process that your attorney can handle:
- Choosing a business name, which can’t duplicate an existing LLC in Virginia
- Creation and filing the Articles of Organization
- Appointment of a registered agent
- Compliance with tax and other regulatory requirements, like getting an EIN, business license, or registering with the Department of Taxation
- Payment of registration fees
Why You Need a Lawyer to Form Your LLC
You may have heard that forming an LLC is “easy.” The Virginia Secretary of State provides documents and allows online filing. But DIY legal matters are rarely a good idea. This is especially true when it comes to your business.
When it is time to move your business to the next level, nothing can substitute for sound legal advice. When you work with our firm, we:
- Advise you if an LLC is right for your business. While it may seem that an LLC is the way to go, a business attorney may find reasons to consider a different entity, such as a partnership, or an S or C corporation.
- Provide legal advice that the Virginia Secretary of State office can’t. If you try to do your filings on your own, there is no one to help with questions about those documents. Personnel in the Secretary of State’s office cannot and will not provide any legal advice.
- Make sure all the LLC legal requirements are met and save you from costly mistakes. If you fail to properly file, meet a regulatory requirement, or pay fees, your LLC application will likely be rejected. Or, even if it is approved, it could later be found to be defective and expose you to liability.
As a business owner you have enough to worry about. A business lawyer helps you sleep better, knowing that we created the right business entity for you.
Need an LLC? Contact Us
An LLC separates your professional and personal finances and limits your personal liability. It also gives you flexibility when it comes to management and operation.
As experienced Roanoke business attorneys, Copenhaver, Ellett & Derrico can answer all your questions about what entity is best for your company, and how to properly form your LLC. By speaking us, you’ll be certain in your choice and free to run your business.