The Risks of Using a Legal Website to Incorporate
Many people that we talk to about forming a business entity (aka “incorporating”) are tempted to do so online via the numerous legal websites available, such as Legalzoom or Rocket Lawyer. For some people, this might be the right choice, but for others it could be a mistake. Learn more about using a legal website to incorporate vs hiring an attorney to do so.
Is Using a Legal Website to Incorporate Right for You?
Here are some points to consider when thinking about whether forming a business entity with a legal website is the right choice for your company.
- Legal websites will help you fill out forms. The main benefit of using legal websites to form your businesses is that they make it easier to fill out a form and send that information to the appropriate state government. Their software is easy to use and intuitive, but will not help you determine which business entity (i.e. LLC, C-Corp) is the right one nor will they give you legal advice on your business.
- Legal websites are not law firms, so they cannot offer legal advice. One of the key benefits of having an attorney in your corner is that you can get insight on the type of business entity is the right one for your business. Your tax liability, liability protection, and your filing requirements may vary depending on the type of entity. Early consultation with an attorney can help you assess all of the options and choose the right entity.
- Legal websites will not generally help with followup items. Filing the incorporation documents are the first step in the process. After filing, the secretary of state might identify items that you will need to changed on your forms. You’ll also need to maintain filings on a regular basis and after certain events arise in your business. Keeping track of these things and responding in the right way is crucial to avoiding any issues.
- Legal websites can sometimes be more expensive than an attorney. Although the upfront costs of a legal website business entity filing are generally going to be lower than hiring an attorney, we have seen that sometimes people run into problems that end up being more expensive to fix. As a business owner, it is important to take these longer-term costs into account when making your decision.
Ultimately, incorporating using a legal website will be right for some people, but not for others. The thing to understand is that legal websites are not a substitute for legal counsel (and they will tell you that themselves).
A properly formed business entity is the foundation of your company – so it makes sense to make sure that things are done right the first time. At the very least, a smart business owner should discuss their business with an attorney and then decide the right path.