A common question that many aspiring small business owners have is whether they actually need to hire an attorney to form the business entity they desire, more commonly these days, the LLC.  Well, the short answer is no. This may surprise you coming from an attorney who practices in small business law, but the truth is that forming a business entity, including an LLC, is so simple that anyone with a high school degree should be able complete the process without the assistance of counsel. Under Ohio law, an LLC is formed the minute that the Articles of Organization are filed with the Secretary of State (and you pay the appropriate filing fee). That is, a separate, legally cognizable entity (e.g., widgets are us, LLC) exists as soon as the State files the very simple document it provides to public free-of-charge. Take a look at the standard form contained at the Secretary of State’s website and see for yourself: www.sos.state.oh.us (form 553a).

This is the reason that our firm doesn’t charge for the time spent forming the entity. As small business owners in our own right, we would feel guilty billing for such a menial task, especially when there are so many more important issues that we will spend our time on.

Forming a business entity is only the beginning, however.  Just because you manage to bring a business entity into existence doesn’t mean it is set-up in such a manner that it will function as you envisioned.  There remains the issue of drafting the all important Operating Agreement,  that adequately covers all aspects of your particular business, and this document can (and should) vary greatly depending on several factors, including: (a) the particular industry in which the business is engaged, (b) the number of owners/investors that will be involved in the business (and in what capacity), and (c) whether the business anticipates adding or losing owners/investors in the future, and many other variables that you may not initially think of as you structure your operations.

The real value in retaining an attorney during the start-up phase of business is their ability to counsel you regarding the nuances of internal organization and control of the business, common misconceptions about personal liability of the owners, the tax consequences of various business endeavors that may be on the horizon, the ramifications of making certain types of business investments, and properly setting up the business so as to reduce problems when owners pass away, want to leave the business, or otherwise disagree with the direction that other owners want to take the company – the dreaded “Agency Problem.”

Many clients also wonder about their ownership share and whether they can pass their wealth in the company along to non-owner family members.  A good small business attorney will make sure these issues are taken care of up-front.

Therefore, while you can easily form a business entity by yourself, it may not be structured so as to meet all of your personal and professional needs. And quite often there are problems down the road that could have been avoided with proper planning and advice from a small business attorney.   The good attorneys will not charge you to form the entity, but rather to structure the entity in a manner that meets your particular needs.