State-by-state statistical analyses suggest that there are presently at least 12 million US LLCs in good standing. It is reasonable to assume that at least 500,000 additional US LLCs will be formed by the end of 2022 and in every year thereafter.
It is also reasonable to assume that the members and managers of many of the above 12 million LLCs formed them with the help of LLC lawyers and that LLC lawyers will play a key role in the formation of hundreds of thousands of new LLCs this year and in future years.
This assumption is particularly reasonable with regard to the formation of multi-member LLCs. IRS filing statistics suggest that about 25 percent of all US LLCs are multi-member LLCs.1 A significant number of individuals forming multi-member LLCs are likely to be aware that:
- Multi-member LLCs are unavoidably far more complex than single-member LLCs; and
- The formation of multi-member LLCs requires addressing many legal and tax issues of which neither LLC formation clients nor non-LLC lawyers are likely to have significant knowledge.
Furthermore, the accountants or other professional advisers of many multi-member LLC founders are likely to advise them of these facts. Finally, American Bar Association statistics and other evidence suggest that, of the 1.33 million lawyers currently practicing law in the US, many tens of thousands qualify as LLC lawyers,2 who likely engage in LLC formation practice frequently. In short, LLC formation practice is a major form of US legal and tax practice.
THE IMPORTANCE OF FORMS
Forms are the most important tool at the disposal of any LLC lawyer. But, oddly enough, many LLC lawyers don’t know much about LLC forms. As many readers will know, LLC forms (sometimes referred by LLC lawyers as “model operating agreements”) are agreements whose main purposes are:
- To identify and address the LLC legal and tax issues relevant to the members of the specific types of LLCs for which these forms are designed; and
- To serve as the basis for LLC operating agreements for actual LLCs.3
The Tax Practical Lawyer
CLICK HERE to read the full article, which was originally published in ALI CLE’s The Practical Tax Lawyer.