PITFALLS OF 50-STATE SERVICES (AND DOING IT YOURSELF) !

Thinking of using a 50-state, one-size-fits-all service like LegalZoom or else just doing it yourself?  Think again ... please!

There are lots of reviews, reports, blogs, etc. about the pitfalls of going this route.  Some of these are written by lawyers, who are no doubt sincere but may lack credibility because of their built-in bias.  Others are written by unfortunate business owners who tried it and learned their lesson the hard way!   Below is a listing of some of those reports – they are not difficult to find on the web.  You should read at least some of them. See links below!

Why LCS is Different and a Better Choice!!  Lawyers Company Service, Ltd. is a business formation service that was founded by attorneys with extensive expertise in business organizations and has such attorneys on staff.  We only operate in states where we have associated with those attorneys.  We offer a 20-minute informational phone consultation with one of these attorneys – free and with absolutely no purchase required or other obligation!

We are different because we give our customers a fighting chance of getting set up correctly !  We focus on the essentials in business formations, not fluff such as fancy padded document binders and books of marketing materials.  Our attention is on making sure the documents are complete and correct.  Unlike many incorporation services and most DIYs, you will receive a complete set of all the essential documents, ready to sign.  We won't select your entity for you, and we won't customize your documents to any unique requirements you may have – only a licensed, competent attorney can do that.  But we have found that many small businesses and some asset holding vehicles do not need such customizing, at least not initially.

Make no mistake – we definitely side with those who recommend using a competent attorney to do this work.  But the fact is, many new business owners starting out decide not to use an attorney.  In that case, we believe our service is truly the next best thing!  And the cost is substantially less than most attorneys charge – even less than some online "incorporation mills," especially after hidden fees and costs are tacked on.

Following are links to reviews and articles dealing with these other services:

http://www.ripoffreport.com/directory/The-Company-Corporation.aspx

http://taxdaddy.blogspot.com/2007/10/legalzoom-com-reviewscomplaints.html?showComment=1203143340000#c4774031121678439712

http://ipwatchdog.com/2010/09/25/legalzoom-and-washington-state-reach-agreement-over-unauthorized-practice-of-law/id=12622/

http://www.thestartuplawyer.com/incorporation/why-legalzoom-fails-startups

Jonas M. Grant, Los Angeles, CA business attorney, wrote:

"After having reviewed numerous incorporation service companies, ... after problems have arisen, ... [or in preparation for a] sale of the business ..., I have yet to see a company that was correctly set up.

I can say the same of do-it-yourself incorporations, where the owner(s) didn't hire anyone and did it themselves. In most cases, the articles of incorporation (for LLCs, the articles of organization) have been completed and filed in an adequate, if not optimal, manner ... [but] the bylaws or operating agreement ... are generally never executed - they just sit on the shelf in a binder, as they have since they were mailed out by the incorporation service, and thus without any force or effect whatsoever. Frequently, they contain numerous blanks that the owner was supposed to fill in, but didn't because they didn't know how to, or just never got around to it."

(Article Source: http://EzineArticles.com/?expert=Jonas_Grant )

Of course, we can't force our customers to sign their documents, but the other problems cited above will not occur with LCS !!

Online Incorporation Service Reviews

Author/blogger Mark Stafford lent his own personal experience to his review of online incorporation services (excerpts):

Thinking about incorporating? DON'T waste your time with those online companies that claim to incorporate you. Unless of course you just have a bunch of money laying around. I am sharing this with you because of the lesson I learned the hard way.

I'll start by saying I know pretty much nothing about business when it comes down to all of the legal issues, tax, and accounting mumbo jumbo and so forth. I like to just concentrate on doing the work at hand. ....

I made the mistake of starting a business jumping in head first, and with the best intentions of course, but I ended up in a mess. I fell into the hype of all of those "incorporate now" websites, and I'm not mentioning names (there are a ton of them), as they seem to all be very similar.

Most of them will ask you if you would like to incorporate, what type of corporation package would you like- as if you were ordering at a drive- thru. .... And they will send you a VERY nice notebook with stock certificates and numerous other forms. In my case I got that and a nice library of five books (you would have to be a lawyer to understand them), which if you were not already confused - you get the picture.

Ah, then the price. This can be from $600 and up. This is when I found a lawyer to be the best way in the first place, as they will know what type of corporation would best suit you. ....

(The full article originally appeared in Helium.com at http://www.helium.com/items/120013-why-avoid-incorporating-your-business-online)

Another excerpt along similar lines:

Far too often, I've come across business owners who used an incorporation service, a shoddy lawyer, or a CPA to incorporate their business and when I asked these business owners where their operating agreements, bylaws, annual meeting minutes and state filings were kept, they couldn't tell me.

Why is that? Because they didn't realize that merely filing articles of incorporation with the State does not [always] provide liability protection.  Your corporate entity ... [should always] be established correctly from the beginning with governing documents and then maintained on a yearly basis.

If you don't do that, you may come to find out too late that your business entity doesn't provide the protection you thought it did.

So, make sure that once you decide what kind of an entity to use, you set it up right and then maintain that entity.

While I'm open to a pleasant surprise one day, thus far I have yet to review one corporation or limited liability company that was properly set up and maintained by a do-it-yourselfer (including those who used online incorporation services, paralegals, CPAs, non-business attorneys).

(From article by southern CA attorney, Alexis Martin Neely, that appeared in Wealth Secrets Online Magazine)