Can an Accountant Set Up an LLC for Me?

A Limited Liability Company (LLC) offers business owners a flexible structure, combining personal liability protection with various tax treatment options. Many entrepreneurs choose an LLC to separate personal assets from business debts. A common question arises: can an accountant facilitate the setup of an LLC? This article clarifies how an accountant can assist in LLC formation, outlining their capabilities and when other professional guidance might be necessary.

What an Accountant Can Do for LLC Setup

Accountants often play a significant role in guiding new business owners through the initial stages of forming an LLC, particularly concerning financial and tax considerations. They can prepare and file the necessary formation documents, such as the Articles of Organization, with the relevant state authorities. These documents formally establish the LLC and include details like the company’s name, registered agent information, and principal address.

Beyond state registration, an accountant can assist in obtaining an Employer Identification Number (EIN) from the IRS, required for tax purposes and opening business bank accounts. Accountants also advise on and process the LLC’s federal tax election. While an LLC is a legal entity, the IRS does not recognize it as a distinct tax entity; instead, it defaults to certain classifications based on the number of members. A single-member LLC is typically treated as a disregarded entity (taxed as a sole proprietorship), and a multi-member LLC defaults to a partnership.

Accountants can help clients elect to be taxed as an S-corporation or C-corporation, which can offer tax advantages depending on the business’s profitability and owner compensation strategies. For an S-corporation election, IRS Form 2553 is filed, while for a C-corporation election, IRS Form 8832 is typically used. Some accounting firms may also offer or facilitate registered agent services, designating an individual or entity to receive legal and official correspondence. Finally, accountants assist in setting up the initial accounting system for the new LLC, advising on bookkeeping practices, chart of accounts, and foundational compliance requirements.

What an Accountant Needs to Set Up an LLC

To initiate the LLC formation process, an accountant requires specific information and decisions from the prospective business owner. This includes basic business details such as the full legal name chosen for the LLC and the state in which it will be formed. The accountant will also need the primary business address and a clear description of the business’s main activities.

Information about all LLC members, including their names and addresses, is also necessary. If the accountant is not providing registered agent services, details for the designated registered agent, including their name and physical address within the state of formation, must be provided. The client’s preferred federal tax election for the LLC (e.g., disregarded entity, partnership, S-corporation, or C-corporation) is also needed, which the accountant will have discussed with the client. While accountants do not draft the Operating Agreement, they will require decisions on its substantive elements, such as ownership percentages, how profits and losses will be distributed, and the management structure (member-managed or manager-managed). These decisions help the accountant properly set up the LLC’s initial structure and advise on financial implications.

The Accountant’s Process for LLC Formation

Once all the necessary information is gathered from the client, the accountant proceeds with the procedural steps for LLC formation. The first action involves preparing the Articles of Organization, or Certificate of Formation, using the provided details. This document contains the formal information required by the state to officially register the LLC.

After preparation, the accountant facilitates the submission of these formation documents to the relevant state agency, typically the Secretary of State’s office. This filing can often be done online, though some states may still require mail submissions. Upon successful state registration, the accountant then applies for the Employer Identification Number (EIN) with the IRS. If the LLC has elected a specific tax classification, such as S-corporation status, the accountant will prepare and submit the appropriate IRS forms, like Form 2553. The accountant also advises on post-formation compliance, which may include initial reports or publication requirements.

Situations Requiring Legal Counsel

While accountants are skilled in tax and financial matters related to LLC formation, their role does not extend to providing legal advice. Accountants are prohibited from drafting legal documents or offering counsel on the legal implications of business decisions. This distinction helps business owners understand how to receive comprehensive guidance.

The drafting of a comprehensive Operating Agreement, especially for multi-member LLCs, requires legal expertise. While an accountant can advise on the financial aspects to be included, an attorney ensures the agreement covers all legal aspects, including member rights, responsibilities, dispute resolution mechanisms, and exit strategies. For businesses with complex ownership structures, intricate liability concerns, or specific agreements between multiple members, legal counsel is recommended. Additionally, businesses operating in highly regulated industries should consult with an attorney to navigate industry-specific legal compliance requirements during the setup phase and beyond.