It's a Trap! Using Low Cost Self-Help Service (Legal Zoom and their ilk) to Incorporate a Busine
Hello everyone and welcome to the new year! I've had a few entrepreneurs quite recently ask me questions about using self-help sites instead of a business lawyer. A wise man told me once that legal self-help websites are "not necessarily the worst idea, but not necessarily the best idea either".
Low cost self-help “legal” services are not lawyers. In fact, recently in June of last year, these types of websites have run afoul of the New Jersey attorney ethics committees as "unregistered legal service plans". By law, they cannot provide you with legal advice. Instead, a customer merely fills out and file forms at your direction. Every time someone tells me off-handed that they plan on using this type of service, Admiral Ackbar's line from Star Wars (which has also become a pretty well-known meme) goes through my head. IT'S A TRAP!
When entrepreneurs use these self-help services, it tends to get entrepreneurs into more trouble than they're worth. If you don't know what you are doing, it can cost you far more to fix a mistake than to work with a living, breathing attorney from the beginning. To use a legal service plan effectively (and correctly), you really need to know what type of business entity you want to organize, the reasons for why you need to, the proper state jurisdiction, and the consequences of setting up the entity wrong.
Self-help “legal” services won't give you that advice. Also, they won't help your company meet corporate formality obligations required to keep your business in good standing with the government once your business entity is formed. There are tons of other things to do, papers to shuffle, and documents to file depending on your state. Yikes!
Like raising a child, it takes a village to make a great startup business takeoff. Part of that village is starting off with a good business lawyer who understands your entrepreneurial free-spirit. The good business lawyer will not only help make law cool for you, he or she will organize your business correctly and meet corporate formality obligations. It helps to have a professional to catch those blind spots that can cost you thousands of dollars or hinder the success of your business. Let us know if we can help!