Small Business Attorney’s Advice on Using LegalZoom to Incorporate a Company in California

Using LegalZoom to incorporate a business includes some pitfalls that business owners may not know about. On this page, California corporate lawyer Andrew Gale discusses some of the problems with using online legal document services to perform complex legal tasks – with information taken directly from LegalZoom’s terms of use.

During these tough economic times, small business owners may look for ways to save money – even for something as important as incorporating a business. That’s when people turn to online services like LegalZoom.

Business owners might incorporate a business using forms obtained through LegalZoom believing that they are just being smart consumers. The mistaken assumption they make is that an attorney would simply be filling out the same forms and submitting them to the proper government agency.

But if you are considering incorporating a business, you want to make sure it’s done right. If it isn’t, there could be serious consequences down the road that could negatively impact both your business and your personal assets.

For such complex legal business transactions, it’s important to hire an attorney specializing in small business. While getting good legal advice or having an attorney incorporate your small business may cost more initially, it could save you much more in the future.

What is LegalZoom?

First, you need to understand exactly what LegalZoom is. According to their description, LegalZoom is an online legal portal to give you, the visitor, a general understanding of the law. They provide an automated solution to those who want to prepare their own legal documents.

Essentially, they give you a simple, fill-in-the-blank legal form. You type in your name and address, print out the form, and use it. If it works for your situation, you’re in luck. If it doesn’t work in your situation, you’re out of luck. The only problem with that is that you don’t find out until the document has failed.

LegalZoom’s Terms of Use

Am I just making this up out of thin air or am I getting this from a legitimate source? The fact is the information discussed on this page is taken directly from the LegalZoom website itself.

The home page entices you with the idea that you’re going to get a personalized, affordable legal solution. It’s personalized because you’re the one who is filling in the blanks. It’s affordable because they are offering these fill-in-the-blank forms to you for as little as $99 dollars. But the legal protection is questionable, at best.

As to whether or not you are actually getting what you have bargained for, you need to figure that out by visiting LegalZoom’s Terms of Use page. At the bottom of their home page, you will see the link. If you click on it, you will get a lengthy page of legal exclusions, waivers, and fine print about what they will not do for you.

What you really need to understand is that they will only do the simple stuff. They’ll review your answers to make sure that they are complete for spelling, along with internal consistency of names and addresses and the like.

What they won’t do is this: They won’t review your answers for legal sufficiency, draw legal conclusions, provide legal advice, opinions, or recommendations about your legal rights, remedies, defenses, options, selection of forms, or strategies, or apply the law to the facts of your particular case.

In essence, they’re doing nothing for you. Why is that? LegalZoom is not a law firm. They are required by law to inform you of this. More importantly, they may not perform the services performed by an attorney.

So, essentially, they are simply a legal document preparation service providing a simple, fill-in-the-blank form. And you are, in essence, your own lawyer.

They further tell you that “LegalZoom and its services are not a substitute for the advice of an attorney.”

And lastly, they tell you that, “LegalZoom strives to keep its legal documents accurate, current and up-to-date.” However, as they recognize, the law changes rapidly. That means they can’t guarantee that the information on the site is completely current. Furthermore, the legal information contained on the site is not legal advice and is not guaranteed to be correct, complete, or up-to-date.

So if you choose to use LegalZoom to complete important legal transactions, what you’re doing is putting your personal assets and your family at risk by using their fill-in-the-blank forms that have no guarantees. You have no idea whether or not they’re correct, complete, or up-to-date.

So what’s my advice?

My advice is to tell you what they ultimately tell you on the site themselves. And that is this:

“If you need legal advice for your problem or if your specific problem is too complex to be addressed by their tools you should consult a licensed attorney in your area.”

That’s the best thing that this site does for you. Unfortunately, it’s buried in the terms of use. If you’re going to use this site or, furthermore, encourage somebody else that you care about to use the site, spend some time reading their terms of use and understand what you’re getting. I would submit to you that it’s not what you think you bargained for.

Small Business Attorney in Orange County

Incorporating Your Small Business the Right Way

If you want to incorporate your business, get it done the right way. Contact expert Orange County, California small business attorney Andrew Gale.

Andy has more than 30 years of experience forming corporations for small businesses in California. As a trusted advisor, he can provide legal advice and services tailored to your specific business needs. Andy can help you determine which business entity is right for your company or answer questions about business issues. So what are you waiting for?

Call Andy today at +1 (714) 634-4838.