A limited liability company, also known as an LLC, is a type of business structure that many entrepreneurs choose. It’s an attractive option because it allows for pass-through taxation while providing limited liability like a corporation. If you’re considering forming an LLC, you might work with an attorney who specializes in business law. To get you started on this new endeavor, here are the answers to a few frequently asked questions about the process.

What to Know About Forming an LLC

When does it make sense to form an LLC? 

Organizing a business as an LLC usually makes the most sense under two circumstances. The first is if the company will be engaged in dangerous activity that increases its risk of being sued, or it has the potential to rack up a considerable amount of debt. The second is if the owner or partners have a substantial amount of personal assets that they want to protect from any possible liability issues associated with the business.

What documents do I need when forming an LLC?

To create an LLC, an Articles of Organization application must be submitted to the Secretary of State or another appropriate state agency. Then, the members of the LLC should draft an operating agreement, which outlines the rights of the members and guidelines for running the company. It may also be necessary to apply for a tax identification number with the IRS.

Do I need an attorney to form an LLC?

Typically, an attorney isn’t required to launch a business; however, there are significant benefits to seeking counsel. These knowledgeable professionals will prepare all the necessary legal paperwork and ensure it’s free of errors. Additionally, if you’re unsure which business structure is right for your operations, an attorney can help you sort through the benefits and disadvantages of each and explain how these would affect your liability and tax obligations.

How do I select a name for my LLC?

When forming a new LLC, you must select a name that’s unique from all other registered entities in your state. It’ll also need to contain a signifier of your corporate status and can’t intentionally misrepresent any product or service you offer. Before filing the Articles of Organization, conduct an online search to check that your desired name is available.

Choosing a business entity is one of the most important decisions an entrepreneur has to make. An attorney from Hawaii Convey in Honolulu can provide further clarity on forming an LLC and help you determine if it’s the best option for your startup. These professionals have been representing local business owners for over 30 years and are known for providing sound legal advice. Call (808) 792-8777 to arrange a consultation, or view their practice areas online.