Rather than being a sole proprietor for your business, you have decided to form a limited liability corporation. This is often a smart choice because you can shield your personal assets from lawsuits. Unfortunately, many people want to save money, so they do it themselves. When this happens, mistakes are common, and this can lead to a lawsuit where your personal assets are not protected. The following are a few things a corporate attorney can do when creating an LLC.
A corporate lawyer can create the operating agreement properly
Even though you are the lone member of an LLC, you need to have an operating agreement. This is a document that explains how the LLC will be run. If you are sued, an attorney can use a badly drafted operating agreement against you. They will be able to pierce the corporate veil and attack your assets. An operating agreement will specify how much money that you are putting into the corporation as startup capital. It may specify other things such as your salary, the insurance that will be carried, the place where the business will be located and other important factors of the business's operation. When the operating agreement is drawn up properly, it will be clear that the corporation is separate from you.
A corporate lawyer can advise you on your bookkeeping
Because you need a separation between your LLC and your personal finances, an attorney can explain exactly how to go about this. The record-keeping should be consistent with an LLC. It may be possible to do this yourself with software, or you can hire a bookkeeper. You will also need a separate bank account for your LLC. One way an attorney suing your LLC can pierce the corporate veil is by demonstrating that the corporation is simply an alter ego of your personal finances. A corporate attorney can give you advice on setting up a financial wall between the corporation and your personal assets.
A corporate lawyer can advise you on how to withdraw money from the LLC
If your company starts to do well, it may end up with more cash than it requires. Per your operating agreement, you already have a salary, but you want access to the extra cash. You can't just take it out because you are the lone member of this corporation. If you do this, it can be used as evidence that you are simply a sole proprietor. A corporate attorney can explain the process that needs to take place, so the wall between your personal finances and the LLC is still strong.
The mistakes that you make in setting up an LLC yourself can be costly. One lawsuit by a smart attorney can pierce the corporate veil and take everything you have. If you want to set up a lone-member LLC, always consult a corporate attorney.
Reach out to a firm like Alghoul & Associates to find out more.
