The Dangers of Using Legal Zoom, Rocket Lawyer, or a CPA to Setup an Entity

In our technology-driven era, many people turn to websites like Legal Zoom and Rocket Lawyer, who offer corporation formation or entity creation at discount prices, to startup their company.  Still others, perhaps in an effort to save costs, employ the services of a CPA to form their business entity, believing these professionals to be knowledgeable in the field.  Despite the advertisements of these non-attorney companies, however, there exists much danger in using these providers to setup your corporate entity.

The following is a list of the potential hazards involved in not employing the help of a professional corporation formation attorney.  This list is not designed to dissuade you from using Legal Zoom, Rocket Lawyer, a CPA, or the like.  Rather, its intent is to ensure you are fully informed when making the important decision of who should form your new business.

  1. You may actually pay more–CPA firms and Legal Zoom charge for some services that you can do yourself for free.  The basic setup of your entity can be done quickly and easily on your own.  By visiting Florida’s Secretary of State website, you can register your entities name, file your Articles of Organization or Incorporation, or Certificate of Limited Partnership.  You can then visit the IRS webpage to request an EIN number.  The only costs involved in these basic startup steps are filing fees, which most CPA firms and websites will require you cover anyway.
  2. Forming an entity is more complicated than you think—non-attorney companies cannot offer you legal advice because they are not licensed attorneys.  A thorough, individualized legal consultation is the most important step in formation of a corporate entity.  This is due to the complex nature of entity startups.  An attorney can advise you as to what entity is the best structure for your business.  The options are numerous and include: C-Corporation; S-Corporation; Limited Liability Company; Sole Proprietorship; and Limited Partnerships.  A knowledgeable business attorney will review your proposed business plan, including the number of partners and the investments of each.  Essential issues such as decision making and profit sharing will be discussed and decided with the guidance of your expert business attorney.  Intellectual property issues, whether it be protecting your own or ensuring you do not infringe upon another, will all be addressed in your attorney consultation.  The assistance of a seasoned business attorney is absolutely vital to the long term success of your new business.
  3. You may face disputes down the road—Legal Zoom and other legal help websites, along with CPA firms, use boiler plate documents.  These documents are not tailored to the specific company and often lack guidance as to specific problems.  When a business dispute arises down the road, business owners turn to their corporate documents seeking resolve, and instead find the issue not addressed.  This can lead to ongoing disputes that often end up in the courtroom, costing business owners and their companies tens of thousands in legal fees and much wasted resources.

The team of legal professionals at Scott Law Group, PLC work with area entrepreneurs to chose the right business entity for their budding company.  At Scott Law Group, we will provide you with vital information as to the advantages and disadvantages of each entity.  Armed with this knowledge, we will assist you with all steps to forming your new corporate entity.  The first step to a successful business is a properly formed business entity, and with Scott Law Group, PLC you can rest assured your company is off to a bright start.  Call us today at (727) 754-5001 to schedule a free consultation.