For many entrepreneurs, a trip to the CPA is one of the first checkmarks on the list for setting up a new business. This is a great first step, as it is crucial to understand the financial and tax accounting structures your new business will need to thrive. A good CPA will explain the different structures for business setup, such as a corporation, single proprietorship, or LLC. Once you’ve explored your options, the CPA might also offer to complete and file the documents you need to create an LLC in your state. While this might seem like a nice gesture on the part of your CPA, and appear to be a cost-effective measure, there are many reasons you should politely decline the offer and head straight to an attorney to set up your LLC. Here’s why:
- Your CPA should tell you that if you want to make sure an LLC is right for you legally, and not just from a financial and tax perspective, you need to consult with an attorney. An attorney is licensed and trained and can provide you with the latest information pertinent to your state; a CPA cannot.
- There are a variety of LLCs, and it is important to review the advantages and disadvantages of each type before making a decision. It is important to discuss with an expert if a single-member or multi-member LLC would work better from a legal standpoint. An attorney can deliver this advice, a CPA cannot.
- While the documents to file for LLC status might seem direct at a glance, they can involve tricky legal issues that are buried below the surface in legal language. If there are issues that apply to your business, an attorney can handle them for you; a CPA cannot.
- Filing LLC status alone won’t guarantee you legal protection of your business. Most states carry a clause that allows for “piercing of the veil,” or forfeiture of protection if various additional steps are not taken. Those steps can vary by state, and can be confusing to navigate. An attorney can advise you of these steps and help you implement them, a CPA cannot.
- If you form as a LLC, you will need an operating agreement. This is important in defining how your LLC is set up as well as what roles different members play. Clear resolution management information is also an important component for handling disputes as they arise. Failing to have an operating agreement is one of the “veil-piercing” liabilities that could cause your business to lose legal protection. An attorney can help create this agreement with your input, a CPA cannot.
When it comes to setting up your new business, every minute and every penny count. At first glance, it can seem easier and cheaper to allow your CPA to set up the legal structure of your business. However, the risks involved by not consulting an attorney far outweigh any cost savings. You wouldn’t ask an attorney for tax advice, and you shouldn’t ask a CPA to perform the legal setup of your business. Save time and money without the risk by using LexLaunch.com to set up your LLC at a fraction of the cost of typical hourly attorney fees. Contact them today by calling 816-434-6610 or click here for more information.