There are currently about 62,000 New Hampshire single-member LLCs in good standing, and every year, New Hampshire businesspeople form at least 14,000 new single-member LLCs. Most of them form their single-member LLCs on their own. Some of them do so by simply drafting their own LLC certificates of formation and filing these certificates online or in person with the New Hampshire Secretary of State, others by paying a company such as RocketLawyer or LegalZoom to form them.

However, if, now or later, the income or other financial or personal stakes of the businesses these businesspeople will conduct through their single-member LLCs will be significant, they shouldn’t form their LLCs on their own or through one of the above companies. Instead, in forming them, they should obtain the assistance of a competent New Hampshire LLC lawyer and should ask these lawyers to provide them with a written operating agreement carefully tailored to meet their needs. To draft these agreements, this lawyer must be expert not only in LLC law but also in LLC tax.

There are five principal questions that your LLC lawyer should address for you. I’ll briefly state these five questions below, and I’ll set forth brief answers to each of them.

Should your LLC be a multi-member LLC rather than a single-member LLC? Because of a judicial doctrine called veil-piercing and for other reasons, a multi-member LLC will provide you with a stronger statutory liability shield than the liability shield provided by a single-member LLC. In addition, under an IRS regulation designated Prop. Reg. § 1.1402(a)-2, a multi-member LLC can provide you with substantial Self-Employment Tax savings unavailable to members of single-member LLCs.

It’s true that if you form your LLC as a multi-member LLC, you will need an LLC co-member you can deeply trust. However, a spouse, partner or close friend can meet this need.

What should be your federal tax regimen? As the member of your single-member LLC, you can be taxable as a sole proprietor, reporting your income from your LLC on Schedule C; as the shareholder of a single-shareholder C corporation; or as the shareholder of a single-shareholder S corporation. Making the right choice among these three options can be complex, but the right choice can save you substantial federal taxes.

Should your LLC have a written operating agreement? It should. For example, if a time comes when, because of an accident, illness or otherwise, you yourself can’t manage your single-member LLC, you’ll need a written operating agreement to validly appoint a non-member assistant manager to manage it until you can resume its management. Also, you may need to identify in a written operating agreement the individual or entity that will succeed to your membership of your LLC if you die while you’re its member. And perhaps most basically, a well-drafted written operating agreement may be useful in providing you with a practical understanding of your LLC from a legal and tax viewpoint and in managing your LLC.

Should you yourself be the manager of your single-member LLC, or should you hire a non-member third party to manage it? If you form a single-member LLC for use in operating a business and if you haven’t got time to manage the LLC yourself, you’ll need a written operating agreement in order to validly appoint a non-member third party as its manager.

In addition, even if you yourself will have time to manage your single-member LLC, you will need a written operating agreement in order to validly appoint a third party to manage it, since doing so will minimize the risk that you will be personally liable if a third party sues your LLC. A written operating agreement will provide you with this protection if, for example, you use your single-member LLC to acquire and hold real estate and to rent this real estate to third parties. If, under your operating agreement, you yourself won’t be the manager of your LLC and if you are careful in choosing a third-party manager, it’s unlikely you will be personally liable in such a suit.

Should your LLC be a NH single-member LLC or a Delaware single-member LLC? Both New Hampshire single-member LLCs and Delaware single-member LLCs can provide you with a potentially valuable type of LLC statutory protections called charging order protections. Charging order protections can prevent creditors from obtaining court orders transferring your LLC membership to them to cover unpaid debts. However, Delaware LLC law can provide you with substantially stronger charging order protections than NH LLC law.

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