If you're starting a business and looking to form a corporation or LLC, you may be tempted to turn to online legal forms. Here's why it's important to hire a lawyer who represents small businesses.

Part of being a small business owner is looking 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 or form an LLC using forms obtained through LegalZoom believing that they are just being smart consumers. The mistaken assumption they make is that a lawyer would simply be filling out the same forms and submitting them to the proper government agency. But if you are considering incorporation or forming an LLC to run your 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 a lawyer experienced in representing small businesses. While getting good legal advice or having a lawyer prepare your corporate or LLC documents 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, cookie cutter fill-in-the-blank legal form. You type in your name and address, you print out the form, and you 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 might not fully understand what best fits your situation or the ramifications of your decisions and you don’t find that 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 we're discussing here 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 the 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, tax implications, 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 are prohibited from performing 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 and can vary greatly from state to state. 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's resources 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 OUR ADVICE? Our advice is to tell you what LegalZoom ultimately tells 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 our 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.

STARTING YOUR SMALL BUSINESS THE RIGHT WAAY. If you want to incorporate your business or form an LLC, get it done the right way. Contact us at 253.858.5434 to set up an appointment today. We have more than 24 years of experience forming corporations, LLCs, and partnerships for small businesses in Washington and more than 14 years of experience doing it in Idaho. As a trusted advisor, he can provide legal advice and services tailored to your specific business needs. We can help you determine which business entity is right for your company or answer questions about business issues. So what are you waiting for?