Many entrepreneurs look to online document creation services like LegalZoom and Rocket Lawyer when starting their new business venture. While these services promote fast and cheap document filing, there are several major downsides that could end up costing you far more in the long run than working with an experienced attorney.
You Don’t Know What You Don’t Know
The first and most significant issue is that you may not actually know what legal entity structure and governance setup is optimally suited for your unique business needs and growth goals. These online services make the assumption that you’ve already determined the ideal legal framework, which is often simply not the case for new business owners.
For example, I recently consulted with a small business that had formed as a California corporation through an online filing service – but without including a corporate signifier (like “Inc.”) in the company name. This seemingly small oversight actually has huge implications, as it means they cannot elect the close corporation status which offers more flexible governance rules under California state law. In other words, to get the liability protection they were seeking, they would have to follow strict governance requirements. Based on their objectives, the business would have been much better served forming an LLC or statutory close corporation instead of a standard corporation.
This case highlights how, without individualized legal guidance and counsel, you may easily end up creating the wrong type of entity structure that is a poor fit for your specific business situation. By taking advantage of a free consultation with an experienced business attorney, you can have an expert evaluate your goals and future plans to steer you in the right direction for structuring and forming your company properly.
One Size Does Not Fit All
The second glaring problem with online incorporated services is that your business is unique, but these websites peddle generic, one-size-fits-all document templates and formations. While affordable, these boilerplate legal forms cannot possibly be tailored to your company’s particular interests, risks, and opportunities. What works for one business may completely miss the mark for your needs and provide inadequate protection or flexibility for growth down the road. An attorney can craft fully customized formation documents, contracts, and more to properly safeguard your business.
Cost of Cleanup
Finally, while services like LegalZoom or Rocket Lawyer seem cheap on the front end, you’ll likely pay a much higher price further down the road when issues arise. Whether it’s hefty attorney fees to revise poorly drafted contracts from the start, fix costly governance errors and oversights, or recover from legal missteps caused by using those subpar online documents – the money you thought you saved will get gobbled up quickly. You’ll end up spending far more than if you had partnered with a lawyer to do it properly from day one.
Rather than pinching pennies with risky online incorporated services, the wiser investment is to partner with an experienced business attorney who can set your company up for legitimate, lasting success from the very beginning. At Bayside Counsel, we offer customized pricing plans to rival what you’d pay for online services – but provide you with tailored legal expertise from real professionals. Investing in sound legal guidance now can prevent potentially bankrupting headaches, risks, and mistakes later on as your business grows.
Don’t go at it alone with generic online legal forms. Protect your entrepreneurial investment by contacting Bayside Counsel today for a free consultation with an experienced San Diego business attorney on structuring and establishing your company the right way for long-term growth and prosperity.